House exchange gazundering help urgent advice

JACKIEHA

We are due to exchange contracts tomorrow, and we are number four in a chain of five. On Friday the bottom of the chain said they wanted a £1000 reduction in price. Unfortunately the next in the chain are not in a position to do this, so the estate agent for the buyer has gone up and down the chain to try and make the £1000. From reading online I can see that this is a known thing called gazundering. It's obviously underhand although not illegal. The estate agent has asked me to write a cheque for £250 to the buyer or get won't proceed. Not everyone in the chain will agree to contribute, but he as stated if we can get two of us to contribute it might be ok. The reason he wants a cheque is so that no one has to redo the paperwork at his late stage and the buyer wants to complete Friday! We are not happy at all with this form of blackmail, but if it's going to mean we can exchange what choice do we have? Do think this is safe?

Fire_Fox

Welcome! I don't believe the next up in the chain cannot lay their hands on £1K, more likely they don't want to as they have it 'allocated' to decorating and furniture. Nobody in their right mind buys a house with no float whatsoever and most of us take estate agent's claims with a pinch of salt.

jackomdj

Ask yourself, do you think they will really pull out due to £1000? How much would they have already spent and not get ack if they pull out, ie solicitors, searches, mortgage fees. Personally I would call their bluff and refuse to play their game.

chickaroonee

I'd be tempted to call their bluff too.

InMyDreams

JackieHa wrote: »

The reason he wants a cheque is so that no one has to redo the paperwork at his late stage

Is that even allowed? What price goes to land registry as the sale price? And no, I wouldn't entertain the idea either.

thelem

I'd also call their bluff, but then I'm not the one worried that their house move might not complete.

Do you know why they want this £1000 reduction? They haven't agreed to buy for £126k or something, and have only just realised they won't need to pay stamp duty if the price is reduced by £1000?

JACKIEHA

Problem is I believe that they are buying to rent out, and are investors rather than someone who is going to live in the property. I have been on the estate agents website and I am pretty sure I know which property it is, and if I'm right it has already been advertised for rent. Therefore they have complete disregard to families moving home and feelings etc, just want to make a quick buck. I would presume that all they have had to pay for so far are the searches and perhaps an arrangement fee. Lots of solicitors now work on the basis that if the sale does not go through you don't pay for the work done, as obviously do the estate agents. So really they have probably not lost much.

Fire_Fox

JackieHa wrote: »

Problem is I believe that they are buying to rent out, and are investors rather than someone who is going to live in the property. I have been on the estate agents website and I am pretty sure I know which property it is, and if I'm right it has already been advertised for rent. Therefore they have complete disregard to families moving home and feelings etc, just want to make a quick buck. I would presume that all they have had to pay for so far are the searches and perhaps an arrangement fee. Lots of solicitors now work on the basis that if the sale does not go through you don't pay for the work done, as obviously do the estate agents. So really they have probably not lost much.

So again, the next people up the chain suck up the £1K.

JACKIEHA

I do feel like saying no, but then would also be devastated if it all fell through at he last minute over me paying £250. It's not so easy when it's just before Christmas and you have three children.

Yorkie1

JackieHa wrote: »

The estate agent has asked me to write a cheque for £250 to the buyer or get won't proceed. Not everyone in the chain will agree to contribute, but he as stated if we can get two of us to contribute it might be ok. The reason he wants a cheque is so that no one has to redo the paperwork at his late stage and the buyer wants to complete Friday! We are not happy at all with this form of blackmail, but if it's going to mean we can exchange what choice do we have? Do think this is safe?

Irrespective of the blackmail element (which I agree it is), I think this could amount to fraud by failing to update the paperwork.

His solicitor has to declare the value of the property purchase to the land registry. Any reduction in the value of the purchase must be shown truly on those documents. So if he fails to tell his solicitor, he is making the solicitor unwittingly create a false document for this purpose. If he does tell his solicitor then the paperwork will need to be redone.

Secondly, if the house value is above the stamp duty level, then it could be fraud - albeit the fact that a higher amount would be declared might mitigate against that.

Thirdly, if he is buying with a mortgage, there are elements of vendor gifted deposit / fraudulent figures, either of which are relevant to the lender's decision to lend and could thus amount to fraud.

And that's just the impact on that part of the chain. I can't compute how the paperwork for the rest of the chain would be false if not properly / truthfully updated.

moneyistooshorttomention

jackomdj wrote: »

Ask yourself, do you think they will really pull out due to £1000? How much would they have already spent and not get ack if they pull out, ie solicitors, searches, mortgage fees. Personally I would call their bluff and refuse to play their game.

Me too:T

I wouldn't feel very pleased with myself if I let a greedy little "try-on merchant" get away with this (ie that would-be gazunderer at the bottom of the chain) and I would refuse to "play their little game" on the basis that I didn't want a nasty little tyke like that to "win" at such tactics.

On a very practical level - I don't believe they WOULD actually pull out if everyone else in the chain stood firm and refused to give in to their blackmail anyway. They will have had costs they wouldn't recoup and they will presumably want their "housing needs" dealt with and matter over/get on with rest of life anyway. I think they are bluffing.