Buying or selling a home can be stressful enough without last-minute surprises. One of the most unsettling tactics in the UK property market is something called gazundering – and if you're not prepared, it could cost you.
What is gazundering?
Gazundering occurs when a buyer lowers their offer on a property at the last minute, typically just before contracts are exchanged. By this stage, the seller has often taken their home off the market, arranged their own onward purchase, and spent money on legal and surveying costs. In short, they’re committed. The buyer's hope? That the seller feels pressured enough to accept the lower price rather than risk losing the sale altogether.
Is gazundering legal?
Yes, gazundering is legal in England and Wales. Until contracts are formally exchanged, either party can back out of the deal without legal penalty. This flexibility is what allows practices like gazundering (and its cousin, gazumping, where a seller accepts a higher offer late in the process) to occur.
Why does gazundering happen?
Gazundering can be driven by several factors:
- Market conditions: In a buyer’s market, where there are more properties than buyers, gazundering becomes more common.
- Down-valuations: If the buyer’s mortgage lender values the property lower than the agreed price, the buyer might reduce their offer to match.
- Chain pressure: If there's a chain involved, a buyer might use timing pressure to their advantage.
- Genuine financial issues: Occasionally, a buyer’s circumstances change, and they can no longer afford the original offer.
Whatever the reason, gazundering puts sellers in a difficult position, especially when they’re financially or emotionally invested in the move.
How to protect yourself from gazundering
While you can't eliminate the risk entirely, there are practical steps sellers can take to reduce their chances of being gazundered:
1. Choose your buyer carefully
Don’t just go for the highest offer – consider the buyer’s position. Are they chain-free? Have they secured a mortgage in principle? A reliable buyer is worth more than an uncertain one.
2. Move quickly through the process
The less time between accepting an offer and exchanging contracts, the less opportunity the buyer has to gazunder. Stay in close contact with your solicitor and estate agent to keep things moving.
3. Be transparent about the property
Surprises (like hidden defects or paperwork issues) late in the process can give buyers a reason to lower their offer. Providing all relevant information upfront, such as property information forms, warranties, and recent improvements, helps to build trust and prevents excuses.
4. Negotiate a lock-out agreement
Although rare, a lock-out (or exclusivity) agreement can give you legal protection for a set period. The buyer agrees not to negotiate with other sellers, and you agree not to consider other offers – helping both parties proceed in good faith.
5. Have a back-up plan
If you sense your buyer is playing games, it can help to have other interested parties lined up. This gives you more confidence to walk away if a late reduction is unacceptable.
What if you’re gazundered?
If a buyer gazunders you, try to stay calm. Ask your estate agent to assess whether it’s a bluff or based on a genuine issue (like a down-valuation). You might be able to negotiate a compromise – for example, splitting the difference.
Ultimately, it comes down to whether you’re willing to accept the new offer or start over. While walking away can be frustrating, accepting a lowball offer under pressure might cost you more in the long run.
Final thoughts
Gazundering is an unfortunate part of the property landscape in England and Wales, but awareness is your best defence. By choosing your buyer wisely, moving swiftly, and staying informed, you can reduce the risk and stay in control of your sale. If you're in the process of selling, speak to your estate agent or solicitor about strategies to minimise risk and protect your position.
