HOW TO MANAGE A BUYER REDUCING THEIR OFFER PRICE – GAZUNDERING
Gazundering is a term used in the UK property market to describe a situation where a buyer lowers their offer on a property after previously agreeing on a higher price, typically just before contracts are exchanged. This can put the seller in a difficult position, especially if they are relying on the sale to fund another property purchase.
Gazundering can occur for several reasons. For instance, a buyer might lower their offer if they discover issues with the property during a survey, or if the market conditions change. It’s often seen as an unethical practice as it can cause significant stress and financial hardship for the seller. The term gazundering is a play on the word ‘gazumping’, which is when a seller accepts a higher offer from a new buyer after already having accepted an earlier offer. Both practices can contribute to the uncertainty and anxiety often associated with buying or selling property.
Gazundering is generally viewed negatively by property sellers for several reasons, and it can have a significant impact on them both financially and emotionally.
1. Financial Impact:
• Unexpected Costs: Gazundering can lead to unexpected costs for the seller. They might have already committed to another property based on the original agreed price, and a lower offer can create a financial shortfall.
• Loss of Other Opportunities: If a seller has turned down other offers in favor of the original agreement, they might lose those opportunities to sell at a better price.
• Additional Mortgage Costs: If the seller has a mortgage on the property, they might incur additional interest costs due to the delay caused by renegotiating the price or finding a new buyer.
2. Emotional Impact:
• Stress and Anxiety: The process of selling a property can be stressful, and gazundering can exacerbate this stress. The uncertainty and potential financial loss can cause significant anxiety.
• Betrayal and Distrust: Sellers might feel betrayed or taken advantage of, especially if they believed they had a firm agreement. This can lead to distrust towards buyers and a generally more cynical view of the property market.
3. Time Delays:
• Gazundering can cause delays in the selling process as it may require renegotiation. In cases where a new price cannot be agreed upon, the seller may need to start over with a new buyer, which can significantly prolong the process.
4. Market Perception:
• Negative Perception: Gazundering can contribute to a negative perception of the property market, making it seem unpredictable and fraught with unethical practices.
• Lowered Property Values: In some cases, gazundering might also contribute to a perception of falling property values in a particular area if it happens frequently.
5. Legal and Professional Costs:
• Sellers may incur additional legal and professional costs due to gazundering, as they might need to consult with their solicitors or estate agents to understand their rights and options.
The impact of gazundering can be quite severe, especially in a fragile or declining property market where sellers might already be facing challenges in getting their desired price for their property.
Gazundering may be seen differently from the perspective of a property buyer, and its impact can vary based on the individual circumstances and the broader market conditions.
1. Potential Financial Benefits:
• Lower Purchase Price: Gazundering can lead to a lower purchase price which may be financially beneficial for the buyer, especially in a buyer’s market or if there are valid reasons for the reduced offer, such as unexpected issues discovered during a survey.
• Better Negotiation Position: It might put the buyer in a stronger negotiating position especially if the seller is keen to close the deal quickly.
2. Market Conditions Awareness:
• Adaptation to Market Changes: Buyers may view gazundering as a mechanism to adapt to changing market conditions. If the market is in a downturn, gazundering could reflect the new reality of property values.
3. Emotional Impact:
• Increased Anxiety: The process of gazundering can be stressful for buyers too, as it carries a risk. The seller might refuse the lower offer and the deal could fall through, which may increase anxiety for the buyer.
4. Ethical Concerns:
• Ethical Dilemma: Some buyers may face an ethical dilemma when considering gazundering, as they might be aware of the stress and financial hardship it can cause to the seller.
• Reputation Risk: If a buyer gains a reputation for gazundering, it might make other sellers wary of entering into negotiations with them in the future.
5. Relationship with the Seller:
• Strained Relations: Gazundering can strain the relationship between the buyer and the seller, which could make the process of finalizing the sale more contentious and unpleasant.
6. Legal and Professional Consultation:
• Increased Legal Consultation: Buyers may need to consult with legal professionals before engaging in gazundering to understand the implications and ensure they are within their rights to do so.
7. Potential Delays:
• Protracted Negotiations: Gazundering can lead to protracted negotiations which could delay the property purchase. This could be particularly problematic if the buyer is in a chain or has a specific timeline for moving.
8. Risk of Losing the Property:
• Deal Breakdown Risk: There’s always a risk that the seller will reject the lower offer and the deal will fall apart, potentially causing the buyer to lose out on a property they desired.
In summary, while there might be some perceived financial advantages to gazundering from a buyer’s perspective, it also introduces a range of ethical, emotional, and practical challenges that could complicate the property buying process.
For more tips on how to avoid gazundering contact us today via our website at www.castle-surveyors.co.uk