Gazundering is what every seller dreads. You’ve got a buyer in the bag for your property when, bam, they slash their offer at the eleventh hour.
Research from Open Property Group shows that a whopping 26% of sellers have been gazundered in the last year. In other words, the buyer has chipped the price after it’s been agreed.
The majority (68%) of gazundered sellers were subjected to it more than two weeks before they were due to exchange contracts. This is the point at which a sale becomes legally-binding. But nearly a third (32%) of them were gazundered in the fortnight leading up to that all-important date.
Some 78% of gazundered sellers accepted the lower price for their home, with 35% of them not wanting to go back to square one and find another buyer.
Other reasons sellers decided to press ahead with the reduced offer were:
they didn’t want to jeopardise the purchase of their next home (22%)
they didn’t want to go through the selling process again (14%)
they still thought the lower offer was fair (13%)
they had to move quickly (7%)
they wanted to sell to that particular buyer (4%)
they had already racked up costs associated with the sale (4).
But 22% of gazundered sellers rejected the lower offer, leading to a fifth (21%) of those sales collapsing.
Jason Harris-Cohen, CEO of Open Property Group, explains: 'Gazundering can be a very stressful occurrence for sellers and unfortunately, as there’s no legal requirement to proceed with a purchase until the exchange of contracts, there’s not a great deal you can do. It leaves many sellers with little choice but to accept the lower offer.'
Open Property Group’s research is based on a survey of 1,001 people who have sold their home in the last 12 months.
Why are sellers being gazundered?
The number one reason buyers lowered their offer was because of issues revealed in a property survey (35%). Meanwhile, 24% of gazundering buyers were simply 'chancing their arm'.
Other reasons buyers slashed the agreed price were:
their mortgage was adjusted because of rising rates (11%)
a down valuation occurred from the mortgage lender on the property (9%)
they couldn’t afford the original offer because of the cost of living crisis (4%)
Harris-Cohen says that gazundering is 'certainly more prevalent in cooler market conditions, such as those we’ve seen develop over the last year'.
Zoopla research shows that sellers accepted 5.5% off the asking price to agree a sale in the first place in the first half of November. That’s an average discount of £18,000, the largest gap for five years.
'These are the best conditions for home buyers for some years, with more homes to choose from and sellers more prepared to negotiate on price to agree a sale,' our Executive Director of Research, Richard Donnell, said at the time. 'There is a growing acceptance that what a home might have been worth a year ago is now largely academic given current market conditions.'
What can you do to avoid being gazundered?
You can’t stop buyers from gazundering. But there are steps you can take to help reduce the chances of it happening.
Set a realistic asking price: Use our tools to research your local housing market and get a feel for what a realistic asking price is.
Get a range of valuations for your home before you put it on the market. 'Today’s buyers are well-informed about the market and they will have an idea if you have overpriced your property, leaving you more vulnerable to gazundering later in their transaction timeline,' says Harris-Cohen.
Be transparent: Yes, that means being open about any issues with your property. You don't want your buyer to find problems further down the line and use them as a tool to reduce the agreed price. 'Survey issues are the most common motivation for gazundering and so there’s no point in attempting to hide a problem with your property as it will eventually come to light,' explains Harris-Cohen.
Hire an experienced selling agent: Get a good estate agent on your side to negotiate the sale effectively and help keep it on track. And outline your expectations with the agent and potential buyers at the outset. They should be in no doubt that you will not accept any price reductions.
Choose a good buyer: Focus on finding a ‘proceedable’ buyer as well as a good offer. 'The best course of action is to find a chain-free buyer if you can, as they are more willing to move quickly. They are also less likely to be caught out by additional costs further down the line, or to be subject to other affordability issues,' says Harris-Cohen. 'First-time buyers in particular are also less likely to potentially jeopardise their purchase as they are keen to get that first foot on the ladder.'
Establish a good channel of communication: Communication is king! Make sure the sale progresses quickly and that everyone is on the same page. 'When you do find a buyer, maintain a good channel of communication and be upfront and honest about your property,' says Harris-Cohen.
Put yourself in a strong position to say ‘no’: This could mean renting your next home so you don’t have the pressure of managing a sale and a purchase at the same time.