Most of you will have heard about gazumping, but how many of you know what gazundering is? Given the nature of the name, you may not be surprised to find out that it is a kind of opposite of gazumping. So, let’s dig down and discover what gazundering is and how you can try and avoid it.
So, what exactly is Gazundering and when can it happen?
Gazundering is the term to describe when a property buyer retracts their original accepted offer and then puts in a lower offer. The term is quite broad ranging and whilst sometimes this is part of a genuine renegotiation, it is sometimes used as a tactic to prey on desperate people and is done just before exchange of contracts.
If Gazumping is legal, I guess this is too?
Correct, this is completely legal but can be done immorally. Before we get to the immoral part, let’s cover when gazundering is simply just a renegotiation due to new evidence coming to light.
A Survey Finds a Problem
This can be the most common reason for someone trying to retract their original offer in exchange for a lower offer. Technically this is gazundering, however, we feel that this may be justified on the buyers’ part and not done with ill intent to the seller.
For example, if the survey discovers a defect that isn’t reasonably obvious that will cost a lot of money to remediate, it is understandable that they would try and negotiate to reflect that unexpected cost. Of course, if you are buying a property that clearly needs work, it is unjustified to use the survey to try and renegotiate on something that was obvious when you made the original offer as that would have been reflected in the price.
A Kink In The Chain
Another reason why people may try and renegotiate is if there is a problem in the chain. We have been involved in circumstances before when another party in the chain has lost their original buyer and whilst a new buyer has been found, the second party has not offered as much as the first buyer.
This then puts them in a tricky position and whilst some will accept it and move on, others will try and renegotiate with their onward purchase which can then have a knock on effect up the chain.
If the chain is advanced it preys on the desperation of the other parties in the chain and whilst it may not be with malicious intent, should you reduce your agreed sale price because someone else in the chain has a problem? We cannot answer that directly as there may be a whole host of circumstances to consider. What we can advise is that if you do find yourself in this position, speak it through with your Agent in depth as they should know more about the chain and have a bigger picture.
Right, so what about the immoral buyers out there?
There are buyers out there, who for no justified reason, retract their offer at the very last minute (just before exchange of contracts) and put in a lower offer. This is done at the last minute because they are preying on your desperation and, especially if you are in a chain, will know that you can’t afford to allow the whole chain to collapse.
There is absolutely no excuse for this kind of tactic, and we are pleased to say that we haven’t ever had the unpleasant experience of this in our sales. It is quite rare for a regular member of the public to use this tactic, however, there are companies out there that use this tactic with regularity, and those are the companies that promise to buy your house for cash or offer quick solutions.
We should point out that this does not happen all the time, some of those companies may be genuine and we can’t tar them all with the same brush. That being said, we have personally known of that happening (a drop of £20,000 in an offer for no justified reason on a bungalow worth £120,000, which is a huge proportional drop) and we have also seen another local agent who has had the same experience and we would think most agents have had some similar incidents.
How do I protect myself against that behaviour?
We understand that some people need a quick sale solution and that it might seem like an offer too good to be true. We always suggest getting advice from an Estate Agent on your property before going to one of those ‘we buy homes’ companies, after all, it is always worth getting advice from multiple sources and most agents will be able to sell your home quickly if the price is right.
If you need a quick sale and would like more advice, please do not hesitate to contact us.
James, Meteor Homes