Case Study Flashcards
Who are Townhus? What type of business?
Developer - JV between TOWN and Trislehus (Swedish Housing manufacturer) Registered company
What is the Real Estate Agency Code?
Sets out core principles that agents must observe when undertaking agency work. Uk Residential Real Estate Agency 2017 ‘blue book’
Acting ethically - duty of care, avoid conflicts, and gifts
Securing instructions (terms) - AML checks and types of agency
Marketing the property - market appraisal and marketing particulars
Disposal - method of sale
What is the process when considering a new instruction?
CIT
Competence - SUK to undertake the work
Independence - no conflict to act for the client or on property
Terms - Provide clear ToEs for signatures.
How did you carry out a conflict check?
I inputted the client and property address into our internal conflict check system. This outlined no conflict with either, I printed out the results for my director to sign, I scanned and kept on the instruction file.
What AML checks did you undertake? Which legislation>
In accordance with Money Laundering Regs 2017, I conducted customer due diligence on the client. I checked on companies’ house the name, number, and register office. I established the beneficiaries/ directors (25% stake) and gathered ID information and proof of address on each. I also obtained the intended nature of the business relationships and proposed funding.
What was included in your ToEs?
Agency basis - Sole agency
Agency rights - sole selling rights
Costs & charges - 1% + £500 per handling transaction
Agent duties - advice on price, marketing and manage sales ( 2 pages of local marketing per month)
Payment of accounts - 100% on completion
Clients responsibilities - Consumer code & marketing
Outline no conflict
Complaints handling procedure
AML requirements
Indemnity insurance - on request
What was the location of the property like?
2.6 miles to City centre
2.1 miles to Cambridge North train station
1 mile to A14 junction
On the guided busway which connects- city with st ives
Largely residential area, a mix of local amenities Education - (Cambridge Regional College, King Hedges Primary School)
What were the construction methods? External considerations?
Construction is fully prefabricated with a
closed panel timber frame for the houses,
and a CLT frame for the apartment block/
common house. The prefabricated wall
panels are made in Sweden and
transported to site for assembly.
- Strip foundations, slate pitched roof, brick veneer with roof and wall insulation between brick and plasterwork.
Single vehicular access / parking on site (1perhouse), three electric car charging, bike and bin storage.
What were the internal conditions of the properties
Good condition, high specification including:
MHVR system, triple glazed
U/F heating GF - (wet), Rads FF
Air-source heat pump connected to Daikin boiler
Electric heating system
AEG appliances & no washer/dryer
Common defects in these properties (new build)
Shrinkage - cracking plaster from drying out.
Settlement cracks - foundations settling
Superfical defects - paintwork, scuffs
Faulty systems - poor workmanship/installation
Who maintains the ancillary facilities?
Cambridge Cohousing Ltd is the management company for ML, therefore facilities are managed by the group. Each household is charged a service charge estimated to be £350pa.
Who was the contractor?
Local Cambridge based builder.
What is galvanised zinc?
Metal cladding used for decorative purposes. More energy-efficient production than steel or aluminium cladding. Decided by group.
What are the service charges with the property?
- Annual service charge levied by Cambridge Cohousing Ltd estimated to be £350pa.
- £1000 first year – start up cost.
- Apartments extra £400pa for building insurance (leaseholders)
Are you aware of how the 31 units exchanged?
Solicitors treated like a typical off-plan sale, undertook searches, and responded to queries. 10% sum of monies of exchange of contracts.
What did the handover/completion consist of?
A home demonstration following a checklist for each purchaser, signatures and date on the plans & handover documents. Any snagging issues reported to the client immediately.
What were the ancillary facilities?
Common House (inc. a shared kitchen & playroom), shared launderette, studio space, library, guest rooms & bathroom, gym, workshop, veg patch. A shared electric car for the group.
Who was the builder (contractor)? Build programme?
Local builder called Coulsons. The Build was 18 months, completion in December 2018
What are the cost implications of MMC?
MMC - Setup costs are expensive, with machinery and warehouse space. Quick site assembly, means faster delivery which reduces the finance period & reduced numbers of site staff.
-Reduction in site preliminaries, site storage requirements and welfare facilities
Traditional method - Resources and workforce readily available to build, longer build period, increased chance of defects due to weather.
What did you do prior to your inspection?
- Desktop Study - Internet search on the planning portal, google, and Rightmove.
- Arranged access - confirmed with client and site manager access and timings for inspection.
- Organised equipment - PPE, Inspection proforma checklist, plans, camera, pen and paper, disto, mobile.
What did you take with you on your inspection?
Mobile, camera, laser disto, plans, PPE, Pen & Paper
What did you do to ensure you health & safety?
Consider my lone working procedures. Wear PPE
Sign in at the site office, have a site briefing from the SM. Accompanied by site manager. Sign out when leaving the site.
What was the architectural style?
Various stylings of brick veneers. Contemporary design, full-length windows and doors for natural light.
Method of sale - What were your client’s objectives?
To achieve best price for each unit in a reasonable agency period (24 months).
Why did you immediately discount auction?
Informal tender & Formal tender?
