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Imagine you're selling your home. You receive a few offers and accept the highest before raising a celebratory glass of bubbly! Not so fast. A few days before the exchange of contracts, your agent contacts you with some bad news. The buyer has reduced their offer – and it's now well below the asking price.
You've fallen victim to the dreaded gazundering.
Much like its cousin, gazumping – which is the scourge of home buyers everywhere – gazundering is something all home sellers fear.
Whether you realise it or not, you're at risk of being gazundered until the exchange of contracts stage of your property sale. Gazundering can derail your whole transaction and leave you thousands out of pocket.
What is Gazundering?
Gazundering is a term used to describe when a buyer deliberately lowers their initial purchase offer just before exchanging contracts.
At this point, you, the seller, are left with a choice; do you continue with this particular buyer and potentially lose out on a better price for your home? Or reject their offer and put your house back on the market, losing upfront conveyancing fees you've already shelled out for – which can total thousands?
This undercutting tactic can leave sellers vulnerable, as they may feel pressured to accept the reduced offer due to time constraints or the fear of losing the sale altogether. Gazundering can disrupt property chains, cause financial strain, and stress homeowners significantly.
Being gazundered is frustrating and financially devastating. But now there's finally a solution – enter Rhino Home Protect and our unique Gazundering Insurance package.
Our insurance is designed to protect homeowners financially against the detrimental effects of gazundering. With this cover, you can claim back conveyancing fees up to £1,650 should you get gazundered.
In this section, we will delve into what Gazundering Insurance entails, the impact of gazundering, and proactive measures homeowners can take to avoid such situations. Understanding the risks and having proper protection can safeguard your property transaction and minimise potential financial losses.
How Gazundering Insurance Helps
Gazundering Insurance provides financial protection and peace of mind for homeowners in the event of gazundering. By securing this coverage, homeowners can receive compensation for the difference between the originally agreed-upon price and the lower offer, helping to mitigate the financial impact of the unfair negotiation tactic.
What is Home Sellers Protection Insurance, aka Gazundering Insurance?
- Home Sellers Protection Insurance protects sellers against financial loss if their sale fails due to reasons beyond their control. This includes gazundering – but also cases such as:
Your buyer has an adverse search on their property which stops them from being able to sell up and honour the purchase of your home. - The cost of any defects or irregularities to the structure of the property you are looking to sell where repair work is valued at over 10% of the buyer's accepted offer
- You are also covered if the individual buying your property can no longer proceed with the purchase due to a notice of redundancy, a relocation package which falls through or even if they pass away during the purchasing process.
If you're covered with Home Sellers Protection Insurance, you can claim back conveyancing fees up to £1,650 if the sale falls through.
Impact of Gazundering
Gazundering can have several negative consequences for sellers, including:
Financial Loss: Accepting a lower offer than initially agreed upon can result in a significant financial setback for sellers, who may have already made financial plans based on the initial offer.
Property Chain Collapse: Gazundering can lead to a breakdown in the property chain, affecting the seller and other buyers and sellers involved. This can cause delays, additional costs, and immense frustration for all parties.
How to Avoid Gazundering
There's nothing you can do to guarantee you won't be gazundered. The buyer isn't obliged to honour their original offer at any point until the exchange of contracts – meaning you're left vulnerable to gazundering right up until the exchange date.
You can, however, protect yourself against the financial losses associated with gazundering – and other things beyond your control that threaten your sale – by taking out Home Sellers Protection Insurance.
While Gazundering Insurance provides a safety net, here are some additional steps to minimise the risk of being gazundered:
Communication with the Buyer: Maintaining open and transparent contact with the buyer is crucial. Throughout the negotiation process, strive to establish a good rapport and address any concerns promptly. Building trust and fostering a positive relationship can discourage the buyer from engaging in gazundering tactics.
Keeping the Property Chain Short: Aim for a shorter property chain whenever possible. A property chain refers to the sequence of buyers and sellers involved in related property transactions. The longer the chain, the higher the risk of delays, complications, and potential gazundering. Minimising the number of parties involved in the chain can reduce the likelihood of gazundering.
Having a Backup Plan: It's wise to have alternative options to mitigate the impact of gazundering. Consider identifying potential backup buyers or alternative properties that you could pursue if the current deal falls through. Having alternative options provides you with negotiating power and flexibility, reducing the vulnerability to gazundering attempts.
Setting a Realistic Asking Price: Pricing your property accurately is key to attracting serious buyers and minimising the chances of gazundering. Conduct thorough research on current market conditions and analyse comparable sales in your area. Setting a realistic asking price based on this information increases the likelihood of attracting genuine buyers who are less inclined to engage in gazundering tactics.
