Auctioneering Flashcards
Talk me through the process of an auction
- Conflicts
- Competence
- Appraise
- T of E – agree guide and reserve, sign
- AML checks
- Inspect – measure, photos, description check. Make recommendation as to guide and reserve.
- Receive any special conditions/addendums from solicitors
- Publish particulars and catalogue
- Auction catalogue/particulars published in line with Consumer
- Marketing period – 3 weeks responding to enquiries
- Auction day
- Ensure information available to inspect on day
- Collect buyers details, deposit and AML checks.
- Post auction - await completion monies.
What are the actions you would undertake pre-auction?
- Receive instruction
- Agree terms of engagement
- Arranging for all relevant legal documentation and plans to be available
- Adopting Common Auction Conditions, 2018 (4th edition)
- Choosing auction venue with sufficient size with insurance cover
- Not providing misleading guide prices
- Advice all applicants if a lot is withdrawn prior to the auction
- Confirm the VAT/EPC position
What actions would you take in respect of the reserve? When is it set?
- To be fixed before the auction day
- To be confirmed in writing with the client
- The figure must remain strictly confidential with the auctioneer and not disclosed to any party
What do you include in an auction catalogue? What regulations apply?
- Particulars prepared in accordance with the current consumer protection regulations
- Include General Conditions of Sale and Memorandum of Sale in the catalogue
- Auctioneer to disclose any significant rent or service charge arrears relating to a lot.
What actions do you need to undertake on auction day?
- Any amendments or variations to the particulars or an addendum should be openly disclosed in the room.
- A statement regarding rules for proxy and internet bidding should be available to all bidders
What actions do you need to do post auction?
- Published results must be accurate and only published with the vendor’s and buyer’s consent
- The Identity of either party should only be disclosed with their consent.
- Oversee completion and receipt of completion monies.
What due diligence should be carried out pre-auction?
- Inspection
- Report on title
- Flood risk
- Council tax/business rates
- TPO’s
- Structural survey?
What are the advantages of buying/selling at auction?
\+ Transparency \+ Degree of certainty of sale and terms \+ Quick timescales \+ Competitive bidding \+ Binding contract at fall of gavel \+ Wide market exposure
What are the disadvantages of buying/selling at auction?
- Lack of confidentiality
- If the lot fails to sell it can be harmful to the market perception of value
- High costs
- Intense timescales
Which common Auction Conditions do Allsop adopt?
Common Auction Conditions, 2018 (4th edition)
Under the common auction conditions when is completion set for?
a) the date specified in the SPECIAL CONDITIONS; or
b) if no date is specified, 20 BUSINESS DAYS after the auction but if that date is not a BUSINESS DAY the first subsequent BUSINESS DAY.
How do you find out about an auction property?
Marketing board, catalogue, email
Should you view an auction property before buying?
Yes
What happens if a cheque for the deposit bounces?
As per the common auction conditions the seller may treat the contract as an at end and bring claim against the buyer for breach of contract
What is a Notice to Bidders?
- to provide key information to the prospective bidder e.g. property offered subject to the Common Auction conditions (4th Edition April 2018).
- Offer process ( if accepted before auction
- Successful bidder (fees, deposit etc)
- No responsibility accepted for information unless from catalogue, site or employee.
- Key release
What does the auction legal pack contain?
- Register of Title (ordered by BB);
- Title Plan (ordered by BB);
- Any additional title documents (ordered by BB);
- Common Auction Conditions (automatically provided by Allsop);
- Special Conditions (drafted by BB);
- Transfer – may include overage and clawback provisions depending on our instructions from NHSPS (drafted by BB);
- Letter to Bidders (drafted by BB);
- Local Authority Search including both Local Land Charges and Standard and Optional replies (commissioned by BB);
- Drainage and Water Search (commissioned by BB);
- Chancel Repair Search (commissioned by BB);
- Environmental Search (commissioned by BB);
- Highways Search if relevant (commissioned by BB);
- Coal Mining Search if relevant (commissioned by BB);
- EPC (provided by NHSPS);
What might be a special condition of sale?
Special conditions’ are additional conditions attached to a standard contract, and are normally included in contracts relating to the sale of a land
E.g. Overage and clawback provisions
- Delayed completion period.
- Purchaser is responsible for vendor’s agency and legal fees
What is a guide price?
A guide price is a marketing figure, which is used to guide potential buyers as to how much a property could be worth. They are not necessarily figures which a property will sell for, the sale price will be dependent on bidding in the auction room. Guide prices can either be a single figure price or a price range.
What is a reserve price?
The price stipulated as the lowest acceptable by the seller for an item sold at auction.
Which of these are confidential?
Reserve price
How do these differ? (Guide and reserve)
The reserve is the minimum price it will sell for and is confidential. A guide is just a marketing figure.
What is an Addendum?
An Addendum, sometimes referred to as an Amendment Sheet, is a list of changes that have been notified after the catalogue being published. The sheet will be available in the auction room and you will often be able to view the addendum on Allsop website website.
Why are Addendums important?
The addendum forms part of the property description and sale contract. If you have any questions about the contents of the addendum, please speak with a member of the auctions team for advice prior to the auction beginning.
What fees are typical for an auctioneer?
Buyers Fee: £1,000
Sellers Fee: 2% (minimum fee £1,000 plus VAT)
Can you sell a property before or after auction?
Yes
How does finance work for auctions?
