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There are many confusing words and terms that come up when considering a mortgage and buying a property. Some of the most confusing sounding terms are “gazumping”, “gazundering” and “gazanging”. Though they might sound weird, their meaning is actually quite simple, but they are things you’ll probably want to avoid with the help of an online mortgage advisor.
Here’s what each of these terms mean, plus some tips on avoiding them.
Gazumping
Gazumping happens when your offer has been accepted but another buyer makes a higher offer than you and then that gets accepted by the seller of the house. You have been gazumped into it.
This isn’t illegal in any way, as until you exchange contracts, nothing is legally binding. The period between having an offer accepted and the contract exchange leaves you open to being gazumped, so you’ll want to be prepared in order to avoid it.
Getting gazumped will mean losing out on the house you were about to buy and forcing you to start your property search all over again. Worse still, if you are further down the line between an accepted offer and contract exchange then you could lose money too, as you will have paid for surveys and legal fees in order to get to the contract exchange stage.
Avoiding Gazumping
If you have as much organised as you possibly can when you make the offer, then you can get everything done as soon as possible. This means that the period of time between your accepted offer and exchanging the contracts will be shorter and there will be less risk of being gazumped. If you contact an online mortgage advisor and get your mortgage agreement in principle set up, this will help speed up the process.
You can also take out home buyer’s protection insurance, which will cover legal, survey and mortgage costs if the purchase falls through due to being gazumped or any other reason. You may get some or all of the money back, either way it’s better than losing out entirely.
Whilst gazumping isn’t illegal, it’s seen as immoral behaviour. The property market can be highly competitive, especially in busy areas like London. Sellers also will obviously want to make the most profit they can from the sale.
In Scotland, the house buying process is slightly different, meaning that there is a much shorter window for gazumping so that it doesn’t happen very often, if at all. In a survey by Market Financial Solutions, 79% of people are in favour of banning gazumping in England and Wales.
Gazundering
Just before the exchanging of contracts, the buyer will reduce their offer. This is known as gazundering. The seller is then left with the choice of either accepting this lower offer or letting the sale fall through. It all depends on if the seller wants to make a quick sale, as it might affect their move into their ideal property. Whichever choice is made can lead to losing money.
If you are selling and have been gazundered with a sudden change to a lower offer, your solicitor may be able to negotiate a better offer with the buyer on your behalf. It could be something worth trying before you decide to cancel the deal or take the lower offer.
Gazanging
Gazanging refers to when a seller suddenly pulls out of the deal, taking the property off the market. Your offer may have already been accepted or it was indicated that your offer was going to be accepted but, as it was before the exchange of contracts stage, this commitment wasn’t legally binding.
Just like gazumping, this leaves you back at square one, forcing you to search for another property and could also mean you have already spent money on surveys and legal fees.
There isn’t much that can be done to avoid this, as it’s a seller’s personal decision and you can’t really change their mind or force them to sell.
Final Thoughts
Understanding as much of the house buying process as you can is key to preventing yourself from losing out on either money, or your perfect property. Keep researching and learning, a good mortgage broker will also offer useful advice.
