Auctioneering Flashcards
What are the four methods of sale?
Private treaty
Informal tender
Formal tender
Auction
Explain a private treaty sale?
Parties are free to negotiate in their own time and without commitment in the open market.
Explain an informal tender sale?
Best offers and bids are taken. Used when there is a good level of interest in the asset.
Explain the formal tender sale process?
This is the sealed bids process typically used by a statutory body to give control and transparency over the marketing process.
What are the advantages of selling at auction?
Speed of sale
Certainty of sale, assuming the reserve price is achieved.
A useful method of sale If the asset is unusual and difficult to value.
Used for a property which is likely to generate high levels of interest.
What are the disadvantages of selling at auction?
Cost of promotions and publicity.
Lack of confidentialty over the price achieved.
Vendor cannot choose the purchaser.
Intensive nature of a short marketing period.
What is the procedure of selling at auction?
- CIT
- AML checks must be completed for all vendors and prospective purchasers in advance of the auction.
- Auctioneer stating the rights to refuse bids and types of bids which can be accepted and to sign the contract on behalf of the vendor.
- Full due dilligence must be carried out on the property prior to sale.
- All relevant information regarding the property to be sold must be made available in advance.
- General conditions of sale, memorandum of sale and the addendum must be published by the auctioneer.
- Reserve price is set and confirmed in writing.
- Contracts exchange at the fall of the gavel.
- Auction particulars inline with Misrepresentation Act 1967 and the Consumer Protection Act 2008.
What actions are required of the prospective purchasers prior to the auction?
- View the property and consider a structural survey.
- Take proper legal advice and complete a due dilligence exercise.
- Read the notice to prospective buyers.
- Arrange a deposit of 10% & insurance for exchange.
- Provide ID for money laundering purposes.
What statement is provided relating to auctioneering?
RICS Professional Statement - Auctioneers Selling Real Estate at Auction in England & Wales, including Common Auction Conditions, 2018
What are the pre-auction actions for an auctioneer?
Agreeing ToEs.
Arranging for all relevant legal documentation and plans to be available prior to sale.
Adopting RICS CAC’s contained within the professional statement.
Choosing a venue.
Not providing misleading guide prices.
Advise all applicants if a lot is withdrawn prior to the sale.
Confirm the EPC/VAT position.
What are the requirements for the reserve price?
To be fixed before the auction day.
Confirmed in wiriting by the client.
The figure must remain confidential.
Why would you suggest proceeding with the auction method of sale?
Auctions overcome valuation uncertainty and offer some certainty of sale.
What is a guide price?
It is an indication of what the minimum price to what the vendor is willing to sell the property for.
What is a reserve price?
A reserve price is a minimum price that a seller would be willing to accept from a buyer.
What is the Auctioneering Act 1845?
States that auctioneers must place a board with their full name and residence that is “publicly visible and legible” in the room where the auction takes place before, during and after the auction.