10% deposit on the day and the remaining 90% has to be paid within 20 working days. Buyers are advised to gain mortgage approval in principle with the maximum amount that they could bid to ensure the process goes smoothly.
What deposit is typically payable and when?
10% on the day
What is a section 5B notice?
- This standard document is a notice under section 5B of the Landlord and Tenant Act 1987 (LTA 1987) offering the tenants the right of first refusal when the landlord intends to dispose of an interest in land by way of a sale at a public auction.
- An offer notice under section 5B of the LTA 1987 must be served not less than four months or more than six months before the auction date.
Do you know of any other important LTA acts?
Yes - The Landlord and Tenant Act 1954 (or the ‘1954 Act’) is relevant to all commercial leases. The 1954 Act gives the right for commercial Tenants to remain in occupation of the property even when the contractual term of their lease comes to an end, and the right to apply to court for the grant of a new lease
How can you bid at auction?
Room/Telephone/Proxy
What is a proxy bid?
Proxy bidding means that you advise the auctions team as to your maximum bid, and the auctioneer will bid on your behalf up to your maximum. They will always endeavour to secure the property for you, either at or below your maximum bid if possible. If the bidding in the room exceeds your maximum, then you proxy bid would end.
Is VAT payable on auction properties?
If it is VAT elected
What are the EPC requirements at auction?
Same as marketing (within 7 days of commencement of marketing)
Do you have to check anything in relation to an auction venue?
Choosing auction venue with sufficient size with insurance cover
How are arrears dealt with in relation to auction properties?
In the case of properties that are let, there may be arrears of rent or other amounts. It is recommended that the amount of any arrears is confirmed by the seller’s solicitor and whether it is intended to recover these from the buyer. The CAC make provision for new arrears to be paid by the buyer and old arrears to be the seller’s responsibility unless otherwise stated in the special conditions of sale.
What is the power to sell?
Power of sale allows a lender to sell the mortgaged property and recover their investment
What are the requirements around the Auctions (Bidding Agreements) Acts 1927 and 1969?
Forbid any dealer from giving or offering any inducement not to bid for any lot at an auction; it is also an offence to accept or attempt to obtain any such inducement. An agreement not to bid is sometimes called “rigging” or a “bidding ring”.
Who is defined as a dealer under Auctions (Bidding Agreements) Acts 1927 and 1969?
A “dealer” means a person who in the normal course of his business attends sales by auction for the purpose of purchasing goods with a view to reselling them.
Joint account purchase exception: the above prohibition does not apply if the dealer prior to an auction agrees in writing with others, provided a copy of the agreement is deposited with the auctioneer.
What are the key principles the auctioneers act 1845?
The Auctioneers Act 1845 was the first in a series of acts of Parliament that provide for a legal framework for the auctions industry. Indeed, section 7 of that Act remains in force (requirement for the auctioneer to make clear details of their name and address for all consumers during the auction itself — failure to do so is a fine of £20).
What are the key principles of the Estate Agents Act 1979? (CHOAALK)
- Clarity as to the terms of the agency (section 18)
- Honesty and accuracy
- Openness regarding personal interests (section 21)
- Agreement for liability for costs
- Absence of discrimination
- Legal obligation to tell the client about offers received
- Keep clients’ money separate
What are the key principles of the Consumer and Business protection Regulation 2008?
They relate to potential buyers and vendors and extend the duty owed to not just clients but to, potential clients, viewers, buyers and actual buyers, (all defined as consumers), to give accurate and/or necessary ‘material’ information and not to make any misdescriptions in the material.
Apply to lettings as well as sales and online agency
What constitutes and offence under the CPR/BPR regulations?
Unfair practices could include:
- Giving false or misleading information
- Hiding or failing to provide information
- Omissions
- exerting undue pressure on consumers
- failing to show professional diligence
What are Business Protection from Misleading Marketing Regulations 2008?
Business Protection Regulations relate to Business to Business activities same as CPR for businesses.
- The Regulations prohibit misleading business-to-business advertising
- They impose restrictions on how businesses compare their products to products from other companies
What are the penalties for breach of CPR?
- Prison for up to two years (as it’s a criminal offence)
- Prohibition
- Up to 25k in compensation
What are the key principles of Auctioneers Selling real estate, 2018?
- As the auctioneer is acting as agent for the seller the auctioneer should carry out further checks to verify authenticity (in addition to AML checks)
- Fees – should specify precisely when liability will arise and what liability is in the even of a withdrawal. As well as fees and expenses during duration of the period of appointment.
- Auctioneer should as far as possible verify accuracy of information through inspection and seller’s solicitor in relation to legal matters affecting title and occupation CPR and BPR 2008 cover both acts of commission and omission.
- All relevant documents and plans to be made available as long as possible prior to the sale
- Bid reporting in line with Estate Agent’s Act 1979.
- Auctioneers terms of appointment - Include extent of auctioneer’s right to refuse bids.
- Sign the contract on behalf of the seller.
What is the purpose of the Common Auction Conditions?
- To strike a balance between the contractual needs of the seller and the buyer while recognising that the seller will wish to determine the principal terms under which they wish to sell
- To make it easier to see all the contract terms by having one document that embodies all the terms within it rather than by reference to other documents such as the ‘Standard Conditions of Sale’
- To ensure the contract is as user-friendly as possible by adopting simple headings and by using plain English
- To increase the convenience of going to auction for the benefit of sellers and buyers, by providing a common set of conditions for all auctioneers in England and Wales
