Unethical, immoral but not illegal – Paul Hogarth of Knight Frank looks at why gazundering is on the increase.

I have a recurring nightmare. I am young, fit and playing football at Wembley, leading 1-0 with 90 minutes on the clock when we concede a penalty in injury time – the glory is whipped away at the last minute.

Just like those penalty shoot-outs that scuppered our chances of glory in the 1990s, another trend is back that can have devastating effects at the last minute: gazundering.

It occurs at the point of exchange of contracts on a property, when the purchaser puts forward a reduced offer from that of the initially-agreed price. It is a highly unethical and immoral practice of buying, yet under English and Welsh law, it is not illegal. Any offer put forward is not legally binding until the exchange of contracts.

So how can you reduce the possibility of being ‘gazundered’? It goes without saying that you should ensure you put your house on the market with a reputable estate agent; you should initially have at least three agents come to value your property. They will hopefully quote you a similar figure for your property but if not, don’t simply settle for the highest.

In a falling market, you have to be realistic. If the house is on at the right price, this will make it much harder for a purchaser to try to knock you down at the last minute.

Use land registry websites to see what other houses have sold for or are on the market for, this should give you a better idea of the level yours should be, and once your property is on the market, keep checking to make sure the prices haven’t dipped.

Without decrying my chosen profession, you really need to question and challenge everything your agent tells you regarding any serious interest to make sure the person buying definitely wants your house and has the funds to pay for it. You can ask to meet the buyer to go through every detail verbally over a cup of tea or glass of wine. Establish a cordial, but professional business relationship. Hopefully you can then lessen the risk of a reduced offer at the last minute.

It’s important to be truthful; agents are governed by the Property Misdescriptions Act (PMA), an Act which ensures only factual details of the property are provided so if there are defects with your property you are aware of, declare them at the beginning. This way, the cost of replacing them can be factored into the agreed price.

Paul Hogarth is partner and head of new homes sales and marketing in the South East at Knight Frank. To contact his residential development team phone 01483 564 660.