Beware the return of the Gazunderer

The fragility of the UK housing market becomes more apparent with each passing day. And anecdotal evidence of the balance of power shifting towards buyers and away from sellers comes with news of the return of the gazunderer!

Gazundering happens after buyer and seller have agreed a price but at the last moment before contracts are due to be exchanged, the buyer demands a final discount on the price. Home sellers then have to chose between writing off weeks or months of planning and accepting substantially less than they originally agreed. This can happen when the supply of property exceeds demand giving the buyer more leverage in their negotiations.

In contrast to the legal system in Scotland, under English law, the price you agree on is not definite until the `exchange of contracts’ which can be many weeks after an initial offer is accepted. So gazundering is legal but perhaps not very ethical. Some analysts believe the practice is becoming more rife because sellers have not adjusted to market conditions to set realistic prices. That said as a our second chart shows, average asking prices in the housing market have been flat or declining for several years now.

One option for sellers who fall victim to gazundering is to call the bluff of the buyer and decline their offer choosing instead to put the property on the market for a second or third time. The key to all of this seems to be to find serious buyers - some looking straight into the eyes is called for.