One in four sales in December were struck by the scourge of a renegotiated fee
By Alexandra Goss
Bargain-hunting home buyers have caused a spike in “gazundering”, a tactic when a buyer makes a lower offer at the eleventh hour to force the seller to cut a property’s price.
In November, 39pc of properties sold by the house buying company Quick Move Now were subject to gazundering, up from 13pc in October and at a level not seen since 2008.
In December, traditionally a quiet month for the property market, gazundering affected a quarter of sales.
Those who gazunder are taking advantage of a weak property market, by gambling that the seller is so far into the process that they will have no choice but to accept. The gambit is often made just before exchanging contracts to force the hand of the vendor.
Danny Luke, of Quick Move Now, says: “Anecdotally, we have not seen gazundering volumes like this since 2008. Some buyers lower their offers last-minute because they have a change in financial circumstances or their mortgage company won’t lend them as much as planned; others simply want to take advantage of their strong position in the current market.”
Gazundering is a controversial practice and buyers who do it can cause a property sale – and even an entire chain of sales – to collapse. While the majority of Quick Move Now’s sales that experienced gazundering last month were successfully re-negotiated at a lower selling price, 17pc were rejected and the sale fell through.
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In John and Francine’s case, and very unusually, gazumping actually happened after a buyer had exchanged – but before completion – on their much-loved home of 47 years in Thames Ditton, Surrey.
The couple, who are in their 80s and preferred not to give their last name, were selling up to move to a smaller, new-build home closer to their daughter in East Sussex.
They accepted an offer and exchanged contracts at the beginning of August, with a completion date set of Oct 31, which is when they in turn were due to complete on the purchase of their new home, in the Hillbury Fields development in Ticehurst.
However, on the morning of moving day, as the trucks with their belongings were on the M25, the buyer lowered his offer substantially. This breached the contract and meant the buyer would incur financial penalties – and also meant John and Francine wouldn’t have the funds for their onward purchase.
“Then followed frantic calls to the removal company to pull over and have a coffee while we worked out what to do,” says John, a retired lawyer. “Thank goodness we could stay with our daughter and son-in-law.
The couple’s daughter contacted friends and family who offered to lend money to help them make up the difference created by the gazundering and complete on their new home. “We transferred our savings and everyone’s money arrived in the nick of time,” John says. “Even our grandsons sent us several thousand pounds, which all helped, though it was nail-biting.”
John and Francine didn’t respond to the buyer’s new offer and he ended up completing four days later with the full agreed amount. “We did at that point enjoy a bottle of champagne,” John says.
While gazundering is still relatively rare, increasing numbers of buyers are betting they can get a bargain by looking at properties beyond their budget. In 2023, Hamptons estate agency found that 13.9pc of viewings were of homes that were above what the purchaser could afford, up from 9.4pc in 2021.
David Fell, of Hamptons, says: “These viewings are most likely to take place across the south of the country, where loans tend to be higher relative to incomes and house prices have come under most downward pressure from higher mortgage rates.”
There are certainly some good deals to be had. Will Watson, of property finders The Buying Solution, helped two clients buy properties in December at discounts of 10pc to 15pc compared with similar homes sold a year earlier. Meanwhile, Nigel Bishop, of the buying agency Recoco Property Search, found his client a property in Cornwall which was on the market for £2.1m but they managed to get the seller to accept a price of £1.85m.
As well as bargaining on price, buyers are negotiating very hard from the outset on other factors. The buyer of a house being sold recently by Josephine Ashby, of John Bray Estates in north Cornwall, was “incredibly demanding”, and asked for “a huge amount of extras to be included in the sale, from furniture right down to the family’s Hunter wellies”.
She added: “The sellers were exasperated, but it made sense to take a deep breath and see the sale through.”
There has also been an increase in renegotiations after an offer has been agreed, according to estate agents. Arlington Residential, a north-west London estate agency, found that the buyers of almost one in 10 homes it sold in 2023 sought to renegotiate the price during the buying process, double the proportion seen three years earlier.
Mark Crampton, who covers the southern home counties for the buying agency Middleton Advisors, says renegotiations are often for good reason – such as when a survey has flagged up expensive defects, or where there are legal or title problems. “Historically these issues would have been ‘taken on the chin’,” Mr Crampton explains.
“However, for the first time in around a decade, we are seeing buyers have the confidence either to reduce their offer or walk away from a deal if the seller doesn’t agree to a well-justified reduction.”
As mortgage rates fall, the outlook is brightening for anyone wanting to sell their home this year.
However, while well-presented properties in sought-after locations are getting interest from buyers, those with any sort of issue or which need extensive renovation works will take longer to sell and are more likely to experience gazundering.
Caspar Harvard Walls, of Black Brick buying agency, says: “Where properties are compromised there is much greater scope for buyers to try to renegotiate the price at the last moment.”
There are ways to reduce the chances of sales falling through. Most important is setting a reasonable price from the outset; the property website Rightmove predicts that new seller asking prices will drop nationally by an average of 1pc in 2024.
Tim Bannister, of the firm, says: “Motivated sellers still need to price below their local competition to secure a sale, as buyer affordability remains stretched.”
London estate agency Johns&Co asks buyers to provide a non-refundable deposit after their offer is accepted, as is common in the new-build market, because this provides reassurance for the seller that the buyer is committed.
Owners should also choose their buyer with care, says Charlie Wells, of the buying agency Prime Purchase. “Don’t necessarily opt for the buyer offering the most money,” Mr Wells says.
“I know of two £3m to £4m sales recently where the vendors went with the highest bidder offering the best terms and then the buyer either fell away because they tried to renegotiate too hard or their bid turned out not to be as rosy as it appeared.” In both cases, the sellers ended up going with the lower bidder.
And buyers considering gazundering should think very carefully before doing so. Clare Coode, of Stacks Property Search in Cornwall, says: “The loss of goodwill is so considerable it can end up poisoning the purchase, or sabotaging it altogether. Even if the sale goes ahead, the buyers will be moving into a house without any goodwill – or lightbulbs – and potentially unfriendly neighbours who will have been informed of the bad behaviour.”