Knowing how to gazunder successfully can be a very useful skill to have when househunting.
After all, not every buyer who reduces their offer is evil. Often there are legitimate reasons for gazundering someone.
So, let’s take a look at what gazundering is, how it differs from gazumping, and what the best gazundering tactics to use are.
What Is Gazundering?
Let’s start by defining what gazumping actually is.
According to the dictionary, the official definition of ‘gazundering’ is to:
Lower the amount of an offer that one has made to (the seller of a property), typically just before the exchange of contracts.
So, in short, gazundering is when a buyer reduces the amount they are willing to pay for a property after the original offer has already been accepted.
You can read more about exactly what it involves on our post – What Is Gazundering?
Difference Between Gazundering & Gazumping
Whereas gazundering is something the buyer is in control of, gazumping is controlled by the seller.
That’s because gazumping is when the seller accepts an offer from another buyer, after having accepted a previous offer.
Therefore, with gazumping, the seller can always choose whether or not to accept the new offer or honour the previously accepted one.
Gazundering, on the other hand, is completely out of the hands of the seller.
If the buyer lowers their offer before contracts are exchanged, the seller can only choose whether or not to accept the new offer.
Should You Even Think About Gazundering Someone?
While both gazundering and gazumping are usually frowned upon, it doesn’t mean there aren’t times when gazundering may be a fair move.
Therefore, gazundering should always be kept in mind as an option. However, we’d suggest it should only be used when really necessary.
When Is It OK Use Gazundering Tactics?
There are some legitimate reasons for why you may need to use gazundering tactics, these can include:
Gazundering After Survey
If you’ve had a homebuyers report or structural survey conducted and it’s thrown up some unexpected issues, you may be within your rights to lower your offer.
Of course, the issues should be major enough that it will cost you a significant amount to rectify. The issues also should not be ones that you had previously been warned about.
Sometimes things just go wrong financially. It could be that the mortgage offer your had has expired and you’re struggling to find a suitable replacement.
It could be that you’ve been gazundered yourself and can no longer afford to proceed at the agreed price.
Whatever the reason, if a change in circumstances means you can no longer afford to pay the agreed price, gazundering may be your only option.
Sudden Market Crashes
It’s rare for property prices to crash overnight. Usually, any price crashes play out over a period of several weeks or months.
However, it is possible that if your transaction has been dragging on for some time, the property may no longer be worth the amount you agreed to pay.
Whether this is acceptable grounds for you to gazunder someone is down to personal interpretation.
However, if the price has fallen so much that a mortgage lender may be reluctant to lend to you at the price agreed, you may have no choice but to lower your offer.
How To Gazunder Successfully
Knowing how to gazunder successfully essential comes down to knowing how to approach it depending on the circumstances.
Gazundering Based On Survey Results
If the issue is linked to maintenance/repair costs that have been highlight by a survey, a good approach would be to first discuss the survey with the sellers.
They may be happy to carry out the work needed to repair the issues highlighted by the surveyor.
The advantage of this is that you don’t have the hassle and upheaval of having to carry out the work yourself.
The downside is that you cannot be sure as to what standard the remedial work has been conducted.
Still, at least giving the sellers the option to see to the repairs themselves is a good idea. If they refuse, it gives you stronger ground for which you can make your attempt to gazunder.
A gazundering offer is more likely to be accepted if you’ve given the seller an opportunity to avoid it.
Gazundering Based On Financial Problems
If you need to gazunder due to financial issues such as being unable to get a mortgage for the agreed amount, the first step should be to tell the seller your position.
This doesn’t guarantee that they’ll accept your new offer, or even that they’ll not be upset about it. But, it does mean there’s more chance they’ll be understanding.
Of course, the exact cause of the issues will also be a factor.
If it’s simply because you overlooked something they may not be as understanding as if, say, you have been gazundered yourself.
Still, only by explaining your issues to the seller do you have a chance of being successful in gazundering.
Gazundering Based On Market Crashes
Wanting to gazunder simply because house prices in the area have fallen since you made your offer is a little more tricky.
Many sellers will feel that if you were prepared to pay the higher price a few weeks or months ago, that shouldn’t have changed no matter what the market does.
However, if the market has crashed to the point where your mortgage lender is unwilling to value the property at the agreed price, you have a better chance of being successful.
In such cases, you can use the same approach as described in the previous section.
Is Gazundering Legal?
Many people feel like gazundering should be illegal.
It seems unfair that, as a seller, you may have incurred costs in preparing for the move only to have the buyer lower their offer at the last minute.
However, while there are questions over how ethical gazundering is, it’s actually perfectly legal.
Until the contracts are signed towards the end of the conveyancing process, neither party has any legal commitment to proceed with the transaction.
So, keep this in mind when considering how to gazunder successfully.
Seller? How To Deal With Gazundering
If you are selling a property and have become a victim of gazundering, do not panic.
If you’ve read all of this article then you’ll already perhaps understand why it may be happening to you.
Sometimes there are genuine reasons as to why a buyer needs to lower their offer. In such cases, you may be able to make allowances depending on your financial position and desire to sell.
Whether you accept a lower offer may also depend on how quickly you feel you could find a replacement buyer.
In short, you have several options open to you:
If you feel the buyer is simply trying it on, or the lower offer makes it impossible for you to continue the transaction from a financial point of view, refusing point-blank may be your only option.
Sometimes this will mean the buyer backtracks and agrees to proceed at the originally agreed price.
Sometimes you’ll lose the buyer altogether, particularly if it’s because they have seen another property they like.
Refusing point-blank is a risky strategy but can occasionally be the correct option.
Re-Negotiate The Price
Perhaps more common is to attempt to re-negotiate the price.
This can often be effective when the gazundering is happening because of an unfavourable survey.
You can perhaps negotiate the buyer back up to an acceptable price by agreeing to carry out repairs to some of the issues highlighted.
Accept With Conditions
If you decide you want to accept the lower offer, you are in a relatively strong position for making extra demands.
This could be along the lines of accepting the offer on the condition contracts are exchanged by a certain date.
This puts the buyer under pressure to get everything in order and the transaction complete.
Just remember, if the demand appears unreasonable you may still lose the buyer.
This kind of counter to gazundering usually works best when the cause of the reduced offer is a crashing market and you want to complete before house prices fall further.
If you are just desperate to sell or concerned you won’t find another buyer, accepting unconditionally may be the best approach.
This takes away a lot of the risk attached to other options but may also leave you in the least profitable situation.
Accepting a lower offer without any conditions attached is usually best for when there are financial issues out of the buyers control.
Whatever approach you decide to take, try to first understand the buyers reason for lowering their offer.
Finding this out can often be half of the battle won as it gives you clues as to how best to deal with the situation.
You may also find our posts on how to negotiate a higher sales price, and how to negotiate a lower price on a property useful.