‘I gazundered my property seller and got £20,000 off the asking price’
Sally Brockway calls a spade a spade – absolutely not the type you would expect to commit one of the most heinous of all property faux pas.
Last year she reneged on an offer she and her husband Gavin Chaplin had made on a home in Eastbourne and put in a “take it or leave it” lower bid.
They call this “gazundering”, defined as cutting down an offer after it has been made and accepted. The tough negotiating tactic causes upset to sellers and can derail property deal chains – and now it is on the rise.
As the housing market wobbles and mortgage costs escalate, one in three home sellers has been gazundered, a study by House Buying Bureau, a home buyer, found. It discovered increasing evidence of buyers lowering offers, sometimes within days of contracts being exchanged.
In some cases the reason was understandable, based on the results of a survey or a down valuation from a lender. However one in five sellers suspected their buyer was “chancing their arm” and the rest blamed increased mortgage costs and the cost of living crisis, the report found. Eight per cent were offered no explanation at all for a lowered offer.
Brockway, 57, and Gavin, 60, certainly were not attempting to wring a better deal out of their vendor or insulate themselves from the possibility of future price falls. Dropping their offer was the only way they could keep their dream of retiring one day to the south coast alive.
Brockway, a copywriter and public relations executive, and Gavin, an IT support analyst, currently live in Kingston upon Thames, south west London, and need to stay put until the youngest of their three children – currently 16 – finishes school.
But what they knew of Eastbourne’s housing stock worried them, because they wanted a home that would be spacious enough for family gatherings but not oversized.
“The trouble is that most of the properties are either fisherman’s cottages or flats, and they are too small, or massive Edwardian mansions which are too big,” Brockway says.
Last year something a bit different came onto the market – a £800,000 bungalow. “It was the only property which my husband and I agreed on,” she adds. “We knew if we didn’t buy it nothing like it would come up again.”
Despite the bad timing, the couple put their best foot forward, and the owner accepted their offer of £795,000.
“It was a really difficult time because interest rates were going up every five minutes, but we could do it,” Brockway says. “Then Liz Truss came along, and it was like being on a rollercoaster … [mortgage lenders] … kept on reducing and reducing the amount we could borrow.”
Eventually, and to Gavin’s great embarrassment, Brockway decided she had to have an honest conversation with the vendors. “I told them the most we could do was £780,000,” she says. “We had no choice. And we were so far down the line by that point, and the market had changed, so they really had no choice but to accept.”
The sale went through in February and, once it has had a freshen up, the pair will rent the bungalow out until they are ready to move in. “I don’t feel bad about it because its now worth £750,000, if that,” she says.
In the majority of cases, a gazunder does not derail a sale. The House Buyer Bureau found that three quarters of vendors faced with the situation accepted the lower offer, often because they cannot face returning to the drawing board, or risk losing their onward property.
Some accept their fate with surprisingly good grace. “I had one scenario recently where a buyer had their mortgage deal reduced and they renegotiated the price they were paying for a property,” says Richard Freshwater of Cheffins estate agents.
“They had agreed the property following a sealed bid situation, and the vendor was actually happy to accept the renegotiated price as they believed the buyer was far overpaying for the house.”
In London, Kesha Foss-Smith, of John D Wood estate agents, also managed to keep a sale going despite a £150,000 renegotiation.
Last spring, the owners of a five bedroom semi-detached house in Chiswick, south west London, had happily accepted an offer of £2.6m, £100,000 above their asking price.
Over the months that followed, however, the buyer began to rethink matters. Interest rates kept going up, as did the cost of building works – the house needed a full renovation.
“They started to think they were overpaying on the deal, and they dropped their offer to £2.3m,” Foss-Smith says.
Eventually, after some haggling and a lot of diplomacy, the parties agreed on a sale price of £2.45m – £150,000 less than the original offer and the house was finally sold in December.
Foss-Smith blames the slowness of the UK’s buying for allowing gazundering to flourish, saying “time is the killer of deals”.
Both Freshwater and Foss-Smith agree that if you find yourself at the sharp end of a gazunder the smart approach is to take all emotion out of your decision. “We do try to prepare vendors but it comes as a bit of a shock and they feel quite angry,” says Foss-Smith. “The bottom line is can you still afford to move?”
Freshwater agrees. “Vendors responses to price renegotiations need to be based on a number of factors, such as how much interest they had on the house, are there any alternative buyers to go to, and are they able to negotiate the change in price throughout other parts of the chain,” he adds.