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Phil Spencer: Gazundering is the height of rudeness – I know Telegraph readers never would

Gazundering is never okay – but you can still get money off a house price
Gazundering is never okay – but you can still get money off a house price

This is not an easy property market. During the pandemic prices rose at a rate we hadn’t seen for years. From March 2020 to the end of 2021 house price growth peaked at 13.2pc, according to the Bank of England. The highest level in a decade.

However, we are now in a different time. High interest rates have hit mortgage holders and limited what first-time buyers can afford.

The average two-year fixed rate mortgage is now 6.06pc, according to Moneyfacts, a world away from two years ago when the same deal sat at around 2.5pc.

At the same time the cost-of-living crisis has limited our ability to save. There is no doubt these conditions have hit the property market. The resulting fall in demand has seen a slump in house prices, although so far they have remained more resilient than expected.

But this may not last.

In its November outlook the Office for Budget Responsibility, the spending watchdog, forecast a 4.7pc drop in house prices in 2024. Currently it expects house prices to rise by 0.9pc by the end of 2023. It certainly is a tricky market to navigate.

It’s one in which buyers and sellers may sense an opportunity to push their luck. Enter “gazumping” and its lesser-known cousin “gazundering”. The first is a well known term to describe the scenario when a buyer loses out on a property, on which they had their offer accepted, because the seller accepts a higher offer from elsewhere.

Gazundering, as you might expect, is the opposite. It is when, at the eleventh hour, a buyer cuts their offer and gambles that the seller is too far into the process to start again so will have to accept.

Both practices are deeply controversial and very unpleasant. However, there are things you can do to reduce your chance of being caught out. Let’s start with gazumping.

While in a slower property market gazumping is less likely, it does still happen. Just last week a Telegraph reader emailed me with her and her husband’s recent experience of it happening to them.

The couple agreed the sale of their own home at a 3pc discount in order to move forward with purchasing a house they had their hearts set on. However, they’ve been gazumped and are now left without somewhere to move to. (You can read my full answer further down on what they should do next).

Gazumping: how to protect yourself

It’s heartbreaking when you fall in love with a property and have it snatched from you. Particularly when you have put your time and money into the process. The first thing I would advise to reduce your chance of being gazumped is to ensure that things keep moving forward on your side.

A buyer can’t expect a seller to wait if a deal is taking too long and someone else is offering more money. Plus, the estate agent is obliged to get the best deal possible.

However, no agent wants to sell a house twice so don’t give them a reason to start looking elsewhere. The greatest killer of deals is time and lack of momentum.

It is hard to inject momentum a month into the process so come prepared with finance, legal and so on, so that when your offer is accepted it is all systems go.

In a similar vein, once your offer is accepted, I would ask for an exclusive period to take the property off the market and get everyone to focus on getting the conveyancing done.

Building up a rapport with the sellers is also incredibly important. In England and Wales an offer is not legally binding, but helping the seller to get to know you can make it morally binding and harder for them to let you down.

There are also red flags to look out for if you suspect your seller may be looking to delay the process or find a better offer.

If the agent hasn’t taken down the “for sale” sign or the property is still listed online without a notice that it is under offer, I would inquire as to what is happening. Likewise, if the sellers appear to be stalling on the conveyancing I would check in with them or the agent to get some peace of mind that things are progressing as planned.

If you are gazumped and have spent thousands so far in the buying process, ask the seller if they will pay the costs. I’ll be honest, it’s unlikely they will. But it is worth asking.

Gazundering: the height of rudeness

On to gazundering. It is the one that, while I hate to say it, is more likely in a softening market. And, in my view, it is the height of rudeness.

It risks endangering a whole property chain. In many, if not most cases, a chain is built on the maths. And if you suddenly take £20,000 off the price of one of the properties at the base that can throw everything off as the owner can no longer afford the home they were planning to buy. So it’s not just your seller you are jeopardising, it is also everyone above them.

Furthermore, if you do try and gazunder, you are taking a very large risk that you will upset the owner to such an extent that either they choose not to sell it to you anyway, or it impacts the state in which they leave the property.

Having said that, I think there is a case to be made in this market for opening a discussion around a price reduction if the deal process has taken so long that the property has genuinely slipped in value over that time.

However, you should not leave it to the last minute or the day of exchange. It is simply not fair.

Similarly, if you as a buyer have a survey completed that discovers new problems with the property, I think you are within your rights to start a conversation about a renegotiation of your offer to take these defects into consideration.

But tread carefully; this is likely to only be the case if the issues are something you couldn’t have known from the viewing.

As the seller, I think one of the best things you can do to guard yourself against being gazundered is build a relationship with your buyers, emphasise your position if you are in a chain and do everything you can to help move the process to completion.

It is worth mentioning that you can get insurance products to protect you if you do get gazumped or gazundered. Home buyers’ protection insurance can stop you from losing out in legal and survey costs if the sale of your home doesn’t go ahead. Roughly a third of sales fall through between offer and completion.

In some cases the product will also protect you from gazundering by paying the difference between the initial offer made and the eventual sale price. I have never used these products myself, but it is a different market now so it could be worth it. It is worth chatting to your estate agent to get a sense of whether in their experience the products are worth buying.

I work very hard to make sure my clients wouldn’t be gazumped or gazundered and much of that is nurturing relationships with agents and vendors, making sure you have everything in writing and dealing with everyone fairly.

If that is all going according to plan then you really shouldn’t have either happen to you. It is when people don’t do what they say they were going to do, when they said they were going to do it, that you will run into problems.

But we live in a changing world and sometimes things don’t go to plan. People’s situations change, and the longer it takes to do a deal the more likely it is that things shift.

And money brings out the worst in people. It is particularly challenging when you are talking about housing because it isn’t just about money, it is also about emotions and visions for the future. You picture yourself living somewhere and if that is threatened it can be very difficult to deal with.

When times are tight, it can even more easily turn into a really fractious situation.

So are we going to see more gazundering? It depends how rude society is, I am holding out hope (maybe naively) that we won’t. I know Telegraph readers wouldn’t.


As ever, do email me with your thoughts and questions: phil.spencer@telegraph.co.uk

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