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.
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.
Disclaimer: I'm just a landlord blogger; I'm 100% not qualified to give legal or financial advice. I'm a doofus. Any information I share is my unqualified opinion, and should never be construed as professional legal or financial advice. You should definitely get advice from a qualified professional for any legal or financial matters. For more information, please read my full disclaimer.