What is gazundering?

Gazundering is a term used in the property industry. It refers to the buyer reducing their offer after a sale has been agreed.

How common is gazundering in 2024?

Quick Move Now figures suggest that 47% of property sales currently experience gazundering. 31.25% of sales that experience gazundering will fall through. The remaining 68.75% progress to completion after a successful renegotiation.

What’s the difference between gazumping and gazundering?

Gazundering is the term used when a buyer tried to renegotiate a lower purchase price after a sale has been agreed. Gazundering often happens late in the sale process, putting sellers under immense pressure to accept the reduced offer or risk losing their buyer.

Gazumping is almost the opposite. It is a term used when another buyer makes a higher offer on a property after a sale has been agreed.

Why do buyers gazunder?

Buyers gazunder for a variety of reasons.

Some less scrupulous buyers will wait until the last minute to drop their offer, simply to try to get the property at a cheaper price with no good reason. This is obviously deeply upsetting for the seller and puts them in an incredibly difficult position.

Other buyers may have a genuine and legitimate reason for reducing their offer.

The key for buyers is to be able to spot the difference. Clues to this will often lie in when they choose to drop their offer.

Legitimate reasons a buyer might reduce their offer

The property survey raises areas of concern and suggests the property is not worth the agreed sale price.
The property survey has identified works required that the buyer was previously unaware of. In this situation, they may need to reduce their offer in order to cover the cost of the works.
The buyer’s mortgage lender has down-valued the property so they can no longer borrow enough to pay the agreed price.
If the sale has been delayed, their mortgage offer may run out. If they have to reapply for the mortgage, there is no guarantee that they’ll be able to borrow the same amount. Several factors impact the level of mortgage your lender will be happy for you to borrow. Simply external changes such as interest rate rises can impact your affordability and borrowing ability.
Lack of awareness around different costs associated in moving house. Buying a house is expensive and it can be easy to underestimate how much each element will cost. A simple miscalculation of their stamp duty liability, for example, could see your buyer facing a shortfall. If this were to happen, they may be forced to reduce their offer or pull out of the sale.
Problems further down the chain. If someone with a connected sale experiences gazundering, it may well work its way up the chain. Unless the impacted buyer has another source of funds, each buyer is likely to need to reduce their offer in order to keep the chain intact.
Change in buyer circumstances. The average property sale takes around 5-7 months. A lot can happen in that time. If your buyer has a change in personal circumstances, they may need to reduce their offer.

Gazundering tactics to be aware of

Some buyers will use unscrupulous tactics to try to get you to accept a lower price for your property.

Waiting until the last minute

Waiting until the last minute before exchange of contracts puts the seller under more pressure to accept the reduced offer.

Lowering their offer with no evidence

If a buyer has a legitimate reason to reduce their offer, they should be able to provide evidence to support their reasoning. This might be a property survey or examples of comparable cheaper properties on the market. If they can’t provide anything to support their reduced offer, you should think carefully before renegotiating.

Hedging their bets with multiple offers

We have, unfortunately, heard tales of rogue buyers making offers on multiple properties but only ever having the intention of buying one of them. They will lower their offer on each property at the last minute and then proceed with the one that accepts the lowest offer.

It’s really important that you hire a reputable and switched-on estate agent who will vet your buyer carefully before you accept an offer.

Buyer trying to gazunder – what can I do?

If your buyer is trying to reduce their offer, there are several steps you can take to protect yourself.

1. Ask why

If your buyer wants you to accept a lower purchase price, they should have a good reason. Ask them to explain their reasoning and provide any supporting documentation that would justify the lower price, eg. a property survey quoting the cost of unexpected works.

2. Try to reach a compromise

Failed property sales are upsetting and unsettling for everyone involved. If you’re able to reach a mutually acceptable compromise and keep the sale on track, it’s likely to be the preferrable option.

3. Weigh up your options

If you don’t feel able to accept the lower offer, consider your options. How urgent is your move? What routes are there available that will meet your time and financial needs?

Is gazundering legal?

A property sale is not legally binding in England or Wales until contracts have been exchanged. This means, unfortunately, gazundering before exchange of contracts is completely legal.

