"It 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, leaving many sellers with little choice but to accept the lower offer"
- Jason Harris-Cohen - Open Property Group
Open Property Group has revealed that a quarter of sellers to have transacted in the last 12 months have been subject to gazundering.
What is gazundering?
Gazundering, also known within the industry as chipping, is when a buyer drops their offer having already agreed a sum with their seller, often at the last minute and in an attempt to secure a discount. The practice is more prevalent in cooler market conditions and is the opposite of gazumping when a buyer submits a higher offer at the last minute despite the seller having already accepted an offer from another buyer.
However, unlike gazumping, there can be a good reason for a buyer attempting to gazunder their seller. They may have found issues within the survey that weren’t apparent when they submitted their original offer, or they may have had their mortgage issue revised, which has become commonplace in recent times as interest rates have climbed.
They may have also had the property downvalued by their mortgage surveyor or a change in personal circumstances, but in many cases, they are simply trying their luck to get a better deal.
A quarter of home sellers being gazundered
A survey of home sellers to have sold in the last 12 months, commissioned by Open Property Group, found that a quarter (26%) had been gazundered.
For the majority (68%), this happened more than two weeks before they were due to exchange contracts, however, a third (32%) were gazundered within the two weeks leading up to this date.
78% of those who were gazundered decided to accept the lower offer.
When asked why, the predominant reasons given were that they didn’t want to waste more time finding another buyer (35%), they didn’t want to jeopardise their onward purchase (22%) and they didn’t want to go through the wider process of selling again (14%).
The main issue cited by gazundering buyers was issues found when conducting the survey (35%), however, 24% were simply chancing their arm, while a further 16% gave no explanation.
CEO of Open Property Group, Jason Harris-Cohen, commented: “Much like gazumping, gazundering is an unfortunate part of the property selling process that many sellers will be subject to at some point, although it’s certainly more prevalent in cooler market conditions, such as those we’ve seen develop over the last year.
"It 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, leaving many sellers with little choice but to accept the lower offer.
"The best course of action is to find a chain-free buyer if you can as they are more willing to move quickly and are less likely to be caught out by additional costs further down the line or to be subject to other affordability issues.
"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.
"When you do find a buyer, maintain a good channel of communication and be upfront and honest about your property. Survey issues are the most common motivation for gazundering so there’s no point in attempting to hide a problem with your property as it will eventually come to light.
"It also pays to be realistic on price. 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.
"Ultimately, you don’t have to accept being gazundered, but the protracted property selling process means that the majority of sellers would rather be out of pocket than return to square one having almost reached the finish line.”