Hiring a Professional Estate Agent: Engaging the services of an experienced and reputable estate agent can significantly support your efforts in avoiding gazundering. A skilled agent understands the market dynamics, has expertise in negotiation, and can protect your interests throughout the selling process. They can provide valuable insights, guide you in setting a reasonable asking price, and negotiate on your behalf to deter potential gazundering attempts.
How common is Gazundering?
We can't truly know how common gazundering is as no official statistics exist. What we do know, however, is that 1 in 4 house sales in the UK fall through before completion, and gazundering is the main reason for this. There were over 200,000 properties sold in the UK from 2020 – 2021, so that's a lot of scope for gazundering.
So, unfortunately, it’s pretty likely that either you or someone you know will be gazundered at some point.
Is Gazundering Illegal?
Gazundering is not illegal in England. This is because a property transaction is not legally binding until the exchange of contracts – and gazundering happens before this.
There are no legal or financial repercussions to the buyer for gazundering you – which means you’re at constant risk of it happening until exchange day.
Is Gazundering Ethical?
We're not one to wade into a debate, but many consider gazundering unethical. They think buyers should adhere to a 'gentleman's agreement’ and stick to their original offer.
However, we're living in tough times. If people find themselves in a situation where they must make a financial decision, they will make it in the best interests of themselves and their families.
People's circumstances change, and sellers sometimes cannot honour the amount they initially offered.
We’d like to think that few people gazunder intentionally and don't plan to go into the deal only to deliberately underbid or withdraw their initial offer.
But the result is the same whether you’ve been the victim of an unavoidable gazundering or a sneaky, shrewd move.
As the seller, you are left with the unpleasant choice of accepting a lower amount or losing thousands of pounds in upfront fees.
What is Home Sellers Protection Insurance, aka Gazundering Insurance?
Home Sellers Protection Insurance exists to protect sellers against losing out financially if their sale fails due to reasons beyond their control. This includes gazundering – but also cases such as:
- Your buyer has an adverse search on their property which stops them from being able to sell up and honour the purchase of your home
- The cost of any defects or irregularities to the structure of the property you are looking to sell where repair work is valued at over 10% of the buyers accepted offer
- You are also covered if the individual buying your property can no longer proceed with the purchase due to a notice of redundancy, a relocation package which falls through or even if they pass away during the purchasing process.
If you’re covered with Home Sellers Protection Insurance, you can claim back conveyancing fees up to £1,650 if the sale falls through.
How can you prevent being Gazundered?
There’s nothing you can do to guarantee you won’t be gazundered. The buyer isn’t obliged to honour their original offer at any point until exchange of contracts – meaning you’re left vulnerable to gazundering right up until the exchange date.
The only thing you can do is protect yourself against the financial losses associated with gazundering – and other things beyond your control which threaten your sale – by taking out Home Sellers Protection Insurance.
Who is at risk of being Gazundered?
Gazundering can – and does – happen to just about anyone selling a property. Nobody is safe – unless Home Buyer's Protection Insurance covers them!
Do I need Gazundering Insurance?
It's not a legal obligation, but considering the likelihood of your sale falling through – 1 in 4 – it makes sense to cover your upfront fees.
Conveyancing fees are pricey and usually run into the thousands. If the selling process throws up a curveball – gazundering, adverse survey results or something beyond your control – it's wise to have insurance to protect you.
Having your offer accepted can feel like the happy ending in searching for a new home, but sellers, beware! Your offer is flexible until completion day; until then, you're at risk of being gazundered.
Is Gazundering Insurance worth it?
The answer is yes. When you consider how likely it is that your house sale will fall through – and how much it’ll cost you if it does – it’s clear how having gazundering insurance in place would benefit you. Cover can be arranged in minutes from as little as £74, and should you need to claim those costly conveyancing fees in the event of being gazundered, you’ll be glad you safeguarded your cash.
Is Gazundering Insurance worth it?
The answer is yes. When you consider how likely it is that your house sale will fall through – and how much it’ll cost you if it does – it’s clear how having gazundering insurance in place would benefit you. Cover can be arranged in minutes from as little as £74, and should you need to make a claim for those costly conveyancing fees in the event of being gazundered, you’ll be glad you safeguarded your cash.
Why choose Rhino Home Protect for your Gazundering Insurance?
At Rhino Home Protect, we’re specialists in protecting sellers against gazundering, as well as against other things which can go wrong with a house purchase that are beyond your control.
Rhino Home Protect are award-winning industry leaders in both Home Sellers Protection Insurance and Home Buyers Protection Insurance.
We insure around 15,000 property transactions every year, and our customers trust us to be 100% open, honest and upfront.
Get a quote today, or contact one of our friendly team to find out more.
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