Has your buyer suddenly lowered their offer? We look at the art of gazundering and tell you how to avoid it…
We all know what gazumping is when a home seller accepts a better deal on their home after it has already been sold to someone else (but before the contracts have been exchanged). But it’s not just sellers who act in an unethical way.
“Gazundering” is the act of a buyer lowering their price at the last minute, right before they sign the contract.
Sellers often feel forced to take the new, cheaper offer because they know that saying no could put them back at square one and cause the whole chain to break.
Is Gazundering Legal?
Unfortunately, Gazundering is legal. Nothing can prevent a buyer from withdrawing their offer before contracts are exchanged.
Is it fair to Gazunder?
Most of the time, it is not. Buyers that ‘gazunder’ their seller usually do so because they know the seller is in a weaker position (since their property has been pulled off the market and they are in a chain themselves), so they take advantage and try to save themselves a few thousand dollars.
However, if the buyer discovers information about your property that affects – or will reduce – its value, it’s fair that the price will be questioned. When issues are raised in the survey, buyers may reduce their offer. Alternatively, if property prices have dropped significantly since the initial offer, a buyer may reduce their offer.
Furthermore, if your buyer is in a chain, the offer on their house may be reduced, leaving them with no choice but to cut the amount they can pay for yours.
How can you avoid Gazundering happening to you as a Seller?
There’s not much you can do if the buyer is only trying to save money (apart from rejecting the new offer), but there are things you can do to protect yourself from real buyers dropping their offers:
Pick a chain-free buyer
A good offer is a good offer, and you’re not going to start rejecting buyers because they’re in a chain. However, if you’re lucky to be flooded with prospective individuals, choose chain-free buyers. They are more likely to move fast, and there is less likelihood that they may incur additional expenditures or have affordability concerns late in the day that they will pass on to you.
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Set a fixed date for exchange Contracts
Get a date set for when you intend to exchange contracts as soon as you can. This is an excellent way to keep the persons involved focused on the date because it gives them all something to strive for and increases the pressure.
Make sure that your solicitor is working on your case diligently and stay in touch with them often. To make sure everything works out properly from the buyer’s side, your agent should maintain contact with the buyer’s solicitor.
Maintain communication with the buyer as well, if you can.
Agents and solicitors usually prefer that the buyer and seller do not communicate, but if you get to know them and have regular conversations with them, they are less likely to try something shady like gazundering.
Be reasonable with your asking price
A Buyer is considerably more likely to drop their offer if you set the price of your home significantly higher than it should be. If a potential buyer falls in love with your property, they can make you an offer right away and offer you the asking amount or perhaps more in an effort to close the deal. After surveys are completed and the buyer has had some time to reflect, they may choose to go lower. There is less chance of this occurring if you set reasonable pricing.
Hire an Experienced Real Estate Agent
When it comes to keeping things on track and completing that crucial sale, a skilled estate agent will have experience dealing with pushy buyers and will know how to handle them.
Try not to cover up anything
You’re setting yourself up for failure if you’re not entirely honest about any issues with the property or the neighbourhood. Any problems will be revealed by a survey, and most buyers will research the region well, so whatever you’re hiding will eventually be revealed. When that happens, the buyer will either back out, drop their offer during the survey, or, worst still, wait until the very last minute to decide before pulling out because they couldn’t accept the new information, which will leave you back where you started.
Plan your finances
Do the math. Determine the lowest offer you will take if you are in a chain and need to move even after an enticing offer has been accepted. In the event that the buyer lowers their offer, you will be more prepared because you will know exactly how low you are willing to go.
In conclusion, Gazundering refers to the practice in Real Estate where a buyer decides to lower their offer on a property after contracts have been exchanged but before the final sale price is settled. This unexpected manoeuvre can be a source of stress and frustration for both sellers and Estate Agents alike.
While Buyers may have valid reasons for attempting to gazunder, such as a change in circumstances or concerns about the property’s value, it can strain the relationship between all parties involved.
The moment of exchange of contracts is crucial, as it signifies a legally binding commitment.
Gazundering after this point, usually at the last minute, can disrupt the conveyancing process and jeopardise the sale.
Sellers who find themselves facing a lower offer might feel pressured to accept, especially if they fear losing the deal entirely.
To mitigate the risk of gazundering, it’s essential for sellers to build a transparent and open relationship with buyers, as well as ensuring that mortgage offers are in place before reaching the exchange of contracts. Ultimately, navigating the dynamics of gazundering requires a delicate balance between the interests of the buyer, the seller, and the estate agent to ensure a fair and successful property transaction.
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Visit our website to learn more about our services and how we can support you. If you’re ready to take the next step, give us a call at 0141 8818795 to speak directly with our knowledgeable professionals.
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