Seller Beware: Gazundering / Bid And Chip

Gazundering, or what the media is calling “bid and chip” is a method of purchasing property used by a breed of parasites that are polluting the already ignominious property industry.

What is Gazundering/ Bid and chip?

Gazundering is a practise whereby the purchaser of a property threatens to pull out just before exchange of contracts if the vendor doesn’t reduce the price.

Why do buyers use this method?
Selling a property can be expensive, and in most cases, the longer a property is left on the market for, the more costly it can be for the vendor. The vendor may be in a middle of a property chain, so he/she could be relying on the sale to keep the chain together. Alternatively, the vendor might be in a financial rut, consequently relying on the money to pay off debt. Buyers that try gazundering on a vendor may be aware of those circumstances, so may try their luck. If the vendor is in a position where they need the sale, unfortunately the dirty tactic may serve well and save the buyer a lot of money.

Buyers that plan to “bid and chip”

If you plan on doing this to a vendor, may I interrupt and attempt to make you think twice. There’s a difference between being a shrewd businessman and a complete bastard (or is there?). Regardless, putting a vendor into a position like that is completely unnecessary, even if it ends up working in your favour. You could be saving yourself thousands, but you could be ruining someone else’s life in the process.

Unfortunately, anyone who even contemplates performing this kind of manoeuvre probably won’t even care about the consequences. People like that will be too busy gazing at themselves in their speedos, patting themselves on the ass, with a smug look on their face thinking, “I look good and I’m slick at business”

Reality: No, you’re not, you’re just an idiot.

Vainity

When I was discussing this issue with a friend, he said, “vendor’s should expect guzundering until exchange, right?”

While that’s true, it’s still wrong, and still puts the vendor in an incredibly difficult position; especially if they are relying on the sale (for whatever reason). When an offer is agreed, estate agents don’t bother pushing the property anymore. The property is taken off the books, so all other potential buyers are refused. Consequently, if the vendor wants to refuse the all-new piss-taking offer, the vendor has to go through the process of finding another buyer, which can be extremely time confusing and costly.

Are you a vendor in this position?

If you can afford to do so, don’t let buyers put you into a corner and pressure you into dropping the price. Tell the bastard to go fuck themselves. You may find that the purchaser will backtrack and attempt to exchange at the original price. That’s when you can get the satisfaction of refusing their attempt to rekindle the deal.

Prolonging the sale may work in your favour. By the time you’ve been messed around, the market may have gone in your favour, so you can compensate by increasing the value of the asking price.

Thinking about selling your property?

In attempt to prevent yourself from being a victim of gazundering you can do a few things:

Firstly, don’t trust your estate agent. When I say don’t trust them, I mean don’t tell them what kind of financial position in you’re in. And if it can be helped, don’t inform them whether you’re in a chain, and whether you’re relying on the sale. Information like that can be passed onto potential buyers, and if buyers know what kind of position (weak position) you’re in, they may see potential to pull a fast one. Keep your cards close to your chest.

Secondly, you can put in a non-refundable deposit clause in contract; your conveyancing solicitor can take care of that. That way, if a buyer decides to pull out because you won’t drop the price, you can keep the initial deposit. However, a clause like that may scare away a potential buyers, but you can rest assure that you’ll only deal with serious buyers that won’t mess you around.

8 Comments- Join The Conversation...

Guest Avatar
Richard 11th October, 2010 @ 23:04

I take it you got gazaundered?

1
Guest Avatar
Rob C 15th June, 2015 @ 20:04

ive had a 3 people try it on with me - 2 of which I met halfway on a reduction to allow for repairs that came up on surveys - I know for a fact that neither have had the repairs taken out and they live quite happily in their homes which needed XYZ doing to bring them up to standard.
The other one had a list a mile long and we couldnt compromise on item 1 so I put it back on the market

2
Guest Avatar
Emma 22nd February, 2017 @ 01:26

Wish I had read this article as someone selling her flat on a tight time constraint and naively told my estate the whole truth!