Gazundering is illegal in Scotland. This is because they have a different system. In Scotland, the sale becomes legally binding as soon as your offer has been accepted and the missives have been concluded (this means the terms of the sale have been formally agreed).

What can be done to stop gazundering in the UK?

Unfortunately, there is currently little that can be done to stop gazundering in England and Wales.

Unless we adopt a property transaction process like the Scottish system, it will continue to be difficult to impose any real consequences for buyers who reduce their offer at the last minute.

How to respond to gazundering – what are my options?

If you’re considering how to deal with gazundering, the right response will depend on your circumstances.

Your options will be:

1. Reject the lower offer and put your property back on the market

You should think carefully before making this decision. It can be tempting to reject the offer because you’re upset by the buyer’s actions, but this is a time to use your head rather than your heart. Of course, rejecting the offer may be your only option if you can’t afford to accept the lower purchase price.

2. Accept the lower offer in order to complete the sale

This might feel bittersweet, but your ultimate goal is to get your property sold so that you can move on with your life. If you can afford to accept the lower offer, and their revised figure is based on solid evidence, eg. a property survey with estimated costs of a mortgage down-valuation, you’re probably wise to accept the offer and draw a line under it.

3. Reject the lower offer but try to renegotiate a new price that both parties are happy with

Reaching your buyer halfway may well appease them enough to keep the sale on track. If you can reach a compromise, you have the best chance of both parties going away satisfied.

How to gazunder

If you have a legitimate reason for reducing your offer on a property, you’ll want to handle the situation carefully.

Make sure you have robust evidence to support your reduced offer if you want to maximise your chances of having your lower offer accepted.

Appropriate evidence might be a property survey, a mortgage down-valuation or information about comparable properties that are on the market at a lower price.

You’ll need to think about your desired outcome and what you’ll do if your lower offer is rejected. If the seller is unable to accept the lower offer, you’ll risk losing the property altogether.

When are you most at risk of being gazundered?

There are several points in a property sale when you will be more vulnerable to gazundering.

Gazundering after survey

Gazundering is most common after a property survey.

The way we do things in England and Wales means buyers have very little in-depth information about a property before they put in an offer. It is only at the point of survey that they will get any information about the condition of the property and any areas of potential concern.

Things work a little differently in Scotland, where a property survey is carried out before the property is marketed. The survey report is then included with the property information pack so potential buyers have all the information they need before making an offer. This means gazundering is far less common in the Scottish system.

Gazundering in a falling market

We’ve seen a lot of property market turbulence over the past few years. The Covid pandemic, Liz Truss’s disastrous budget and the cost of living challenges have all had an impact on property prices.

If you are selling your house in a slow or falling market, you will be more vulnerable to gazundering. This is increasingly true if your property sale takes a while to go through. The slower your sale, the more time your buyer has to get cold feet about whether the price they’ve agreed to pay is still fair or not.

Gazundering just before exchange of contracts

Property sales in England and Wales are not legally binding until exchange of contracts, which usually happens just a week or two before the sale completes.

Exchange of contracts is when things get really serious and therefore the lead up to it is a time when your property sale is particularly vulnerable.

If a buyer is getting cold feet, being told everyone’s ready to exchange contracts may well be a trigger for a last-minute price reduction.

How to avoid being gazundered

1. Price your property fairly

Pricing your property competitively means your buyer is less likely to question whether they’re overpaying.

2. Be honest about your property

Don’t try to hide or disguise any issues you’re aware of – they will come up in the property survey. Any big shocks will increase the likelihood of your buyer asking for a price reduction.

Your asking price should fairly reflect the condition of the property.

3. Choose your team wisely

You’ll want to get the sale through quickly to avoid any issues such as mortgage offers running out, changing circumstances or chain issues etc. The team you choose to handle your property sale – specifically your estate agent and conveyancer – will have a big impact on both speed and success. You’ll want to make sure both parties are proactive and responsive to your buyer.

Keen to avoid the uncertainty of selling on the open market? Quick Move Now could provide a guaranteed property sale on a date of your choice.

For a free, no-obligation cash offer, call our friendly team today on 0800 068 3366.

What is gazundering?