Whether you’ve bought a house before or not, most people have heard the term ‘gazumping’ in one situation or another, but what is gazundering?
Gazundering is when a buyer unexpectedly lowers their offer just before contracts are due to be exchanged.
This lesser-known but equally as frustrating term is highly criticised in the property world, however, you’ll be happy to hear this crafty tactic of trying to secure a cheaper price last-minute can potentially be avoided. Here’s how;
WHAT IS IT?
Picture the scene.
You’ve accepted a buyer’s offer, determined the terms of sale and you’re gearing up to exchange, then, just before the sale becomes legally binding, the buyer lowers their previously agreed offer.
This practice is known as gazundering and it is sadly more common than you may think. Desperate not to lose the sale completely, sellers often feel forced to accept the lower price. In some cases, it can be significantly under market value.
DIFFERENCE BETWEEN GAZUMPING AND GAZUNDERING
You may notice this is similar to the equally controversial gazumping, where sellers accept a higher offer last-minute.
Essentially, gazundering puts the shoe on the other foot, with the home buyer trying the underhand tactic by reducing their offer, leaving the seller between a rock and a hard place.
Gazumping tactics and gazundering tactics are frowned upon, however, this doesn’t stop them from happening. It’s always good to be aware of the terms and what you can do when selling your home.
IS IT LEGAL?
Gazundering is legal; there’s nothing to stop a buyer changing their offer before contracts are exchanged.
In Scotland, both gazumping and gazundering are much less common, as buyers and sellers are entered into a legal agreement as soon as an offer is accepted.
WHY DOES IT HAPPEN?
Gazundering after Survey, one of the most common instances.
If a buyer lowered their offer after a property survey, it could mean it has uncovered issues regarding the property’s condition and made the buyer doubt the sale or change their mind on the property.
The cost of fixing these issues is carefully considered and the house price offer is adjusted accordingly to cover these repairs.
Issues in the Chain
Property chains can cause a number of issues for sellers and are one of the main reasons why some sales fall through altogether.
If a buyer is relying on their house to be sold in order to buy yours, they may have no choice but to lower their offer last-minute, they might have had to reduce themselves, or they simply can’t find a buyer willing to pay more.
Property Value
A decrease in property value due to uncertainty in the housing market for example, might cause a buyer to challenge the sale price and reduce their initial offer.
Weak Areas
Sometimes, unreasonable home buyers simply try and exploit weakness. They may lower their offer last-minute if they know the seller has been struggling to sell, or if the property has been on the market for a long time.
HOW CAN YOU PREVENT IT?
Know your Property’s Value
Having a good idea of how much your home is worth will put you in a stronger position.
Some sellers feel forced to take a lower offer in the fear they won’t get another one, however, if you’re confident the price you’ve set is reasonable, it may help.
Make sure you don’t over-value your property. Look at how much similar properties in the area are selling for to provide you with a good base to work from.
Pick the Right Estate Agent
Choosing the right estate agent to seal the deal is key.
They will be invaluable in fact, providing sound advice having dealt with this numerous times. There may need to be a negotiation but not just for the sake of it!
Avoid Delays
The quicker the process moves along, the better. Delays can give a buyer more opportunity to negotiate, this doesn’t mean rushing into an ill-advised sale, rather, it’s important to make sure things don’t drag out unnecessarily.
Avoid your property sitting on the market, buyers can see how long it has been up for sale – and potentially use this to their advantage.
DESPITE AVOIDANCE TACTICS, THE WORST CAN STILL HAPPEN, SO WHAT NEXT?
If you feel the offer is unfair and significantly lower than your property’s value, it’s possible the buyer is just trying their luck and would still pay the higher price.
Consider their position carefully, chances are they won’t want to lose the money they’ve already spent on the sale.
It could be a risk, but standing strong and refusing the lower offer might just pay off.
Renegotiate
This could be the right thing in the case of an unfavourable survey or issues in the chain for instance and there are certainly times where negotiation is the way forward, however, not just for the sake of it!
Use the right estate agent, it could save you £££££££!
If you would like to discuss moving home please contact me
01209 711118 / 07968641892 or email me jason@homesofcornwall.com