Whether you’re buying or selling a house, chances are you’ve heard of the term ‘gazumping’ at some stage. But have you heard of gazundering?
Gazundering is something that can negatively impact you when you’re selling a house. In this blog we’ll walk through everything that you need to know about gazundering, from what it is, to preventing it from happening.
Gazundering takes place when a buyer reduces their offer at the last minute. Usually just before contracts are exchanged and the sale of the property is legally binding. So much has been invested into the property sale at this point, selling a property is costly, and can take a long time.
You can imagine the frustration that vendors feel when the offer is reduced at the last minute. At this point the seller really has two options, either accept the reduced offer and continue with the purchase, or refuse it and potentially go back to square one in the selling process. Many vendors understandably feel pressured into accepting the offer once they’ve got to this point.
Gazumping is where a property seller accepts an offer or bid from a second buyer that is more attractive (usually in terms of price) than the offer that they initially accepted. This primarily affects the buyer of the property. It leaves them in a position where they have to either increase their offer.
Gazundering is the opposite of gazumping in the sense that the buyer is the one calling the shots. The property buyer reduces the offer at the last minute and then leaves the property seller in the position where they can go and try and find other offers for the property, or they accept the reduced offer.
If you live in England or Wales then (unfortunately if you’re a property seller) gazundering is completely legal. No property sale is legally binding until the moment that contracts are exchanged between the buyer and seller.
Gazundering is far less likely to happen if you live in Scotland. In Scotland a sale becomes legally binding once an offer has been accepted. So if the buyer backs out by reducing their offer then they lose their deposit. It is possible to back out of a sale in Scotland if serious issues become clear after the contract has been entered into. But Home Reports are conducted on Scottish properties before they’re listed, so the likelihood of this happening is low.
Usually gazundering happens because the buyer has made a higher offer in order to get the property taken off the market and secure it, all the while having the intention of reducing the price or following on from a survey which brings up issues in the home which may affect its value.
Sometimes gazundering is unavoidable. However, there are a number of things you can do to help you avoid gazundering when selling your house.
Know your property’s value and price it realistically
If you know your property’s value (i.e. you have a good understanding of its selling points and comparables in the area) and you feel it is a realistic price.
If you know that there are issues with your property that are likely to be uncovered in property searches or in the survey, then it’s better to be honest and upfront about them when marketing your house. Any offers that you get are going to be a more accurate reflection of the property’s value and therefore your chances of getting gazumped are much lower. The negative information is going to come to light sooner or later. It’s better to get it out of the way at the beginning rather than risk disappointment further down the line once you’ve started to make your onward plans.
Choose a good estate agent
A good estate agent will help you pick the right buyer for your property. They’ll assess the buyer’s position, funding, and should have experience in spotting buyers that are opportunists and therefore help you avoid gazundering. It’s worth investing time in picking the right agent. They’ll act for you throughout the entire sale and typically tie you into an agreement, so you don’t want to end up with an agent who isn’t acting in your best interests. A good place to look for the right agent is by using comparison sites like getagent, asking family and friends, and looking around your local area to see which agents have the biggest presence.
Be quick and keep communication flowing
Gazundering is often used as a tactic by buyers to encourage sellers who are dragging their feet to pull their finger out and complete the sale quickly. Make sure you’re providing your conveyancing solicitor with all requested information in a timely and accurate manner. This means your sale will progress quicker and you’re less likely to get hit with a price reduction. Staying up to date with your conveyancer is critical if you want to sell your house fast. Agents and solicitors tend to prefer handling all communication between the buyer and seller. However, there’s nothing to say that you can’t communicate with them directly. If you’re able to build a relationship with your buyer then there’s a lower chance that they’ll try a sneaky price reduction at the last minute and you can avoid gazundering.
Use negotiation tactics
If there are issues surfaced during the conveyancing process that warrant a price reduction, and there’s no way to avoid being gazundered, then you could try using negotiation tactics to minimise the amount of money you lose. Highlight the positives of your property, offer to meet in the middle between the agreed price and the new offer, and potentially include fixtures and fittings in the sale that weren’t in the initial sale agreement.
Sell your house for cash
Cash house buyers tend to move quicker than those who are using a mortgage. This means that you’re much less likely to suffer a price reduction based on a survey or search results. Property chains are usually not an issue for cash buyers either. If you pick a cash buyer you’re generally going to end up with a faster and more secure house sale and avoid being gazundered.
If you are thinking of selling your home and would like more information on what your home could be worth in the current marketplace, please contact us on 0121 430 4448 or email us on email@example.com
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