What is gazundering – and how can you avoid it?

You’re probably familiar with the term gazumping – the practice of sellers accepting an offer from a buyer – then accepting a better one later on.

But are you familiar with gazundering? Gazundering happens when a buyer reduces their offer at the last minute. Unlike gazumping, which is a problem for buyers, gazundering affects sellers and can leave you with a difficult decision to make about your house sale.

While gazundering is rare, it does happen. If you’re thinking of selling your home in the south east London areas of Bermondsey, Surrey Quays, Deptford, or Canada Water, we ask what is gazundering, and examine how you can avoid gazundering and what you can do if you find yourself in this tricky situation.

What is ‘gazundering’?

Gazundering is the practice of buyers reducing the offer on a property just before exchange of contracts.

How does it affect the property sale?

It places the seller in a difficult position as they need to decide whether to accept the new offer and proceed or reject it, potentially losing the sale, breaking the property chain and missing the dream home they are hoping to buy.

As a buyer, if you gazunder without good reason, you risk creating bad feeling between you and the seller. There is every chance your seller will refuse the new offer or even pull out of the sale altogether, so you need to carefully consider whether such a move is worth it.

Why do buyers gazunder?

There are various reasons why buyers might reduce their offer at a late stage, some more legitimate than others.

Your buyer may just be unscrupulous and seek to save money on the property purchase by forcing you into a difficult corner. This is more likely if they know you are part of a chain and are keen to sell to secure your own purchase. You are particularly vulnerable to gazundering if your home has been on the market for a long time or there are other issues with it that make securing a buyer difficult.

A buyer may reduce their offer because of issues with the property which come up in the survey or even later on. In today’s world of fluctuating mortgage rates, they may also do it if the sale takes longer than expected, their mortgage offer expires and they are unable to secure as good a deal. If house prices fall meaning they can’t sell their own home for as much as they’d planned this could also be a factor. While all of these excuses sound reasonable, your buyer ought to raise them earlier in the process, rather than waiting for exchange day.

Is gazundering legal?

Sadly, gazundering is perfectly legal in England and Wales. While unethical, there is no reason why a buyer can’t reduce their offer before the contracts are exchanged.

Don’t get gazundered: strategies & tips

How sellers can manage gazundering

If gazundering is happening to you, there may not be much you can do other than take a deep breath and make a big decision.

Don’t try and manage the negotiation yourself, this is where your estate agent comes in and a good, experienced agent will be able to advise you and work on your behalf to resolve things.

Do the sums to work out whether you can actually afford to accept the reduced offer. If it will mean you’re stretched too far, refuse the offer and be prepared to walk away. You may find that the buyer is a chancer who will still proceed if you call their bluff.

If you can afford to take the hit, and your buyer isn’t budging, consider whether keeping your sale intact and having your own purchase go through is worth it. Remember that once you have exchanged the buyer is committed to the sale.

How sellers can prevent gazundering

There is no guarantee to ensure your sale will go through without gazundering. And, unlike gazumping, there isn’t insurance product you can buy to protect you either. However, these there are things you can do to make your sale go smoothly, reducing the risk.

1. Be realistic on price

It might be tempting to over-price your home, giving you wiggle room if your buyer lowered their offer, however, this isn’t recommended. If your home is on sale for more than it’s worth, buyers may adopt a strategy of making a high offer to secure the home only to reduce it at the last minute.

A local estate agent will be able to provide you with a realistic price in line with the current local property market and current UK market conditions. They should be able to explain how they got to the price. It is also worth getting a few different valuations from agents for comparison.

2. Be honest about faults with the property

Don’t try and hide issues with the home. Be upfront so you can negotiate on price at an early stage if your buyer needs to spend money to put something right.

Hidden issues will almost always be uncovered in the homebuyer survey, and the buyer is more likely to gazunder or pull out completely if they feel you have been dishonest.

3. Pick the right estate agent

Make sure you’re careful about which agent sells your home. Grill them about their experience in managing chains and difficult sales, including gazundering situations. You want a confident negotiator who will fight your corner.

Check online reviews to read about the experiences of previous sellers who used the agent. A good estate agent will often be able to work out which interested buyers are more likely to be chasing a deal.

4. Be choosy when it comes to buyers

If you receive multiple offers, think about who you go with. While a chain-free buyer in a strong position might feel more likely to indulge in gazundering, the fact that the transaction will be simpler and proceed more quickly reduces the risk of gazundering occurring.

5. Ask to see a mortgage in principle before accepting viewings

You can also request that prospective buyers have a mortgage in principle to prove that they have a loan amount agreed for the asking price. Some people gazunder if they find that they cannot borrow as much as they need in hope that you will accept lower than the agreed price.

6. Keep things moving

Do everything in your power to get to exchange as quickly as possible before the buyer has the chance to rethink their offer. This means answering questions quickly, filling in paperwork and helping make sure the survey happens. Make sure that you are available to answer calls during the process to avoid unnecessary delays.

Gazundering FAQs

And Finally

If you’re thinking of the steps for selling your home in south east London areas including Beckenham, West Wickham, Hackney Wick, Greenwich, Bethnal Green, Shad Thames, talk to us. As experienced local agents you can trust us to manage even the trickiest of sales and provide plenty of advice and reassurance to avoid problems like gazundering. Contact us for a free, no obligation market appraisal of your home.