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“Gazundering is when a buyer lowers their offer on a property just before the sale, often causing stress for the seller. It’s legal in the UK and tends to happen in a buyer’s market”
Understanding Gazundering in the UK Property Market
Gazundering is a term in the property market that not everyone may be familiar with. While it’s far less common than its counterpart, gazumping, understanding gazundering can help provide a broader perspective of the dynamics in the real estate arena.
What is Gazundering?
Gazundering occurs when a prospective buyer lowers their offer on a property shortly before the contracts are exchanged, often using the pressure of a looming completion date to incentivise the seller to accept the lower price. Unlike gazumping, where the seller accepts a higher offer from another buyer after agreeing to a sale, gazundering puts the buyer in the driver’s seat, potentially leading to significant stress for the seller.
Why Does Gazundering Happen?
Gazundering tends to occur in a buyer’s market, where there are more properties for sale than there are interested buyers. In these circumstances, buyers have more power and can attempt to gazunder in the hope that the seller, keen to secure a sale, will accept the reduced offer.
Market Conditions
The likelihood of gazundering increases if the property has been on the market for an extended period or if the market conditions have changed since the offer was initially accepted.
Discovering Property Issues
Sometimes, gazundering occurs because the buyer has discovered an issue with the property that was not apparent when they made their original offer. For example, a survey may uncover structural problems, leading the buyer to lower their offer to reflect the cost of necessary repairs.
Gazundering: Ethical Implications
Opinions on gazundering are split. While some view it as a legitimate negotiating tactic that plays off market conditions, others see it as an unethical practice that exploits the vulnerability of the seller.
Legal Position
Although gazundering is seen as controversial, it’s crucial to note that it’s entirely legal in the UK. This is due to the property law principle that the sale is not legally binding until contracts have been exchanged. Until that point, either party can change their mind or alter the terms of the deal.
How to Gazunder Successfully
If you’re considering gazundering, it’s important to approach the situation tactfully to maintain a good relationship with the seller. Here’s how to navigate this process:
Be Honest and Clear
If you have valid reasons for gazundering, such as issues revealed in a property survey, be honest and clear with the seller. Show them any evidence you have to justify your reduced offer.
Negotiate Reasonably
When gazundering, ensure your reduced offer is reasonable and reflects the true value of the property. A drastic reduction without valid reason may lead to the seller pulling out of the sale.
Communicate Through Your Solicitor
It’s recommended to communicate your intention to gazunder through your solicitor. They will be able to advise you on how to proceed and will handle negotiations with the seller’s solicitor.
Consider the Potential Consequences
Before deciding to gazunder, remember that the seller is under no obligation to accept your lower offer. They could decide to put the property back on the market or accept a higher offer from another buyer. Consider this risk before making your decision.
Steps to Minimise the Risk of Being Gazundered
While it might not be possible to entirely eliminate the risk of being gazundered, there are steps sellers can take to minimise this risk:
Keep the Lines of Communication Open
Maintain open and honest communication with the buyer. If they’re aware of any issues from the outset, they’ll be less likely to reduce their offer later.
Agree to a Swift Exchange
Aim for a swift exchange of contracts once the offer has been accepted. The less time there is between the offer being accepted and contracts being exchanged, the smaller the window the buyer has to gazunder.
Keep the Property Attractive
Ensure the property remains attractive to other potential buyers until the sale is final. If the first sale falls through, you’ll be in a better position to secure another buyer quickly.
The Impact of Gazundering on the UK Housing Market
While not as prevalent as gazumping, gazundering does have an impact on the UK housing market. It contributes to the overall unpredictability and can lead to deals falling through, which impacts both individual sellers and the wider market.
Effect on Sellers
Gazundering can put sellers in a difficult position. They may have to accept a lower offer or risk the sale falling through and having to find another buyer.
Effect on Buyers
For buyers, gazundering can provide an opportunity to negotiate a better deal. However, it also carries risks. If the seller refuses to accept the lower offer, the buyer might lose the property.
Effect on the Market
On a broader scale, gazundering can contribute to market instability. Frequent instances can make sellers wary and contribute to a slow-moving property market.
In Conclusion
Gazundering is a lesser-known but impactful part of the UK housing market. While it presents an opportunity for buyers to negotiate a better deal, it can pose significant challenges for sellers. Whether you’re a buyer considering this strategy or a seller looking to guard against it, understanding the dynamics of gazundering can better equip you for your property transaction. As always, engaging a reputable solicitor and keeping the lines of communication open can go a long way towards ensuring a successful property sale or purchase.