The housing slump in the UK has led to a significant increase in gazundering – the practice of buyers cutting the offer price for a property at the last minute.
Many agents are reporting that gazundering is occurring in more than half of all house sales and this is causing a high number of transactions to fall through at the final stages. Typically, buyers are asking for a 5% deduction on the price originally agreed but many sellers are now accepting larger price reductions – given the stagnant nature of the housing market, few are willing to walk away from a transaction. Often, however, a seller will look to pass the reduction up the chain, forcing prices down further.
While gazundering is seen as a questionable practice, it is entirely legal. Estate agents recommend the following tips to help avoid gazundering:
Set a realistic price
At the start of the year, contradictory headlines about house prices meant that sellers did not immediately recognise which way prices were going – as a result, many set asking prices above buyer’s expectations. Websites such as Rightmove will help you to ensure that your price is not out of line with the rest of the market.
Make sure that the buyer has all the information required
Last minute shocks, for example, relating to building defects, are one of the most common causes of price reductions. This can be avoided if the buyer’s survey has been carried out by a reputable surveyor and is comprehensive.
Don’t make it easy for the buyer
When considering a buyer’s initial offer, don’t accept it straightaway. That may make the buyer think that the negotiation was easy and that they can knock more off the price later on.
Set your own terms
If you accept a reduced offer, make sure that the buyer has instructed solicitors. You could make it a condition that the buyer has a survey carried out within a certain period of time – most surveyors require payment up front and this will be a good indication of the buyer’s commitment.
Exchange contracts as soon as possible
A typical sale takes between 8 and 10 weeks to exchange from the date an offer is accepted. The longer this period, the more chance there is that a buyer will feel uncertain about their offer.