Gazundering is a situation whereby potential homebuyers looking to take advantage of a housing downturn, cut the price of properties at the last minute of negotiation or exchange of contracts. It is a phenomenon occurring in the current credit crunch climate and is already reaching extreme levels
The temptation to gazunder grows with every new sign of weakness in the property market: in the latest slew of bad news, sales volumes have fallen to their lowest level for at least three decades, repossessions rose by 71% in the three months to the end of June, and the Bank of England now predicts one in 10 mortgage holders – 1. 2m – will be trapped in negative equity.
It's vital you go with what your valuer says and put your property on the market at the right price. If the price is realistic, this will help you to get an offer quickly. The less time it takes you to get an offer, the less desperate you will be to sell at any price. Be aware that some buyers will check how long the property has been on the market and whether it has been reduced in price, and will use this information to try to negotiate a further discount.
Research the market carefully and try to figure out what your property is worth objectively. Access the Land Registry and house-price websites to find out the rates that houses actually sell at, not those at which they go under offer. Then factor in what your property is worth to you: i.e. your absolute lowest price. If this is all you can get from a buyer, make it clear from the start that you will not drop the price in the future no matter what happens.
Watch out for the warning signs. If a buyer starts delaying – asking for a second survey and postponing exchange – then expect a last-minute gazunder
There is a greater chance that a buyer will pull out or gazunder if the exchange of contracts is delayed. Don’t be fooled by marketing such as “ exchange ready HIPs” ( think hens teeth ). Nevertheless do make sure your solicitor has all the legal documents the potential buyer will need before you even get an offer. Dig out any relevant certificates, e. g for damp-proofing or double-glazing. This advise is even more important for a leasehold property. Please see the article published by Fridaysmove 10 insider tips for preparing a leasehold property for sale
Opt for a chain-free buyer if you can. The quicker that buyer can move, the more valuable the offer. A buyer who already has a mortgage offer in place and can move fast may be worth lowering your price for. So ask your estate agent to find out these vital facts before they put an offer to you.
You might consider selling your home and renting for a period to shorten a chain or keep it complete. If you are in a chain don’t inform the agent as inadvertently information like that can be passed onto potential buyers, and if buyers know what kind of position (weak position) you’re in, they may see potential to gazunder. Keep your cards close to your chest.
Be truthful. If there are defects with your property, declare them at the beginning. This way they can be factored into the agreed price. If the buyer is aware of problems like subsidence or a short lease from the start, it is far more difficult for them to turn around later and use this as a reason to haggle down the price. Ask the estate agent to ensure the buyer is fully aware that such defects have been factored into the asking price and you would not be prepared to negotiate on these points.
Remember, you're not safe until you exchange. So incentives the buyer to speed up the house buying process. For example, you could accept the offer only on the condition that the buyer gets a survey done within 10 working days, and refuse to stop showing the property until the survey has been completed. It is possible to keep your house actively on the market until contracts have been exchanged, so that if anyone tries this sharp practice, you may have other potential buyers in the frame but in reality, when an estate agent feels they have a serious offer, they will not put time and money into trying to secure a back-up. In light of this make sure, if you are marketing the property with a number of agents, you ask them to continue marketing.
If you can develop some sort of personal relationship with the buyer, it will be harder for them, emotionally, to go back on their word. But don't reveal any facts which might make them think you are desperate to move. As mentioned above try not to disclose the fact that you have a related purchase.
Finally, consider selling at auction. It offers the security of a pre-agreed completion date and a binding contract on the fall of the gavel.