Can sellers protect themselves from gazundering?

By the time you reach the later stages of selling your property, most sellers assume the price agreed with the buyer will hold.

Unfortunately, the deal can still change at a very late stage. One reason for this is gazundering.

What is gazundering?

Gazundering is one of the more unpleasant features of the English and Welsh property system.

It is the term for a scenario in which a buyer lowers their offer late in the process, often after surveys have been carried out and just before contracts are ready to be exchanged.

The seller then faces a difficult decision. Accept the reduced price or risk losing the sale altogether.

Is it legal to gazunder a seller?

There is no law in England and Wales to prevent a seller from being gazundered. Until contracts are exchanged, either party is entitled to change their mind or alter the terms of the agreement, including the price.

Although it is not illegal, many consider the practice unethical.

Are there common reasons behind gazundering?

In order to reduce the risk of being gazundered, you’ll need to understand the reasons buyers may consider lowering their offer later in the transaction process.

Here are some of the most common reasons:

• Problems, including damp and structural issues, can be identified during the property survey. A buyer could renegotiate their offer to reflect the funds they will need to spend on repairs for these issues.
• When the property market falls, buyers may request a reduction to match the current market value.
• They have been gazundered themselves and can no longer afford their original offer.
• They are opportunistic and always intended to put the seller under pressure at the last minute to secure themselves a better deal.

For a more detailed explanation of why someone may try to renegotiate their offer after previously agreeing to a set price, speak to our team.

What is the knock-on effect of gazundering for sellers?

If you are part of a chain, a reduced sale price may leave you short on funds for your own purchase. That can force you to renegotiate with your seller or pull out altogether. One late change can ripple through several transactions.

Another cost that isn’t as visible, but is just as valid, is the emotional strain. Many sellers feel backed into a corner and resent agreeing to terms they would never have accepted earlier in the process.

How to prevent yourself from being gazundered

While there isn’t a guaranteed way to prevent gazundering, there are a few steps you can take to reduce the risk.

These include:

• Setting a realistic price from the beginning. Overpricing gives buyers room to justify a late reduction.
• Being honest about any known issues with the property before a survey is conducted.
• Choose your buyer carefully. A strong mortgage offer, proof of funds and a simple chain usually indicate commitment.
• Keep the transaction moving as quickly as possible to limit the time a buyer has to rethink or try their luck with a lower offer.
• Set expectations early. Make it clear that you expect the agreed price to stand unless genuine issues arise.

For further advice on how to avoid your buyer attempting to negotiate a lower offer, contact our residential property team today.