Money Jargon - The Letter G

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Money Crocodile knows the finance world is full of terms, phrases, buzz words and jargon. The below terms will help you with terms beginning with the Letter G

On this page we explain,
Gazumping > Gearing > Green Card > Gross > Ground Rent > Guarantor

Gazumping

Gazumping is the term used to describe a situation in which the seller of an asset accepts an offer made and then accepts an new offer made by a different buyer at a later time. Once an offer is accepted in principal no other offers should be considered by the seller.
As far as property gazumping goes of course the seller wants the highest price possible for their property and this is where gazumping can cause conflict. A seller once they have accepted a buyers offer in principle should not then go ahead and accept a higher offer made by another buyer. Of couse buyers are looking to buy property at the cheapest price they can get but before offers are actually accepted negotiations should be complete.

Buyers and Gazumping.
The buyer finds the property they want, make an offer and verbally agree on the price with the seller. After this agreement, another buyer makes a higher offer which is agreed to by the seller, this results in the person who made the first offer being gazumped. The first buyer may or may not be given the chance to raise their offer in order to beat the second offer. It all seems very unfair.
Buyers should be careful not to offer too low a price. Understand that the lower the price offered, the higher the risk that another buyer will offer more and gazump. If it is at all possible try to meet the sellers, it is hard for sellers to agree any further offers (gazump) if they meet the buyer and like them. Buyers can count on nothing being certain until the exchange of contracts.

Agents and Gazumping.
When agents are employed by sellers, they have a duty to the seller to get the best price for the seller. Agents should make people aware when an offer has already been accepted on a property, they also have to inform the seller if there has been a higher offer for their peoperty even if it was made after the lready agreed offer.
If an agent does not pass on an offer to a seller, the agent could be in legal trouble should the seller find out at a later date.
Agents are the middle men in the proeprty market and sometimes have a difficult job to do, however an agent should inform the seller they have no legal obligation until the contract is signed.

Gearing

Gearing is the term used for the percentage of your borrowing relative to your assets. This is a term used when involved with investment trusts. It is the ratio of your own money versus borrowed money in an investment. Positive gearing is when you borrow to invest in an income producing asset and the returns (income) from that asset exceed the cost of borrowing. Negative gearing is when you borrow to invest in an income producing asset and the cost of borrowing exceeds the returns (income) from that asset.

Gearing is the opposite of your estate, simply the sum total of your liabilities, minus your assets. That is every thing you owe, minus what you own. Gearing is often refered to as a percentage figure. For example if you own a home worth £200,000 and you have £100,000 mortgage outstanding on it, your gearing is said to be 50%.

Green Card

A green card is a document which provides evidence that you have at least basic vehicle insurance cover in your home country. A green card is not a legal requirement to drive in other countries, nor is the card insurance cover in itself.
The green card can be a useful document because it is readily recognisable by law enforcement officers and can save you time and trouble if you need to produce evidence of insurance while travelling abroad.

Gross

Gross refers to a payment of some income before and without the deduction of tax. The term gross refers to an overall total, excluding any deductions.

Ground Rent

The ground rent is the sum of money paid to the landlord or owner of a property by a tenant or leaseholder for inhabiting the property. It is the amount of money that is paid for the use of land when title to a property is held as a leasehold estate rather than as a fee simple estate. Ground rent is frequently used in mobile home parks where the living units are individually owned but the land is rented from the mobile home park owner.
The ground rent will be set when the lease is first granted, and may provide for increases in it's amount as the years pass.

Guarantor

A guarantor is a person or group of people who provide security for a finance product, be this through cash or providing the lender with additional security. A guarantor undertakes that he himself will repay a debt incurred by another person to a creditor, if that person cannot or will not pay their indebtedness.
In the case of co-guarantors each guarantor will be fully liable for the total outstanding amount. It is up to the guarantors to resolve their respective obligations between themselves. When becoming a guarantor remember you are fully liable for the outstanding amount, so caution is advised before agreeing to help finance others as it is possible that you will be asked to pay.

Guarantors and Property Buying
Often nowadays due to the increasing property prices a buyer may find lenders unwilling to lend to them. Lenders may not be willing to lend sufficient funds to aquire a property, in such cases parents may wish to become guarantors. This would help their offspring to get onto the property ladder. One way parents could raise the funds to help their sons or daughters is by releasing any equity they may have on their own property.