'My buyers dropped their offer by £15,000 the day before exchange': Gazundering and how to avoid it

A significant story is unfolding on the international scene. 'My buyers dropped their offer by £15,000 the day before exchange': Gazundering and how to avoid itImage source, Getty ImagesByDan WhitworthRadio 4 Money Box reporterPublished5 hours agoSarah was excitedly packing up to move out of the terraced house her family had outgrown to a four-bedroom home in the countryside. But the day before exchanging contracts the buyers of her house dropped their agreed offer by £15,000. "It was awful, your heart just drops to your stomach," says Sarah, not her real name.

She had fallen victim to gazundering, a rare but growing problem in the property market in England and Wales, according to the Conveyancing Association, external. It is calling for government reforms aimed at tackling this and other house buying and selling issues to be brought in "without delay" instead of 2029 as planned. For Sarah, her husband and two children their move had all been going smoothly.

The Details

They were selling the three-bedroom terrace they'd renovated and buying her parents' four-bedroom detached house in the countryside. But the day before contracts were exchanged Sarah received a phone call from her "befuddled" estate agent saying he had some bad news. Their buyers said they'd done some more research about the area and would now offer £15,000 less than the price they'd agreed.

"I can't even begin to go through the financial consequences ," she says. If they accepted the lower offer they would be out of pocket but if they refused there would be costs too. "We had already paid one set of legal fees but would have had to pay again if we needed a new buyer.

We'd also paid the removal fees already and would have to pay again if we cancelled the moving date," says Sarah. Gazundering is when a buyer lowers their agreed offer just before contracts are exchanged. It puts a seller under pressure to accept the lower price or risk losing their sale and collapsing their property chain - potentially losing the house they want to buy.

What Experts Say

It is possible because in England and Wales an offer is not legally binding until parties exchange contracts. Once an offer is accepted it takes an average of 120 days to complete. One in three house sales fall through before exchange.

This costs sellers £400m and the wider economy £1. 5bn each year, according to the Ministry for Housing, Communities and Local Government. Planned government reforms would cut that time by four weeks and save the average first time buyer £650, it says.

After speaking to her dad and husband Sarah decided to put her house back on the market that same day. The next day, her buyers "went running into the estate agent's office saying they were happy to proceed with the agreed sale price", she says. "Gazundering is actually awful.

The development has drawn wide international attention, with diplomatic circles watching closely.