Gazundering on a house

Can anyone tell me if I can do this ? I've put a deposit of e5,000 on a three bed semi and the contracts are due to be signed shortly. I think the house is worth less than I orginally offered and I now want to revise my offer downwards by offering e10,000 less. Can I do this without endangering my deposit ? My offer was e250,000. I now want to offer e240,000. Thanks you for any advice you can give.

If there are no contracts signed, there is nothing to stop you doing this, likewise there is nothing to stop them refusing your lower offer. I am sure it is happening a lot recently when people go back to their bank and the amount they expected to get from their lender has been reduced.

Is there any grounds for a reduction based on a survey you have had on the house? I ask only because if there was a reason like that, as a vendor I would be more understanding than if I believed that the person had strung me along with an offer, possibly having always had the intent to reduce it at the last minute.

You can withdraw your offer and ask for a refund of your 'booking deposit' without penalty once no contracts are signed.

thanks for the information and tips, I appreciate it....

I gazundered.

If you have had some cooling off and feel you have overbid then tell the vendor and make a revised offer (if you want). Thier decision is unchanged, they can proceed or not proceed.

But you have to ask yourself if this is the right thing to do, morally.

Legally, it's clear. You can pull out and get your money back.

But you agreed a price. They have taken it off the market. They have spent money to draw up the contracts.

They may well have agreed the purchase of another house based on going sale agreed with you.

We all make agreements which we later regret. But generally we stick to them.

Unless there was some significant change, you should go ahead at the agreed price.

Brendan

Brendan said:

But you have to ask yourself if this is the right thing to do, morally.

Legally, it's clear. You can pull out and get your money back.

But you agreed a price. They have taken it off the market. They have spent money to draw up the contracts.

They may well have agreed the purchase of another house based on going sale agreed with you.

We all make agreements which we later regret. But generally we stick to them.

Unless there was some significant change, you should go ahead at the agreed price.

Brendan

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I disagree. If they have signed a contract then that is different but they haven't.

Up until the point of that contract being signed anything could happen to any side. In fact, whats to stop the seller pulling out?

TBH in this enviroment as a seller I would be expecting the buyer to come back with a reduced offer. If they didn't i would count my self very lucky.

It nothing to do with morals its to do with the changing market and price. If I had agreed to buy 10 cancers screening machines for €10m and before contracts were signed the gobal downturn has led to further competition and value should i waste money and buy at €10m or renegoiate to acheive the market price?

When the market is in a state of flux so will be the process of buying and selling.

GO FOR it, acheive the best price you can in the end the market will decide! If they are buying they will have also renegotiate as well. You never know eventually an average home will be bought for 3.5x average salary again. Happy Days for all.

In fact, whats to stop the seller pulling out?

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There is nothing to stop the seller pulling out. And when the market was good, sellers were pulling out or demanding higher prices. That was wrong as well.

Go Tapaidh

What if you really liked this house and were excited about moving into it and the sellers told you that they had an offer of €10k more? How would you feel?

What you are planning to do is more serious, because it could have a knock-on effect on a chain of buyers and sellers.

Brendan

I would agree with Brendan on this. It's legal but it's wrong, unless there are contributory factors necessitating a revised offer which could be explained to the vendor.

Brendan said:

There is nothing to stop the seller pulling out. And when the market was good, sellers were pulling out or demanding higher prices. That was wrong as well.

Go Tapaidh

What if you really liked this house and were excited about moving into it and the sellers told you that they had an offer of €10k more? How would you feel?

What you are planning to do is more serious, because it could have a knock-on effect on a chain of buyers and sellers.

Brendan

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You are moving in line with the market and you should do the best to acheive the ture market price or a price you are happy with.

As the market price is moving so the process has to be fluid. I would expect this as part of the market as contracts have NOT been signed, in affect all is still negotiatable.

It may have a knock on effect in the chain if the seller has "assumed" it would go through. You know what assumed makes.....I for one would not be signing up to buying another house until the contract to sell mine had been signed at least!! (I'd probably wait for the money to be in the bank tbh)

If prices were going up and you couldn't afford the extra 10k, you missed out on the house, this is what happen.

If the seller hadn't wanted this to happen then they should have refused to take the house off the market until the contract was signed at the agreed price. And they should have laid down a strict time table by which the contract needed to be signed.

Go for it acheive the best price for you.

The OP and MR DT's attitude is partially to blame for where we currently are as a society, it's the same attitude that tolerated nay encouraged gazumping in the boom times.

You are moving in line with the market and you should do the best to acheive the ture market price or a price you are happy with.

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That is not correct. The market is moving all the time. But when I make an agreement to buy a house, I am buying it at that price. I am not saying "I will buy the house at the price prevailing on the date we exchange contracts".

Do unto others as you would have done unto you.

