Understanding Gazundering & How To Avoid It

In the world of property transactions, few tactics are as controversial as gazundering. It’s a term that can send shivers down the spine of sellers and elicit a range of emotions from frustration to outright anger. 

This article aims to shed light on what gazundering is, its implications, and how sellers can protect themselves from this tactic.

What is Gazundering?

Gazundering is the practice where a buyer, having already agreed on a price for a property, reduces their offer just before the exchange of contracts. This is in contrast to ‘gazumping‘, where a seller accepts a higher offer from a new buyer after having already agreed to sell to another buyer at a lower price.

The primary reason buyers resort to gazundering is to take advantage of a seller’s vulnerable position. They believe that the seller, having already invested time and emotion into the sale, will be more likely to accept a lower offer rather than risk the sale falling through.

Is Gazundering Legal in the UK?

In the UK, gazundering is, in fact, legal. The property market operates on the principle that until contracts are exchanged, either party is free to change their mind or alter the terms of the agreement, including the price. This means that while gazundering might be viewed as unethical or unfair by many, it is not against the law.

Implications of Gazundering

• Financial Strain: Sellers might have to accept a price lower than what they had budgeted for, potentially affecting their next property purchase or other financial commitments.
• Emotional Stress: The last-minute nature of gazundering can be emotionally taxing, leading to feelings of betrayal and mistrust.
• Delay in Property Chain: If the seller refuses the reduced offer, it can lead to delays or even collapse of the property chain, affecting multiple parties.

How to Prevent Gazundering: Practical Advice

• Robust Property Valuation: Ensure your property is priced correctly from the outset. An overpriced property can make it more susceptible to gazundering as buyers might feel it’s justified to reduce their offer.
• Quick Sale Process: The longer the sale process, the more opportunity there is for market fluctuations and buyer’s remorse. Aim to expedite the sale by being organised with your paperwork and responsive to queries.
• Build a Relationship: Establishing a good rapport with the buyer can make them less likely to gazunder. Regular communication can also help you gauge their commitment.
• Consider a ‘Lock-In’ Agreement: Some sellers opt for an agreement where the buyer pays a non-refundable deposit after their offer is accepted. This can deter gazundering as the buyer has a financial stake in the agreed price.
• Stay Informed: Keep abreast of the local property market. If prices are generally falling, be prepared for potential attempts at gazundering.
• Be Prepared to Walk Away: While it’s a tough decision, sometimes it’s better to reject a reduced offer and re-list the property. This can be especially true if you believe the property can fetch the original agreed price or more.
• Seek Legal Advice Early: Engage with a conveyancing solicitor early in the process. They can guide you on the best practices and help you navigate any attempts at gazundering. Read our article on what conveyancing solicitors do for the seller.

Conclusion

Gazundering, while a legitimate tactic from a buyer’s perspective, can be a distressing experience for sellers. Being aware of the practice, understanding its implications, and taking proactive measures can help sellers navigate this tricky terrain. Remember, every property transaction is unique, and what works for one might not work for another. Always seek personalised advice tailored to your situation.