Gazundering on the rise in buyers' market - warning

More than three quarters of home buyers are ‘gazundering’—or ‘price chipping’—to reduce the agreed sale price of properties at the last minute, a leading property lawyer has warned.

Simon Nosworthy, head of residential conveyancing at Osbornes Law, said he has seen a stark increase in gazundering in the past year with more than 75% of buyers attempting the tactic.  Two years ago the number of buyers gazundering was closer to 50%, he said.

Nosworthy added: "If you are selling a property, you need to prepare yourself for the buyer to ask for a price reduction even after you agree on a price, and they then get to see more of the property.

“It’s pretty common to lose around 5% of the agreed selling price. When you agree to a deal, it’s important to remember that it may not actually be the final deal. To protect yourself, you could potentially try and insert stipulations in writing to prevent last-minute changes.

"In the past, price chipping was rare due to a strong market where sellers had the upper hand. If someone tried to pull a last-minute chip, the seller would just walk away and sell to someone else for a better offer. 

“However, the landscape has changed dramatically. I’ve seen a massive rise in price chipping. A couple years ago, about 50% of all deals had some chip, now it’s around 75% of transactions."
 

Nosworthy said the phenomenon is further exacerbated by intense competition for properties in high-demand areas such as London, where buyers often overbid to secure a deal, only to chip away at the price later.

He said: "There’s no full proof way to avoid price chipping, until contracts are exchanged, the agreed price can change, making the period before exchange particularly nerve-wracking for sellers.

"While it may not be ethical, gazundering isn’t illegal and has become a common strategy for buyers to reduce the price. However, many don’t realise that if a buyer does gazunder, they must obtain a new mortgage offer for the revised price, potentially causing delays in the exchange process."