Most people know the term gazumping, but few have heard of gazundering. The word describes a tactic used by a buyer to offer less than the price originally agreed for the property. This occurs just before the contracts are exchanged by both parties. Typically, it happens at the last minute before this part of the process.
While gazumping impacts the would-be buyer, gazundering impacts the seller of the property. Up to this point, they would have agreed a price for the sale and gone through many of the required stages before the contracts are exchanged. Once the exchange occurs, very few people back out, as there are significant costs involved in doing so. Therefore, anything can and does happen before contracts are signed.
For the seller, gazundering can be frustrating at best and cause the failure of the property sale at worst. The buyer may have intended to drop the offer price at the last moment all along, being prepared to walk away if the seller does not cave to their demands. The temptation to accept the lower offer is significant. If the seller doesn’t accept the offer, the buyer could walk. The seller might also have placed an offer on another property – an offer they may need to withdraw if the sale is not completed. A lot is riding on the exchange of contracts, hence why some unscrupulous buyers indulge in gazundering in the hope of getting their desired property at a lower price than they originally agreed to. The process is potentially great for buyers – far less so for sellers. It is also legal.