Auctions Level 3 - South West London Flashcards
Talk me through the advice you provided to your client?
I was instructed to sell a retail unit in south west london.
The client enquired if an auction method of sale would be appropriate
I presented the different methods of sale to my client, I considered Private Treaty or Auction Sale
I considered my clients objectives which was a short sale as they wanted to dispose of the asset to purchase another investment, I advised the client that an auction method of sale would be the most appropriate given the short time scales in which they wished to purchase their other investment. I also advised that the property being income producing and a small lot size would appeal to investors who usually purchase at auction.
The second piece of advice was surrounding an offer received prior to auction, I acted in line with the Estate Agents Act 1979 and reported the bid to my client.
I provided my client with two options
the first was to accept the offer prior to auction and sell at the level of the guide and the second was to decline the offer and put the property into auction.
I advised my client that due to the amount of registered bidders that the property was likely to achieve a higher sale at auction which was one of my clients objectives. The client agreed and the property sold at auction ahead of the guide.
What do you mean by small lot size?
affordable lots that can be purchased with cash and don’t have complex legal documents attached.
What is an informal tender?
Informal tender less structured approach, involves marketing to potential buyers and inviting offers within a specified time frame with negotiations.
- can be uncertain and time consuming.
What is formal tender?
formal tender involves a strict timeline and clear guideline for submitting offers, offers are not negotiable and submitted as final.
- long completion time lines and time consuming involving extensive documentation.
How do you collect deposits?
In line with the RICS Professional Statement on Client Money Handling the account was held in a separately clearly labeled client account.
What is a Virtual Freehold?
describe a lease where the length of lease is far longer than the norm typically 999 years.
Describe the property?
modern ground floor retail unit let to an estate agents which formed part of a residential building that was not included within the sale.
How did you appraise the virtual freehold?
when looking at comparable evidence I looked at ground floor long leasehold properties, as well as freeholds in the area. I then made appropriate adjustments to reflect the 999 year lease on this property.
What did you consider when appraising a virtual freehold?
Considered that the upper parts have sold off, no room to add value.
I also had consideration for the ground rent.
I considered that the 999 year long leasehold would still appeal to investors, it was in an affluent area and let on a new 10 year lease.
What did you guide the property at?
£450,000
What did the property sell for?
£500,000
Why didn’t the housing act apply?
There was no qualifying tenants above the property.
