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Beware growth of gazundering, agent warns

A top property expert is warning “gazundering” – when house buyers dramatically lower the price they offer at the last moment – could become more common in 2015.

Ajay Jagota of South Shields-based sales and lettings firm KIS believes the improving health of the North East property market may lead to the growth of gazundering – with sellers in the region particularly vulnerable to the practice.

The opposite of “gazumping” – where a seller accepts a higher offer on a property at the last minute despite verbally agreeing a lower price with someone else – gazundering sees buyers attempting to force down a previously agreed price as contracts are exchanged in the hope sellers are panicked into accepting.

The practice is commonplace with quick-sell property companies, and there have been recent reports of the practice becoming more mainstream, fuelled by a fall in buyers caused by declining availability of mortgages.

Data from the Council of Mortgage Lenders last week showed the number of new mortgages being approved fell by 7% in the last quarter of the year, with lending to first time buyers down 3%. Lending to buy-to-let investors, however, rose by 9%.

Ajay Jagota is founder and Chief Executive Officer of the UK’s most innovative sales and lettings business, KIS, believes a quirk of the North East property market may make sellers in the region especially vulnerable to gazundering.

The firm is famous for being the first letting agent in the country to abolish deposits, replacing them with a one-of-a-kind landlord insurance policy offering guaranteed rent, deposit replacement, legal assistance and round the clock third party emergency home repairs.

He said: “There’s little doubt the North East property market is finally returning to health – I think prices could rise by as much as 10% this year - but many sellers have been in the mindset of a market which has been in the doldrums for some time.

“If you’ve been waiting months or even years to sell your property, you’re more likely to be to be vulnerable to gazundering in the fear that they won’t find another buyer if you don’t accept a lower offer. That isn’t necessarily the case, and it could well be worth holding your nerve and even making more money as the market rises.

“It’s a cultural quirk of the North East property market that it’s comparatively common to exchange contracts and complete on the same day in a way it isn’t in other parts of the country. That makes sellers in the region particularly vulnerable.

“The exchange of contracts legally binds the price, so my advice to sellers is ensure their solicitor insists on exchanging well before completion to safeguard against this happening.”

This was posted in Bdaily's Members' News section by Ajay Jagota .