Buy a BargainGazundering
What is gazundering (and what can you do to avoid it?)
Gazundering is the unsavoury notion of a buyer making a firm offer on a property which the seller accepts, and then significantly lowering their offer just before the sale's completion. The buyer is hoping that the seller is so eager to sell that they will want to avoid marketing their home once again. For example, the buyer puts forward an offer of £250,000 on a property and the owner accepts it, but the buyer then gazunders them by offering £220,000 just before final contracts are handed over. With an uneasy property climate and everybody looking after their own interests more than ever, the conditions are perfect for gazundering to become fashionable.
There is no reasonable excuse for a reduced offer at the eleventh hour. It hasn't been made because the surveyors discovered a fault within the property. The buyer is relying on the vendor feeling insecure and taking the new offer in desperation. With property values under threat across many areas, the lenders are unable to obtain the funds they require (due to the credit crunch) to be able to provide mortgages, and buyers are inevitably finding it hard to obtain those funds and are watching their finances, even if it means trying to gazunder an unfortunate seller. If the seller then refuses a gazunder offer, this can cause a chain of sales to collapse for several individuals.
What is the answer to this problem? Prepare. Have your home valued and then set a fair price without any exaggeration. Over-valuing of properties during the market's buoyant period has created resentment among buyers, and with it they can gazunder without remorse. Quell their motivation by pricing your property at a fair amount.
Consider the option to create a condition of the sale that compels buyers to give you a deposit and sign a contract that locks them into completing the sale at the agreed amount, with the deposit secured in a solicitor's bank account and a deadline arranged for the final exchange of contracts. Taking a deposit is quite a normal practice on the continent and it can be lost if the buyer abandons the purchase without a valid reason.
The final tip is that it never hurts to be on good terms with a buyer. If the buyer can see that the vendor is a decent type of person, they might think twice before attempting to gazunder.
Even if a buyer commits a gazunder, the situation is salvageable. A vendor can say no to the gazunder offer, either on principle or for financial reasons, and it's possible that the buyer might still complete the purchase at the price first agreed. The buyer already has some stake in the deal at this stage, having paid for a survey, maybe even invested some emotional commitment toward the property and possibly found a buyer for their current residence. In extreme circumstances, try to reopen discussions and reach a new price that is acceptable to both parties rather than accepting the gazunder offer.