Gazundering - forewarned is forearmed

Following on from our recent article advising on how to reduce your chances of being gazundered we have noticed a number of articles in the press highlighting the websites that are promoting the tactic of gazundering to first time buyers.

These web sites argue that when prices were rising fast, sellers were happy to ‘shaft’ first-time buyers by accepting higher prices at the last moment from other buyers. Now the tables have turned, for first time buyers facing unaffordable homes, gazundering is entirely justified, it says. "It is completely legal and therefore it is part of the game. If you don't play your gazunder card at the right time, you only hurt yourself. "

Whist many property websites (and indeed Fridays) would describe gazundering as an "underhand practice" informing sellers never to negotiate with people who use this tactic, those advocating the use of gazundering would argue that ". . . sellers regularly ask for higher prices, so why shouldn't buyers exploit the market too?" The purpose of this article is to alert sellers as to what advice is now being offered to buyers. A number of websites are now promoting gazundering, offering step-by-step guidance on reducing your offer at the final moment. Firsthomebuyer.co.uk was set up by three first-time buyer couples to help others locked out of the property market and features a page entitled "gazundering is your friend". The following table details the advocated strategies of Firsthomebuyer.co.uk together with our comments/responses:

Firsthomebuyer.co.uk advice in bold (Fridaysmove advice in Italics)

Make gazundering a permanent part of your home buying plan until the government reforms the law. Consider making an offer on two or three properties at the same time (but through different estate agents). Gazunder them all at the last minute, and you know at least one will give in to you.

Ask the Estate agent to directly ask the buyer if they have any offers on other properties. Preferably ask the agent to get the answer in writing from the proposed buyer. If they are not prepared to put this in writing it should set off some alarm bells.

Make sure the seller is part of a chain - he will be in the middle of completing a purchase on his next home and will be unable to refuse your gazunder

Do not volunteer to the agent that you are in a chain.

Have a backup plan in case the seller refuses your lower offer - the backup plan will probably mean renting or living with relatives for a few months while finding another property. This is only a small inconvenience if it eventually means you can save £10, 000 on your house purchase.

You should also have a back up plan in case the buyer attempts to Gazunder. If you have an offer that is close to the asking price. Be honest with yourself. Ask yourself what you would have accepted.

Keep your legal and bank fees to a minimum. Use a solicitor who offers a no-deal- no-fee scheme. You will only have to pay a few pounds for solicitor's disbursements and local authority search fees.

Ask the agent to check if the buyer is using a lawyer that is working on a no sale no fee basis. If they are using a law firm where they are exposed to an abortive bill this should give you some comfort.

Don't tell the solicitor what you have planned, but do ask them about the issue in a general sense. Most solicitors will do whatever their client tells them.

You could ask your solicitor to ask the buyer to execute a " good will agreement' in which the buyer confirms that he/she will not reduce the price without reasonable justification. ( please note that some law firms would charge additional fees for drafting a "good will agreement".

Make your initial offer for the property close to the asking price, so there will be little time wasted negotiating and the seller will feel confident with your offer

Beware of this and employ the tactics outlined above.

For advice what to do in the event that a buyer attempts to Gazunder please see our article What to do if your buyer turns gazunderer.

Additional note from editor: (20/09/2011)
Read about Gazanging - the new problem facing property buyers in the UK