5 Top Tips on how to avoid being gazundered
The Commercial property sector has seen an increase in the phenomenon of gazundering*, with 71% of agents and landlords stating that they have recently experienced gazundering, reveals research by NB Real Estate, the commercial property agents.
NB Real Estate conducted a survey amongst agents and landlords, asking them whether they have recently experienced gazundering. Only 29% of respondents said that they had not.
NB Real Estate explains that many buyers have been seeking to take advantage of the negative perceptions of the state of commercial property and the economy in general and try to lower their offer for a property at the last minute before the final contracts are exchanged.
Says Peter Trinder, Director at NB Real Estate: “Many buyers, having been conditioned by the negative messages about the commercial property market, assume that agents or landlords are desperate to sell and so they would go along with a last minute drop in price.”
“Sellers need to realise that there is still a good level of activity in the market and there is demand for the right properties, so gazundering is not something they have to put up with.”
Peter Trinder suggests that landlords follow just a few steps to stop gazundering in its tracks – from the moment the buyer agrees on the purchase, to the final exchange of the contracts.
Top 5 tips to avoid being gazundered:
1. Keep the time span between agreeing the price to signing all contracts to a minimum: Try to foresee any potential obstacles to contract exchange before you market the property. Make sure that you understand the terms of the lease and have a legal pack ready to be sent to the buyer as soon as possible. The legal pack should contain things like a draft contract, copy leases, insurance documentation, EPC assessment and any other relevant warranties and licenses.
2. Choose you buyer carefully: make sure that you know whether a seller actually has the money and the ability to complete the deal.
3. Monitor and coordinate the buying process: you must at all times be on top of what is going on with the process, and be alert to any serious issues. This will help if you need to revert to your Plan B.
4. Have a Plan B: It can help if the buyer is aware that you are ready with a back-up plan. Never let a buyer know or think that they are the only players on the pitch; this can leave them wondering why they are the only interested party and can cause nervousness.
5. Ensure that the deal has something for the seller and for the buyer. All deals should have something for both. If a buyer is pushed too far this will cause you problems. Try to put yourself in the buyer’s shoes – this will help you anticipate problems before they arise.
*Gazundering: when a buyer lowers the offer to a seller right before contracts are exchanged, even though the sale had been agreed. Opposite to gazumping.