They introduced a cash buying investor (without advertising my property at all) who bid a decent amount, now is chipping at 1% before solicitors have even begun searches. I expect him to chip more closer to the time, but not sure if I want to risk pulling out and looking for a new buyer in this climate.

3
Guest Avatar
Battenberg 14th April, 2017 @ 18:14

I realise to my horror that I might have gazundered - does it count if you didn't plan to?

A few years back, after having my offer accepted for what became my current home (my first property), I discovered that it is what is sometimes euphemistically called a "car-free development" - i.e. that people living at this address are not eligible for entry into the residents' parking scheme. It's not that uncommon these days - especially at a new build like this which was built where previously the use had not been residential. There's a legal thing called a restrictive covenant which in this case purtains to the resident's parking scheme, and it was part of the conditions under which planning permission was given for the development to be built at all.

But the vendor had neglected to inform the agents about this detail, and I only found out when my solicitor informed me. The agents themselves seemed surprised to hear about it, and, indeed, acted surprised when I suggested that I had put in my offer on the basis of a materially different proposition (i.e. not on inhabitancy of which precludes car ownership - for me or anyone I wish to sell to) which has an inevitable negative effect on value.

In the end I got a good deal knocked off the price but the deal nearly went through.

Am I a bad person? I supposed I could have simply walked away...

I expect you'll say this wasn't really gazundering, though...

4
Guest Avatar
Rob C 14th April, 2017 @ 19:50

Battenberg - in this case you were absolutely right to get a reduction as the vendor had not informed anyone, and was lucky to still get the sale even with a reduction.

5
Guest Avatar
Would-be Gazunderer 13th June, 2017 @ 07:26

Curious to know what people would think of my situation. I'm a first time buyer with an offer accepted on a one-bed flat in London. We're right up at the point of exchange and if I was to give the go ahead we could do it as soon as today/tomorrow.

The flat in question was absolutely bought as a speculative purchase by the vendor and given they bought in 2014 and I'm buying now they've hardly done badly out of now selling it. Note, this is not the house they live in but one they apparently bought for their son (who then moved to Singapore). It is therefore also not part of any chain. The offer was accepted in December 2016 and has dragged along for various reasons.

Given the election results/economic uncertainty that is now really kicking into the market I've been agonising over the decision of whether I should go ahead or not - I feel very exposed to fluctuations in the market or interest rate rises.

Do you think in this situation it is wrong to say given the now uncertain econmoic situation, and given I'm not trying to screw someone who is moving house - that I should consider seeing if they would be willing to accept a lower offer given the amount of uncertainty I'm now taking on or should I just cleanly pull out rather than this kind of deal, on the basis that I should look elsewhere rather than gazunder?

Thanks in advance!

6
Guest Avatar
Emma 13th June, 2017 @ 11:05

Hi Would-be Gazunderer, I finally finished the sale of my flat with £5k off the initial price after five/six months of drawn out legal queries. To be honest, in this current economic climate and news of house prices stalling/dropping, I think I got away lucky without the buyer withdrawing as I doubt I would have gotten a better offer.

It's a buyer's market at the moment, so I don't think you need to feel bad about reducing your price or withdrawing completely (would you pay any fees)? The shoe is on the other foot after years of being a seller's market, so might as well take advantage of it - it's just business, nothing personal. It might be morally grey, but in the end, everyone is looking out for themselves in the property market.

7
Guest Avatar
Rob C 13th June, 2017 @ 21:20

In my opinion between you and Emma. If it had been taking too long I would have demanded a completion date deadline (and not let the solicitors go to sleep on it). Sometimes flats can take ages to go through compared to houses due to the lease which needs to be scrutinized and amended if necessary with all parties to agree.
As for economic uncertainty and a buyer's market - what a load of crap! If you tried that on me I'd put it straight back on the market.

8

Please leave a comment...

Nobody

Nobody

Landlord

Landlord

Tenant

Tenant

Agent

Agent

Legal

Legal

Buyer

Buyer

Developer

Developer

Enthusiast

Enthusiast


Popular Landlord Categories