Reports say that more and more house buyers are undercutting asking prices at the last minute – or ‘gazundering’. It’s a practice that needs to end as it’s unethical – or is it?
Imagine if you were selling a cake at a fair. A buyer turns up, has a look, likes the icing and seems happy to pay the £2 you’re asking.
As you wrap it up, she hands you just £1. You complain, but she says it’s 4pm, the church hall is clearing out and £1 is the best you’ll get. Reluctantly, you accept.
That just wouldn’t happen, you cry. Unfortunately, that’s exactly what’s happening with the housing market. And it even has a name – gazundering.
Gazundering and the law
Recent reports show that up to 25% of purchasers are attempting to renegotiate the house price downwards just before contracts are exchanged. It’s the opposite of gazumping, which we heard so much about during the property boom.
Gazundering is not illegal in England or Wales because nothing is binding until contracts are exchanged. However, it puts sellers in a hugely difficult position – accept the sale on your buyer’s terms or hold out for an asking price that may never come again. Especially in a falling market.
In Scotland, however, gazundering can’t happen as the initial offer on the property is legally binding. And there have been calls for the system to be introduced in the rest of the UK.
Don’t be gazundered
The best way to avoid gazundering is to set a fair price in the first place and to try and get contracts exchanged as swiftly as possible. And in the end, if you’re not happy with the price you’ve been offered, you can always back out – putting the onus back on the buyers.
However, there are those who believe that gazundering is both human nature (looking for the best deal) and economically sound. After all, in the period between initial agreement and exchange, the property value may well have fallen, so why pay the original price?
In the end, your feelings on the subject may depend on whether you’re a property buyer or a seller at the moment. But the question still remains, you wouldn’t do it with a cake, so why do it with a house?
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