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What is Gazumping
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Just what is gazumping, and how do you make sure that it does not get
the best of you? The term gazumping is said to have come from the Yiddish
word “gazumph” which means to swindle or overcharge. During the 1920s,
it supposedly came in to frequent use in the gangster culture, when
people would use the word when making false transactions to con someone
in to upping their price. Over time, the meaning has changed slightly,
and the word now applies primarily to real estate. Gazumping is when
a vendor accepts a higher offer from another buyer after one has already
been accepted.
If you have never purchased a home before, this may seem very unfair
to you, and you may not understand how this happens. When a buyer puts
in a bid on a house and the vendor accepts it that is only the beginning.
An agent, which is a go between for the buyer and the vendor is still
obligated to tell the vendor of any bids that go in on the property
until the close of the sale. So, even when there has been an agreement
made, until the contracts are signed, the property is still up for grabs.
This is good for the vendor, because they can still accept higher offers.
Even if the house has been taken off of the market, until contracts
are signed, parties who have previously viewed the property can still
put a bid in on the real estate. If this happens, the agent is legally
obligated to inform the seller of such activity. This is to protect
the seller’s best interest.
For the most part, agents do not want there to be another offer. Once
an agreement is made, it is in their best interest for the proceedings
to happen as quickly as possible. A slightly higher bid will not necessarily
mean much more in commission for them, but it will mean a lot more work
in deliberations and paperwork. So, many agents will ask sellers to
sign an agreement that says that gazumping will not be a problem.
As a buyer, it is in your best interest to ensure that your funds do
not get tied up in legal proceedings for a property that you may not
end up with in the end. Ask your agent about the prospects of gazumping,
and whether or not they have a contract with the seller that prevents
such activity. This will lead to a less stressful proceeding for all
parties involved. Buying a home for the first time can be a scary and
exciting process. Obviously, you want it to be more exciting than scary,
so cutting out as many surprises as possible is paramount.
Once you put in a bid on a property and it is accepted, your money begins
to be spent. Inspections, feasibility studies, appraisals and court
fees are non-refundable. So, in order to ensure that this money is not
being spent in vain, do everything you can to make sure that you understand
where your agent stands on gazumping, and be sure to be as up front
and honest about your intentions as you expect the other party to be.
About The Author:
Peter Dobler is a veteran in the IT business. His passion for experimenting
with new internet marketing strategies leads him to explore new niche
markets.
Read more about his experience with real estate; visit
http://real-estate.online-business-idea.com
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