It’s a short and intense marketing period which I felt wouldn’t fetch the best value. I also had sufficient comparable evidence to value each unit accurately.
FT - complex method for apps, deter offers and not suitable in slow market.
My client outlined a marketing period which would have been inappropriate for both these methods.
Method of sale - How did you present your recommendations?
I outlined my recommendations in a sales and marketing report which was discussed in a client meeting.
Why did you recommend the use of a reservation form and fee?
Form - ensures I have all information verified and on record to mitigate delays with sale. Signed and dated to share with respected solicitors.
Fee - ensures that all purchasers are genuine and incentivizes purchasers to cooperate with the sale.
Explain cohousing?
Cohousing is an intentional community of private homes clustered around shared space. It originated from Denmark and there are around 20 schemes in the UK (10 in London).
PS1 (Red Book) - other exceptions to red book compliance?
Agency / Brokerage Expert Witness For Statutory purposes Internal Purposes, without liability Negotiations or litigation
Comparable method - what was the methodology?
- Source and select comparables
- Confirm and verify evidence
- Assemble into a schedule
- Establish a hierarchy of evidence
- Analyse and form an opinion of values
- Stand back, reassess and report to the client (prepare file note).
When verifying evidence? What were your findings?
Generally achieved prices were below asking prices and developers were using incentives to leverage sales. My comparable evidence outlines net prices. I also gauged market sentiment from other agents.
What is the RICS guidance on comparable evidence?
RICS Comparable Evidence in Real Estate Valuation, 2019. A new hierarchy of evidence:
Category A - direct comparables (near-identical, completed, verified. Askings prices (careful analysis)
Category B - general market data (historic and indirect evidence)
Category C - other sources (background data, evidence from other properties & locations)
How did you adjust values for second-hand evidence?
I put the least weight on this evidence and used it primarily to sense check my proposed values. I expected to see a 10% premium on this evidence.
You outline a dearth of comparable evidence, what do you mean?
No new and identical evidence in the local vicinity. I chose to consider new sites which were situated a similar distance from the city centre (fringe locations).
What trends did you see from your comparable evidence?
- The use of HTB for this mid-market product
2. Prices being chipped and developers offering incentives.
3 beds @ Virido - was that an anomaly?
The size is bigger than the 4 beds, so no. But also the use of HTB drove that sale and the threshold for HTB is £600k.
Can you briefly explain your pricing? What factors reflected premiums
4-bed configurations reflect a £5k uplift
EOT properties reflect a £10k uplift
A £10k premium for Plot 1 (aspect & balcony)
I recommended a 5% uplift on my selling prices to reflect asking prices (this was to factor in the likely incentives used to leverage negotiations).
HTB - Why did you think this was important?
An owner-occupier market in Orchard Park, the area offers relative affordability, therefore, the qualification of HTB would support sales.
Why did you not apply a cohousing premium?
Limited cohousing evidence, insufficient to rely on with any professional certainty. I relied on my new build comparable evidence.
Briefly explain Virido?
A scheme of 104 units in 8 quads. Built to a high specification and finish by a renowned local developer. Situated to the south of the city, a more valuable area.
Briefly explain Windsor Gate?
14 unit scheme comprising townhouses and flats. Built by a small local developer. The specification was basic but contemporary in design. Situated on a busy road, a good level of local amenities.
Can you explain the additional considerations in the agency brief?
Respect the privacy of the CCL residents with a clear viewing notifications.
By request of the group and honoured by the developer, the agent was responsible to arrange this meeting.
CCL membership fee - an additional cost to cover membership to the group and start-up costs incurred by the group.
How do you make a HTB application?
Obtain an application form from an HTB agent. Developments have to be registered to the government scheme.
What are the key principles of the EAA 1979?
T - Terms - clear and signed by both parties
H - Honest - transparent and upfront
I - Independence - no COI in ToEs
D - Do not discriminate on any purchasers or third parties
O - Disclose all offers to your client
C - hold clients money securely
C - outline the costs and disbursements with the agency work
How did you inform purchaser 2 of his low offer?
Firstly I informed them over the phone, as I felt he might counter offer. Following my conversation, I followed up with an email and recorded it on file.
What does legal documentation entail?
Draft up contracts for solicitors.
What were the AML checks for an individual purchaser?
I obtained proof of identity (passport, driving license), I also obtained proof of address (bank or utility bill dated within 3 months). Photocopied, signed, and held in secure file.
What did you do to ensure the sale processed in a timely manner?
- Encouraged the purchaser to use recommended solicitor (who had dealt with the scheme previously)
- Spoke with buyer’s solicitor & buyer weekly to assist where possible
- Organised and arranged site visits with the purchaser.
What does MMC stand for and what is its premise?
Modern Methods of Construction, it is centred around the use of off-site construction techniques that can benefit from factory conditions and mass production techniques.
Can you name some types of MMC
- Panellised units produced in a factory and assembled on-site to produce a three-dimensional structure.
- Volumetric construction to produce three-dimensional modular units in controlled factory conditions prior to transport to site.
- Hybrid techniques that combine both panellised and volumetric approaches.
