28 February 2023 – New data suggests that issues found during a survey are the main reason why buyers lower their offer after a sale is agreed.
A survey of 1,104 UK home sellers who have sold their property in the past six months gives an insight into their experience of being gazundered.
Gazundering is when buyers lower their offer after a sale has agreed. It’s the opposite to gazumping, which involves a buyer offering a higher price for a property in order to break an already existing sales agreement.
While gazumping was practised often in recent years, when demand was high and stock low, it seems that the cooling down of the market has increased the levels of gazundering.
31% Of Sellers Experienced Gazundering
The survey, commissioned by the property consultancy firm House Buyer Bureau, has found that almost a third (31%) of respondents have been gazundered by their buyers.
The majority (51%) of buyers who lowered their offer did so more than two weeks before the agreed exchange date. 15% said it happened within two weeks of the exchange date.
And 33% received the notification of the lowering of their buyers offer within a week of the proposed exchange date.
The main reason, with 33%, why a buyer wanted to renegotiate the price is that the property survey brought up an issue. The second most mentioned reason, with 25%, is that the property was down valued.
19% gave as reason that the buyer was trying to get a discount. 11% reported that the mortgage of their buyer was adjusted due to increasing mortgage rates.
5% of buyers could no longer afford the property due to the cost-of-living crisis, while 8% did not give a reason.
While this trend is being driven by opportunistic buyers to some extent, it’s important to note that in many cases, it’s due to issues found during the survey and the resulting down valuation.
Chris Hodgkinson, Managing Director of House Buyer Bureau
Majority Of Sellers Accepted Lower Offer
While it is never a nice feeling for a seller to be gazundered, 75% said they accepted the lower offer of their buyer. Even though only 21% said that the sale would have collapsed if they didn’t do so.
The reasons why sellers accepted the lower offer are varied, but most of the respondents (25%) said that they thought the lower offer was still fair.
This is probably because the most common incidence when buyers lower their offer is when the survey finds an issue with the property. As long as the new offer is still fair, most sellers will accept it, it seems.
The second reason, with 23%, why sellers accepted a lower price is because the vendor didn’t want to lose the home they were purchasing.
Especially when the buyer decides to lower their offer at the last moment, many sellers might feel they have no option, if they don’t want to lose their dream home.
19% said they didn’t want to waste more time trying to find a new buyer and 12% didn’t want to go through the whole selling process again.
While finding a new buyer was fairly quick and easy during the past two years, since the market has cooled off, many sellers don’t want to prolong a process that can be very stressful.
For 9% of sellers, the reason was more personal, as they liked the buyer and wanted to sell to them.
8% of vendors had a deadline which they could not miss, for example, because they relocated abroad, which meant they had to accept the lower offer.
Finally, 4% of respondents said that they had already incurred costs, which meant they did not want to let the sale collapse.
Falling House Prices Likely To Keep Level Of Gazundering Up
While most industry insiders don’t expect the housing market to crash, it is widely anticipated that house prices will fall this year.
With the shift from a sellers’ market to a buyers’ market, the number of buyers lowering their offer will naturally rise.
However, so far the property market has performed strongly given the economic situation the UK is in. This would suggest that the price drops should not be too big.
So far at least, the property market is proving resilient and price reductions have been quite small – a few percent or so. This keeps many out of danger.
Jonathan Rolande, Director of House Buy Fast and Founding Member of the National Association of Proprty Buyers
So even if sellers have to accept a lower offer, it is unlikely that they will have to sell their home for less than what they have bought it for.
Estimates suggest that prices would have to fall by 15% from their peak before a majority of people see negative equity. And it is unlikely that prices will fall by that much.
