Almost a year ago, following the death of his father, Jolyon Harris decided to use his inheritance to buy a larger home. The housing market looked solid, and he envisioned that trading up from his smart one-bedroom Notting Hill flat would be straightforward – as straightforward as moving home can ever be.
In April he put his flat on the market for £395,000, but immediately it became apparent that he could get more. Six months later, and he accepted an offer – for £495,000. He found a two-bedroom flat he liked, the chain looked solid, and all seemed to be going well.
But just before Christmas, the deal began to unravel. Harris soon learnt the hard way about a scourge that's taking a worrying stranglehold on the housing market across Britain. For Harris was about to become a victim of gazundering.
If the term itself – a pun on gazumping – sounds comical, its effects are anything but. Gazundering occurs when a buyer catches a seller on the back foot by dropping their offer, at times by as much as 20 per cent, just before contracts are due to be exchanged – sometimes on the exchange day itself.
The seller then faces a dilemma. Should they agree to drop the price and borrow more to stop the chain falling apart? Or should they put their home back on the market and get the price they want, even if that means losing the dream house they are about to buy?
On this occasion, Harris's buyer wanted to drop his offer by £40,000. Harris put his flat back on the market. "I was very annoyed that we might have wasted £6,000 in legal fees if we lost the flat we wanted to buy," he says. "It was a really low point for me. I was extremely stressed, it wrecked Christmas and I became very unwell."
Harris is certainly not alone. Jason Cheeseman, the national sales director of the online estate agency Bright Sale, has watched the rise of the phenomenon with concern over the past six months. "Gazundering was last popular in the 1990s," he says, "but we're seeing it now more than ever – especially in London and the South-east where buyers tend to be more ruthless, but also in Manchester, Leeds and Nottingham where a glut of new-build flats has made gazundering rife among first-time buyers."
Harris admits that turning away the buyer completely was a risk, but fortunately for him, his estate agent soon had a new buyer for him, though this time for the reduced price of £485,000. Again, though, the buyer turned gazunderer, and once again Harris found himself putting his flat back on the market. Finally, five months after Harris first thought he had sold his flat, another buyer viewed the flat, and offered what Harris describes as a "sensible bid" of £475,000. This time, thankfully, the deal went through.
But the bumpy ride wasn't over yet. "My partner and I really didn't want to lose the flat we'd offered on," says Harris. "Five months earlier, our offer of £810,000 had been accepted, and we were fortunate that the woman who was selling had been incredibly patient, but we were now getting £20,000 less for our place, and couldn't add that to our mortgage."
Even though he could see the damage that gazundering does, Harris was therefore forced to turn gazunderer himself. "I said to the agents that if the woman we are buying off will reduce her price by £10,000, we have a deal. In other words, I gazundered her. I was forced into that situation.
"I hated asking a very nice lady to drop her price. I had to ask my agent to do it because I was too embarrassed to do it myself even though I had her phone number. I asked my estate agent to explain to her that I was totally ashamed by this but I was put in a situation where I could either gazunder or have to withdraw from the purchase completely."
Most instances of gazundering are resolved in this way, with estate agents working their way up and down the chain on their client's behalf to renegotiate all the deals, according to Peter Bolton King, the chief executive of the National Association of Estate Agents. But of course, estate agents hate gazundering – they want their deals to sail through smoothly, so they can get their cut. It's motivated, on the face of it, by members of the public. But is it an inevitable consequence of a cooling market? Ask the experts and it seems not.
David Wetherell, managing director of Wetherell Property, a specialist in London deals, explains that gazundering is as rife at the first-time-buyer end of the market as it is higher up. "At the top of the housing market people are gazundering not because of a lack of confidence. Rather, the uncertain market simply gives them an excuse to drop their offer and make a saving. I'm afraid I believe it's as clear-cut as that."
"We are extremely happy now," says Harris, "but the emotional impact of being gazundered, and all the stress and upset it causes, can't be underestimated. It took over my life, I became obsessed by it."
What to do if your buyer turns gazunderer
Peter Bolton King, chief executive of the National Association of Estate Agents, gives this advice to anyone whose buyer drops their offer:
1) Stay calm; do not lose your temper with your prospective buyer as they may still end up purchasing your property.
2) If the reduced offer comes directly from the purchaser, don't make any comment to them yourself and certainly don't enter into any negotiation with them. Go back to your agent and seek their advice.
3) Ask yourself how desperate you are to move fast. If you don't have to move immediately and can afford to wait for another offer, that is normally your best course of action.
4) In the worst case scenario, when you can't wait for another offer, your agent can usually work up and down any chain on your behalf to see if it possible to make up the loss.
5) Remember that your estate agent is not part of the problem but the solution. Your agent has to pass on the bad news – if they don't, they are breaking the law.
And Bolton King's advice for anyone tempted to be a gazunderer?
If you start to play games at the last minute, those tactics could backfire. A number of sellers have withdrawn from the sale on principle. Each and every seller can fall victim to gazundering. What goes around comes around. Avoid gazundering at all costs – it's a dangerous game to play.
In the fight to drive a hard bargain, hundreds of home-buyers are no longer playing fair. Jamie Merrill hears how one man's move turned to chaos when the offer he'd accepted was slashed – at the very last minuteReuse content