There has been a significant increase in gazundering, with vendors pressured to accept less money, new research shows.
With buyer demand low compared with recent years, owing in part to higher mortgage borrowing rates, more sellers experienced gazundering last year, with more purchasers reducing their offers at the late stage of negotiations to try and pressure the seller into accepting less money, and that trend appears to be continuing into 2024.
A new 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, with a third – 22% – reporting price chipping within two weeks of the exchange of contracts.
The study revealed that 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.
Jason Harris-Cohen, CEO of Open Property Group, said: “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 data that would be truly stunning if it were compiled would be the number doing this at exchange.
Then the data for all the instances showing how many were either simultaneous or a mere 1-3 days.
I’d be willing to bet that the four in ten above that have no answer or admitting chancing it would be in that data set.
Gazundering is a psychological game. Enabled by a stupid lack of certainty and the enablement of transactions being ‘last minute’.
We need now, as we always have done a mandated fixed period in-between exchange and completion. Ideally of two weeks.
The manner with with the process is being implemented isn’t suiting the public.
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Two words… “Reservation Agreement”
Of course, if unknown essential repairs are discovered it’s different, but a buyer chancing their arm would be stopped by a Reservation Agreement.
Most countries worldwide use them on all transactions – if your agency doesn’t you are harming your clients.
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How much of that ‘chipping’ was the result of surveys uncovering issues?
I did it when I recently bought an 1851 house because the survey threw up the likelihood of damp. I produced an estimate, and my seller was quite happy to drop a suitable sum. Equally, when I sold, my buyer asked for a reduction because the windows needed replacing. I had always intended to do it, but decided to grab the very good offer. We agreed on a sum, which was way below the cost of new windows. We were all happy.
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Surely your buyer saw the old windows when they viewed? Didn’t the asking price take into account the old windows that needed replacing?
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The guide price was higher than I expected, and I had 2 offers above guide, cash buyers, within a 2 days. The house was what my buyer wanted after renting and searching for 2.5 years. His survey identified the windows [original 20s casements] but they were not a reason to pull out. The reduction was less than half the cost of new windows. It was a fair gesture on both our parts.
The point I’m making is reductions are not always about the buyer ‘winning’.
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I got gazundered this week, 3 months into a sale. I provided my own survey in the beginning, showing our buyers the condition I had bought it in, what I had rectified and what still remained an issue. (It should be mandatory for the SELLER to provide at least a level 2 building survey and include this in the agent’s sale pack in my opinion). That way once a sale price is agreed it is AGREED and signed by all in the memorandum of sale. Our buyers gazundered anyway because we initially refused their lower offer, and clearly they thought I was a pushover that would back down at the last stage. They pulled out after several attempts to renegotiate, (probably had banked on it). Wasting everyone’s time and making themselves look like idiots. Glad I kept my integrity. If you show your belly you’re just adding to the problem! More should be done to make clear what you’re buying from day 1. The price you offer is the price you pay. I despise the current system, its brings out the greed and entitlement of humans and makes my blood boil.
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How close to exchange did you think you were?
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A week at most
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Over 1000 agents now use Gazeal’s Reservation Agreements – this would have stopped your buyer Gazundering – I would never agree to sell without one.
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Nah, still doesn’t prevent the issue. My buyers spent thousands on fees and a survey of their own, but still backed out and lost that money. What’s to say people won’t disregard a reservation agreement in the same way.
If the seller did the survey, and buyer paid a large deposit, knowing of any potential issues at the property, then it might prevent some gazundering. But lets face it, if someone changes their mind there’s not much anyone can do about it.
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