Offers on properties being dropped just prior to exchange
September 14, 2008
A recent report has highlighted a problem that many homeowners are now experiencing, with the housing market having swung abruptly from a sellers market to a buyers market. Many homeowners are now experiencing difficulties in selling their homes for a number of reasons. One reason is that mortgage lending has dried up over recent months, and this has resulted in many would be buyers being unable to get a mortgage to purchase property, as well as due to would be buyers experiencing nerves over taking the plunge in case property prices continue to fall, as they are expected to do, as this could leave them facing negative equity.
This has left many homeowners who are looking to sell up feeling pretty desperate, and with house prices also falling many have had to look at reducing the asking prices on their property in order to sell. The number of properties now being sold has plummeted, and estate agents have been reporting extremely poor sales performance, which has left homeowners feeling even more desperate. With property values set to plummet over the course of this year, many homeowners are trying to sell their homes before values fall further, but this is proving very difficult for some.
However, the situation is giving buyers the edge, and some buyers are indulging in a practice that is not illegal but is classed as unethical, adding to the woes of homeowners that want to sell their homes at a fair price. This is a practice that is known as gazundering, and according to recent reports is becoming more and more commonplace, as buyers play on the desperation of sellers in order to get the property at the lowest price possible.
There is also rising concern that many of those doing the gazundering are not really bothered if the seller decides not to go ahead with the sale at the new lower price, making the likelihood of this practice occurring even greater. However, for the seller the situation means having to start from scratch to sell the property again or risk losing thousands by accepting the lower offer.
One industry official said: ‘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 said: ‘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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