Gazundering is back as purchasers reduce offers by thousands

Home buyers are regularly ‘price chipping’ at the last minute and forcing sellers to take thousands of pounds less, lawyers have revealed.

Solicitors from London law firm Osbornes Law have seen a significant increase in buyers price chipping and estimate it is currently happening in around 50% of house sales.

Homebuyers ‘price chip’ by demanding money off the agreed sale price just before the sale is about to exchange, citing an issue from a survey such as damp, a problem with the roof or the electrics.

Simon Nosworthy, head of residential conveyancing at Osbornes Law, said the wave of gazundering has only began in the last few months but has rapidly gathered pace as the UK economy weakens and the housing market reacts to this.

He said: “Price chipping has been unheard of in recent years as the market has been so strong. If a buyer had asked for several thousand pounds off the agreed price at the last minute because of a fault in the property sellers would have just pulled out and gone to another person who had put in an offer. But recent months we have seen a massive rise in price chipping and I’d estimate we are seeing it in around 50% of transactions at the moment.

“Price chipping is a sign that the market is weaker and that the pendulum of power is swinging from the seller to the buyer. It has been a sellers’ market for the past few years, but with rising interest rates and the cost of living crisis that is changing. Sellers are left in a difficult position of losing their buyer when the market is turning or having to accept thousands of pounds less.

“It should be said that this practice has been exacerbated by stiff completion for property in places such as London, meaning that buyers are having to offer ever increasing amounts to secure an offer on a property in the first place.”

“It’s a horrible position to be in for sellers but it is all too common now,” Nosworthy added. “While it may not be moral, price chipping isn’t illegal and is being used as a price reducing tactic by buyers. What a lot of people don’t realise though is that if a buyer does price chip, then they need to go away and get a new mortgage offer showing the newly agreed price for the property from their bank before they are able to exchange contracts. This can lead to delays when getting to exchange.”

SOURCE: Property Industry Eye | AUGUST 24, 2022 | MARC DA SILVA