Gazundering becoming more commonplace

With property prices falling, mortgages becoming more difficult to obtain, and homeowners experiencing increased difficulties in selling their homes, the housing sector is already experiencing its fair share of problems. However, a new problem has recently reared up for sellers, and this comes in the form of gazundering, which is an unethical but not illegal practice that some buyers are engaging in. The practice involves putting in an offer on a property, and then dropping the offer right before contracts are exchanged.

When this takes place the seller is left in a predicament, as they either have to start from scratch, which is a dicey option in the current climate, or have to lose money on the house. The buyer, however, can benefit to the tune of thousands of pounds by taking advantage of sellers’ desperation to sell. Some are dropping the offer by thousands of pounds at the last minute, so many sellers are losing out.

According to one official: ‘The most likely gazunderer will be an investment banker, in fact anyone in the City, particularly a single bloke looking to show off to his girlfriend or vice-versa. It’s reasonable to expect people to negotiate say £10,000 to £15,000 for issues such as damp but if the buyer is trying to get 10% to 15% off, then you’re into gazundering territory.’

Another official went on to say: ‘London is not like the country. If you fall for that perfect rectory then you are unlikely to want to jeopardise that. But in London if you are after a three-bedroom mansion flat and the deal falls through you know that, like London buses, there’ll be another one along soon. We had a double gazunder the other day in Westminster. The price was agreed at £2.5m then it came down to £2.2m, which my client agreed to reluctantly, then the buyer dropped the price to £2.1m at which point my client withdrew.’

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