About two years ago, a friend of mine had his heart set on a house and agreed the price. Just before issuing contracts, the sellers came back to him asking for an extra €20k as the market had moved up. He was gutted and really wanted the house. But on principle, he decided not to buy the house. They offered it to him 6 months later at a reduction of €100k. He told them to go ... (I almost forgot that bad language is not allowed on Askaboutmoney).

Unless there is a very good cause, people should stick to their agreements.

But it's Go Tapaidh's moral choice at the end of the day.

Brendan

dereko1969 said:

The OP and MR DT's attitude is partially to blame for where we currently are as a society, it's the same attitude that tolerated nay encouraged gazumping in the boom times.

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Its not an attitude its a belief in letting the market decide the price.

They have a right to negoiate up until the point a legal contract is signed in my opinion. If either party don't like it then they can pull out!

So in your opinion you should go with the price you offered, NOT the price you sign a legal contract for?

Were we are currently in society is a far more complex issue and has nothing to do with selling and buying houses i hope (mmmm but then again as this is all we did for several years may be it does......mmmm)

Mr DT said:

Its not an attitude its a belief in letting the market decide the price.

They have a right to negoiate up until the point a legal contract is signed in my opinion. If either party don't like it then they can pull out!

So in your opinion you should go with the price you offered, NOT the price you sign a legal contract for?

Were we are currently in society is a far more complex issue and has nothing to do with selling and buying houses i hope (mmmm but then again as this is all we did for several years may be it does......mmmm)

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I strongly disagree with you here. There is a verbal, though not legal gentleman's agreement in place before contracts are exchanged. It can cost "the shafted" party dearly in legal fees, wasted time and complication if the other party gazumps/gazunders and they don't want to go ahead with the "new" price.
"Pulling out" can be a very expensive business, but sure I guess you'd probably say "thats my problem", we have ways of legitimizing the pains we cause to others.

IMO Gazumping/Gazundering is shafting, pure and simple. I also agree that this attitude plays a large part in the reason why this country is in the current state its in, both socially and economically.

Integrity is a very desirable virtue in a person.

but you're not letting the pure market decide the price!

you've agreed/promised to buy something for a certain price, the people selling have more than likely taken the house off the market and made plans based on the agreed/promised price and then you try to screw them over by dropping the price. So the market won't have access to the property for the time the person who promised to buy the house is taking to sign the contract.

a person should be judged on their ability to keep a promise made and decisions like those you are advocating raise questions about what type of a person you are and what type of society you favour.

I know that it sounds very old-fashioned, but so far as I am concerned, when I make a deal, I should do my best to keep to it. The fact that the law might allow me to behave dishonourably does not change that.

Brendan said:

That is not correct. The market is moving all the time. But when I make an agreement to buy a house, I am buying it at that price. I am not saying "I will buy the house at the price prevailing on the date we exchange contracts".

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The market moves quickly in the boom and in the bust, hence it would be wise to get contract signed quickly. In a "normal" market we wouldn't have the extremes. Hence, it will be less complicated for all when we move to a normal sustainable market.

Brendan said:

About two years ago, a friend of mine had his heart set on a house and agreed the price. Just before issuing contracts, the sellers came back to him asking for an extra €20k as the market had moved up. He was gutted and really wanted the house. But on principle, he decided not to buy the house.

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Fine, so out of pinciple he decide not to buy his dream house.

Brendan said:

They offered it to him 6 months later at a reduction of €100k. He told them to go ...

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So he refused to buy his dream house at 80k less, as I guess he felt it was worth less than that or not at a price he was happy with. Fine.
And the seller had a "paper" loss 80k. Fine. you could argue the market worked well for both parties.

Brendan said:

But it's Go Tapaidh's moral choice at the end of the day.

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Nothing is agreed until contracts are signed. Fact. Its more complicated in the extremes of a boom and bust and both buyers and seller should be aware of this.

Padraigb said:

I know that it sounds very old-fashioned, but so far as I am concerned, when I make a deal, I should do my best to keep to it. The fact that the law might allow me to behave dishonourably does not change that.

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+1. I have been playing devils advocate

I would never Gazunder or Gazump myself. I would negotiate a price I am happy to pay based on my knowledge and future expectation of the market.

Just thought it would be interesting to get a debate going.

raven said:

Gazundering/Gazumping only works when one party takes (attempts to take...) advantage of the other. Part of the "attractiveness" of doing so, is that the other party has already made a commitment in time and money (fees etc.) and thus it is less desirable for them to sacrifice this and walk away. The whole act is premised on the "victim" acting honourably, and taking advantage of this. This is arguably confidence trickery within the narrow though not legal meaning of the term.

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I think this is a very good summary which we may not of got to if the other "arguement" had not been put accross.

I hope it allows the original poster to make the correct decision to honour the argreement.

It breaks the golden rule.

You wouldn't want someone to do it to you.

However, if the seller was stupid enough to delay the sale beyond a reasonable period (say 3 months), they have only themselves to blame.

From what I can see about half of all 'sale agreed' house transactions fall through or are subject to gazundering.