The drop in house prices and the desperation of some homeowners to sell before prices fall any lower is resulting in many buyers getting a raw deal on the value of their home, as buyers take advantage of the difficulties in the housing market by engaging in a practice known as gazundering. Whilst not illegal, this practice is seen as highly unethical but a number of buyers are trying their luck in the hope of being able to pick up a property at a bargain price.

This practice involves putting in an offer on a property, and then dropping the offer price just before the exchange of contracts, sometimes by thousands of pounds. Sellers are then left to decide whether to take the reduced price or whether to start from scratch and start looking for another buyer. Some buyers are quite happy for the seller to walk away from the deal of they are not prepared to accept the lower offer price, according to some officials.

According to one industry official: ‘The most likely gazunderer will be an investment banker, in fact anyone in the City, particularly a single bloke looking to show off to his girlfriend or vice-versa. It’s reasonable to expect people to negotiate say £10,000 to £15,000 for issues such as damp but if the buyer is trying to get 10% to 15% off, then you’re into gazundering territory.’

Another said: ‘London is not like the country. If you fall for that perfect rectory then you are unlikely to want to jeopardise that. But in London if you are after a three-bedroom mansion flat and the deal falls through you know that, like London buses, there’ll be another one along soon. We had a double gazunder the other day in Westminster. The price was agreed at £2.5m then it came down to £2.2m, which my client agreed to reluctantly, then the buyer dropped the price to £2.1m at which point my client withdrew.’

Recent news:

• Mortgage market could continue to suffer for another two years
• Even the government expects house prices to keep falling
• More help to be offered to homeowners facing repossession
• Estate agents at risk of problems due to mortgage and housing chaos
• Brokers complain over lack of access to mortgage deals
• Slump in lending levels fuelled by credit crunch

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