You’ve almost certainly heard of gazumping, which is when a seller accepts a higher offer after they’ve sold (subject to contracts) to another buyer. This is always at the back of a buyer’s mind when they have their offer accepted, but there’s something sellers should be aware of too – gazundering.
Gazundering is when the buyer lowers their offer just before contracts are exchanged and, if their backs are against the wall, the seller often feels forced to accept this low-ball offer or lose the sale entirely.
Sounds sneaky! Is gazundering actually legal?
You might wish it wasn’t if it happens to you, but it’s quite legal.
Is it fair?
Most often it’s not fair. Buyers tend to gazunder sellers when they’re in a stronger position than them. The property is off the market and if the sellers are in a chain and in a hurry, they might have no option but to take the lower offer.
Sometimes, however, it’s more a case of readjustment than dirty tricks. If the survey reveals an issue that’ll cost a few thousand to rectify then it only seems fair to ask for a reduction. Also, if the sale has taken a while and property prices have fallen in the interim, you can’t blame the buyers for at least asking for a slight reduction.
It’s also possible that the buyer has just been gazundered themselves and they can’t make up the shortfall, so to prevent the chain collapsing, that lower new offer may be the solution.
How can I avoid gazundering?
There’s little you can do if the buyer is just a chancer trying to save some cash (save rejecting the new offer, of course) but there are things you can do to protect yourself from genuine buyers lowering their offers:
If your buyer is a bit of a chancer then there’s not much you can do other than respond with an outright no. You can lower the risk of honest buyers reducing their offers.
Look for chain-free buyers
If you can, always take chain-free offers because they’re more able to move as quickly – or as slowly – as you need. They don’t have any real pressures on them and no-one’s going to gazunder them if they’ve already sold.
Set an exchange date
It doesn’t have to be to the minute, or even to the day, but having a week set for exchange keeps everyone moving and focussed, which leaves less time for wondering about lowering any offers.
Build a rapport with the other side
Stay in touch with both your solicitor and agent, as well as the buyers and their people. You don’t have to become good friends, but if you can send them a photo of the jasmine bush that they loved flowering, or offer to take them to the village pub, then they’re much less likely to do anything sneaky.
Have a realistic asking price
Buyers can sometimes get ahead of themselves and offer you the ever-so-slightly-optimistic asking price just to secure the place. They may then, once the proceedings have started, decide they acted too rashly and ask to adjust the price to a more realistic level.
Be as honest as possible
The survey will discover the damp, the crack in the foundations or the Indian burial ground under the basement, so be upfront from the start. If buyers feel you’ve been dishonest then they may decide to pull out entirely rather than set a reduction.
Work out your absolute bottom price
You should have a good idea how much money you’ll need for your move and how low you can go to still manage it. Even after you have a good offer that gives you a decent margin, you should have an absolute rock-bottom amount that you can’t go below, just in case your buyer does ask for a reduction.
