There is only one thing that sellers in a falling market fear hearing from their estate agent more than the dreaded V-word (valuation), and that is the G-word: gazundering. This phenomenon is a growing threat to house prices from buyers who drive a hard bargain. Gazundering, not to be confused with the other G-word, gazumping, is when a buyer demands a last-minute price cut right before contracts are exchanged, forcing sellers to accept a lower price than the original offer. The practice is either immoral or canny, depending on your point of view. Either way, it is rising. Some estate agents are reporting a fourfold increase in the number of transactions being gazundered since the start of the downturn, with buyers typically trying to knock about 10per cent off the asking price.

Gazundering is more common when prices are falling. Nervy buyers do not want to pay over the odds when the property's value may have fallen farther since they made the initial offer. With more desperate sellers around, there is a higher chance that these last-minute offers will be accepted, although some agents are reporting instances where vendors have called the bluff of gazunderers by pulling out of the sale.

“In most cases buyers are not trying to be nasty, they are simply worried about paying too much,” says Peter Bolton King, the chief executive of the National Association of Estate Agents. “But it's a very dangerous game. I heard of one buyer who demanded a £5,000 reduction the day before exchange - the seller refused and the whole chain broke down.”

Offers are not legally binding until the exchange of contracts, so either buyer or seller can withdraw, demand an increase or reduce an offer.

Rebecca Williams, a senior surveyor at Knight Frank, said: “Gazundering was rife during the recession of the 1990s. It is widely viewed as unethical and immoral but, under English and Welsh law, it is not illegal.”

Some agents, worried about the impact on transactions, are taking matters into their own hands. Cluttons, based in the South East, has cut the timeframe for sales in half to reduce the risk of gazundering. It now demands that buyers complete a purchase within three weeks rather than the typical six.

Sellers can take their own steps to avoid being gazundered by setting a realistic price in the first place, asking the buyer if they already have a mortgage and solicitor lined up, and maintaining a good relationship with their agent. Williams says: “Be truthful. If there are defects with your property, declare them at the beginning. This way they can be factored into the agreed price.” King adds: “Consider the motivations of the buyer. If they need to move, they are less likely to mess you around than, say, an investor looking for a bargain.”

If you are gazundered, ask why, decide what you think of the buyer's reason, and don't accept lower than the very least that you need to get out of the sale. And if you are thinking that this means the end of gazumping, think again. Agents say that, even now, buyers are losing out to higher bids, but only on quality properties in good locations that were reasonably priced in the first place.

Case study

Suzanne Emson had lived in a spacious two-bed flat in Cranbourne Court, Battersea, South London, for 13 years with her husband, James, now retired.

“We wanted to downsize,” said Emson, a property-finder in her late fifties. They put the flat on the market in May for £695,000. “Just a year ago we would have put it at well over £700,000,” she added. The Emsons received an offer of £675,000 in June and accepted. Eight weeks later the buyer dropped to £630,000. “We were a bit shocked and tried to negotiate it up, but she said ‘no' so we rejected it.” By August they had found another offer for £642,000 but were gazundered a second time. The buyers, a young couple, said that a survey had found damp in the property and reduced their offer to £615,000 two months later. “We didn't see any choice but to accept. The market was getting worse.”

The Emsons withdrew an offer on another flat because they could no longer meet the seller's minimum, and are now renting. “We feel quite wounded by the whole experience but were also relieved when we finally exchanged contracts.”

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