According to the Council of Mortgage Lenders, there were 78,400 repossessions in the five years to 2007. They now forecast that this will rise fivefold to about 350,000 during the next five years. In fact, it seems that in about 25% of the properties now going into residential auctions are repossessions. The only ray of good news from this for estate agents is that it will perhaps cause sellers to realise they have to drop their asking prices when they see similar properties going at lower figures at auction. The agony will only end when sellers and buyers finally start to agree on the value of properties.

Gazundering is good. It spreads the pain. It allows the sellers to take their reality medicine in easy to swallow quantities.

It suppose it’s a bit unkind if someone get into a chain and then, just at exchange, threatens to withdraw unless he gets another 5% off the price. But it is just business after all. Buyers and sellers aren’t relatives, they’re just people doing a financial transaction . But even if you think that’s really immoral, which I don’t, that type of behaviour only makes up a very small part of the gazundering phenomenon. Mostly it’s just people who genuinely feel they are paying over the odds – and, if you’re an estate agent, I think you should see this as positively beneficial.

Sellers are putting their properties on the market at unrealistic prices because they just can’t accept how much the market has fallen. It’s very hard for estate agents to talk them down from 2007 dinners party prices. So what seems to happen now is that buyers succeed in knocking something off the price when they agree the deal. But they’re just not happy with it. The sellers aren’t happy with the price either, but they have to stomach it because after many weeks on the market they do eventually come round to the fact that they have to accept a lower price. So the sellers come to terms with it, but the buyers don’t. The buyers go ahead with the higgling feeling that they haven’t got the discount which they read in the papers everyone else is getting. So it’s no surprise really that they come back for a second bite later in the transaction, either because something comes up which justifies a price reduction (usually something in the survey report), or just because they can’t bring themselves to exchange contracts at the price they had agreed (as they see it, in a moment of regrettable weakness).

We’re always finding this with clients who get our report, sign the contract, and then start asking us what we think about the price and how the market has gone in the last few weeks, and so on. They don’t really think that the price of the property is directly related to some index run by Nationwide Building Society, and they aren’t really scared by whatever it is they make a fuss about in the survey report. That’s really just the excuse they give themselves. The reality is that feel they never negotiated the right price in the first place.
 
So, back to why this is a good thing for estate agents. In an ideal world, the best thing estate agents could do to achieve a sale is to force the sellers to lower their expectations and to accept a price which may be 5% or 10% below their hopes, and to do it right at the start. But the problem for estate agents is that, if you give realistic advice, you risk the sellers deciding they prefer another firm.

So gazundering does the dirty work for you. You get the property under offer at a price which is acceptable to the seller, and then the real price negotiation happens just before exchange of contracts. It doesn’t cause the deal to fall through, because the sellers can’t afford to back out at that point. Gazundering really can help you keep a deal in place. And although they don’t appreciate it, that’s good news for the sellers too.