Equestrian estate agent David Rumsey of Pelhams was puzzled by a buyer who kept delaying completion after putting in a good offer. His feeling that something was amiss proved right when the reluctant buyer announced at the last minute that he was only willing to pay a whopping £250,000 less than the agreed price, take it or leave it.
Welcome to the world of gazundering, where purchasers substantially lower their offer just days before exchange. The seller must accept the reduction or lose the sale.
“Gazundering is not reasonable renegotiation, which can take place following a survey that finds a substantial defect in the property, which merits a revision in the offer price,” says Lindsey Burden of Fox Grant, adding that ruthless buyers often use “spurious excuses” to hold sellers to ransom.
Despite David Rumsey’s experience, gazundering remains mercifully rare in the equestrian market, perhaps because demand always outstrips supply.
“We haven’t come across this often,” says Rumsey. “On the whole, it will occur when buyers believe they are in a strong position and the vendors are desperate to move — or if a property has been empty for some time.”
There is no doubt, however, that this unethical but entirely legal practice is on the rise across England, as the National Association of Estate Agents (NAEA) reports.
“I’ve seen professional buyers make offers on two properties, with the intention of buying the one that achieves the most significant reduction,” says Anthony Kerrigan, NAEA chairman for Sheffield and South Yorkshire. “This isn’t fair, it isn’t moral and it shouldn’t be legal.”
The NAEA is campaigning to change the house buying process in England and Wales and make it more straightforward.
“In Scotland, once an offer is accepted on a property, the agreement is legally binding,” says NAEA chief executive Peter Bolton King. “This means that problems such as gazundering and gazumping [where sellers accept an offer, then renege on the deal for to a higher one] are virtually non-existent.”
But as long as the legal framework remains unchanged, keeping mum on future plans or financial needs is the best advice for those concerned about being gazundered.
“It is one reason for not being too forthcoming to a prospective purchaser and telling them too much,” says Rumsey.
Sellers should also ask estate agents to keep matters confidential.
“If the client is emigrating, it is not a good idea for the estate agent to tell buyers not to worry about the lack of onward chain because Mrs T is on flight BA1471 booked for 5 June,” says Burden. “Discretion ensures that the unscrupulous buyer doesn’t compromise the client’s position or equity.”
Burden adds that vendors should know their own property inside out and avoid overpricing it, which is often an invitation to gazunder. If the issue of renegotiation crops up, sellers should be prepared to get quotes on any works.
“They can then discuss it from a position of knowledge and insight,” according to Burden, and, presumably, weed out bogus claims.
For those who are worried about being gazundered, perhaps because their property has been empty for some time, Richard Nocton of Woolley & Wallis recommends selling by public auction, where the contract is sealed at the fall of the hammer, leaving no room for ethically questionable manoeuvres.
As for buyers, they should remember that behaving badly never pays off. Rumsey has proof of it: the gazundering buyer he had the misfortune to come across was himself gazundered later on.
“Having told their purchasers they were desperate to buy and had already substantially reduced the price on their property, they were greeted with a £150,000 gazunder from the prospective buyer,” he says. What goes around…