What is Gazundering and How to Stop it Happening
Gazundering is when a buyer lowers their offer just before contracts are exchanged. Conscious of having to begin the process all over again if they reject the offer, sellers often feel pressured into accepting the lower offer.
As both buyer and seller are almost at the end of the process, neither want to pull out as this would mean the entire property chain falling apart. While sometimes there might be a genuine reason for gazundering, most of the time it's frowned upon.
With more and more sellers worrying about their buyer reducing their offer at the last minute, it’s important to know the vital steps to take to stop gazundering from happening, as well as what to do if your buyer does try to lower their offer at the last minute.
Compare My Move work with property experts to bring you the most informative articles on everything you need to know about the selling a house process. In this article, we take a look at what gazundering is and how to avoid it.
Is Gazundering Illegal?
Gazundering is legal in Wales, England and Northern Ireland but illegal in Scotland. In Scotland, once an offer has been accepted, the sale is legally binding and the buyer’s deposit is forfeited if the buyer backs out.
In Wales, England and Northern Ireland, a property sale isn’t legally binding until contracts have been exchanged. This means it’s not illegal for a buyer to change their offer at the last minute, before for a buyer to change their offer at the last minute, before exchanging contracts.
Although gazundering isn’t actually illegal, it isn’t an ideal situation for the seller to be in. As neither the seller nor buyer wants to pull out of the sale so late in the process, when a buyer gazunders a seller, it puts pressure on the seller to accept the lower offer.
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Can Gazundering Ever Be Justified?
Gazundering is often unfair and is done because the buyer knows the seller is in a weak position. However, if the buyer learns information at a later stage about the property that could devalue it, then this type of “gazundering” might be justified.
Typically, the main reason for gazundering is to take advantage of the seller. As the sale is almost complete, the seller wouldn’t want to start the whole process again. People who gazunder, ultimately try to buy the house for a cheaper price knowing the seller doesn’t really have a choice, especially if they wanted a quick sale.
What are the Reasons for Gazundering?
There are some genuine reasons a buyer might try and reduce their offer though. Below we’ve listed some of the scenarios where a buyer will gazunder.
1. Having a property survey later on
If the buyer delays their property survey, it might flag issues at a later date so naturally, the buyer will try to renegotiate the offer. It’s important that your estate agent and conveyancing solicitor encourages your buyer to have their property survey early on in the process.
2. Learning of damaging information
Similar to the property survey, the buyer might learn at the last minute of damaging information that could affect the property’s value down the line and therefore try to reduce their original offer. For example, there might be a motorway being built at the end of the garden.
3. Disruptions in the chain
If your buyer is also selling their house, this opens your sale up to possible gazundering. If your seller has been gazundered, they won’t be selling their house for as much as they would have liked, meaning they can no longer afford yours.
4. Market crashing
If property prices are falling, the property market could crash or dip just before you exchange contracts and affect the property’s value, leading the buyer to reduce their offer.
5. Changes in tax regulations
The pandemic lead to the government introducing a stamp duty holiday from July 2020 to June 2021, in order to kickstart the property market. Many buyers will have been aiming to complete their purchase by 30 June 2021 to benefit from savings on this tax. Those buyers that didn’t complete on time may want to renegotiate the price of a property they are buying as they will now have to pay more stamp duty.
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How Do I Stop Gazundering?
There are many steps to take to avoid being gazundered. Below we’ll take a detailed look at how to deal with gazundering.
1. Work with a licensed conveyancing solicitor
Choosing the right conveyancer will really help to make the selling process less stressful. You should only ever hire a licensed conveyancer or conveyancing solicitor who is regulated by either the SRA, CLC, LSS, LSNI or CILEx.
Your solicitor will be able to offer their expert opinion if your buyer tries to gazunder you and help to avoid the situation. When you compare conveyancers with Compare My Move, we will put you in touch with up to 5 fully regulated and vetted conveyancers to compare quotes.
2. Work with a trustworthy estate agent
By choosing your estate agent carefully, you will help to minimise the risk of being gazundered. Any estate agents you are considering should have the necessary accreditations and be a member of The Property Ombudsman, Property Redress Scheme, the Association of Residential Letting Agents and the National Association of Estate Agents (NAEA).
Your estate agent should help to avoid the buyer gazundering you and do all they can to ensure the sale goes through. They have the experience of dealing with all types of buyers so will know how to control the situation.
3. Choose the right buyer
Before you accept an offer on your house, find out if the buyer has everything in place ready for the sale to go ahead. They should have a mortgage in principle in place which will prove to you that they can actually afford the price of your house and therefore less likely to try to gazunder you.
4. Avoid a chain sale
In general, it’s best to choose a buyer who isn’t part of a property chain as you are more likely to have a quick house sale. By avoiding a chain sale, your buyer is less likely to reduce the offer last minute as your transaction does not depend on theirs running smoothly.
A chain-free buyer will also not want to delay the conveyancing process. Most of the time, chain free buyers are first-time buyers and have the best intentions with buying your house.
5. Make sure your house is valued correctly
If your house is priced higher than it’s worth, then this raises your risk of being gazundered. By getting a RICS registered valuer to carry out a property valuation survey in addition to the estate agent’s valuation, you will have an accurate market value of your property to prove to the buyer if they do try to gazunder you.
6. Ensure your buyer has their property survey early
Typically the buyer will have their property survey carried out on your property during the early stages of the conveyancing process after the offer has been accepted. If they are putting off the property survey, talk to your estate agent and solicitor to help encourage the buyer to carry out their survey as soon as possible.
It’s common for buyers to negotiate the offer after having a survey, so if this is done early on in the process then this lowers the risk of them trying to get the offer even lower at the last minute.
7. Keep the process moving
If you can keep the conveyancing process moving then this will also minimise the chance of being gazundered. You should ensure you have everything you need for the process to keep moving. Make sure you have all the documents you need for the sale to avoid any delays.
You’ll need things like FENSA certificates for doors and windows and certificates to show any building work or renovations carried out.
8. Set a date for exchanging contracts
The sooner you set a date for exchanging contracts with the buyer, the quicker you can complete the sale, hopefully avoiding the risk of being gazundered. Don’t be afraid to chase this up with your solicitor so they can then chase up the buyer’s solicitor.
What’s The Difference Between Gazumping and Gazundering?
Gazumping is when a seller accepts a better offer on their house after already accepting one. Although gazumping isn’t illegal, it is frowned upon as the original buyer is almost at the point of exchanging contracts and has already paid for services such as conveyancing and surveying.
Gazundering is when the buyer reduces their offer just before exchanging contracts, putting the seller in an awkward position.
While both gazumping and gazundering are legal, both practices are deemed ethically wrong.
Gazundering after Survey
The most common time a buyer will lower their offer is after a survey as it might have revealed damage or repair work. Buyers will try and renegotiate their offer to cover any costs of repair work. This is often only fair and buyers and sellers can usually come to a deal.