Case Study Questions Flashcards
How did / do you confirm that there are no conflicts of interest?
In house tool which allowed me to search the name of the client, property and surveyors acting on the instruction to find any Conflicts of Interests
What would be contained within Terms of Engagement?
- Fee basis
- Personal Expenses and Disbursements
- Confirmation of a Complaints Handling Procedure available upon request
How were your clients objectives established?
Through a meeting held over teams for efficiency
How did you provide your client advice if you have a responsibility to follow their instructions?
Not exclusive. In order to achieve my clients objectives ‘reasoned advice’ must be applied
What is the definition of Market Value / Market Rent?
Easy peasy answer
Within your clients objectives you mentioned negotiating ‘the strongest possible terms’, what would the strongest terms look like?
- Offers with a low level of conditionality
- Deal Performance
- Funding position, intended use, purchaser was represented, known multiple operator
Would a 6 month timescale for the disposal of a property be considered reasonable?
Yes. Depending on my clients expectations
- Guide price (high price = lower progress with parties)
- Marketing process (better marketing = more enquiries)
What impact would a lack of onsite parking have on a licensed premises?
- Depends on the location. A countryside public house would be negatively effected by a lack of parking.
- Not as crucial for a high street pub due to ‘walking trade’
Why would you note the condition of a property within your inspection notes?
- For Stat Compliance reasons (gas and electrical safety)
- To note any potential or existing defects
If you did have the necessary information how would you approach a ‘Profits Method Valuation’?
- Last 3 years audited accounts need
- Review accounts to established FMOP / EBITDA
- Add a years purchase multiplier to establish Market Value
Why would your client not require a ‘full Red Book Valuation’.
- As my valuation was done for Agency Purposes
- Valuation wasn’t ‘Red Book Compliant’
- As stated in PS 1
What is the local authorities planning policies regarding change of use?
Policy IF6 of The Local Plan states that application for change of use or redevelopment are resisted unless:
- There is a lack of demand
- Community benefit to redevelopment
– Cost of void and viability for redevelopment would be too costly.
What do you mean by ‘higher level of subjectivity’?
Where I would have or have had to make more ‘judgement-based calls’
How would you then weight leasehold comparable transactions and evidence? Which would give a higher value?
- Transactional evidence would hold a greater weight than Rent Reviews etc.
- As it has been market tested
What would be included within purchasers costs?
- Stamp Duty
- Agency fees
- Solicitors fees
Wouldn’t 24 High Street, Windsor have a higher value due to its Class E use?
Yes, and is reflected within my estimate of value on a rate per sq ft basis.
How did you arrive at your Market Rent?
Through the analysis of Leasehold comparable evidence
- Rate per sqft couldn’t be adopted, no floor plans
- Most comparable was Crown & Cushion
Why did you guide £1m when MV was £995,000.
- Set just below for ‘Phycological pricing
- To stimulate the market and encourage healthy competition in the property
Why would a high quality brochure be important to a market strategy?
- Adds professionalism to our marketing
- Communicates the property most effectively
- Broadens our ‘marketing reach’
What are the 4 Methods of Sale?
Easy
What are the disadvantages and advantages of the 4 Methods of Sale?
Give two points for each
Wouldn’t the speed of an Auction Approach align best with your clients objective for a sale in 6 months?
Yes, fastest method of sale. However:
- No confidentiality or control of purchaser
Why would a ‘private treaty’ method of sale align best with your clients objective?
- Allowed flexibility in the marketing process / could call for bids at any point via Informal Tender
- Allowed me to speak to as many parties as possible
- Negotiations are confidential
- No bound to proceed is any offer received
How would you marketing on 3rd Party websites (Rightmove etc.) be paid for? By the client or paid by your firm and reimbursed?
Part of our upfront marketing costs which are stated within our terms of engagement
How would the data e.g. contact information be stored efficiently an privately?
-Held safely and securely only agents working on the instruction could access the file
- When enquiring parties must consent to have their data stored
Why did you advise your client to set a best bids deadline
To draw the sale process to and end through an ‘Informal Tender’ approach
How would a ‘mail out’ help you marketing?
Expanded our marketing reach
You had 34 viewings in total – How would you cover so many parties viewing?
Open House viewings between myself and my colleague
Would a best bids approach be private treaty with an informal tender?
- Gather interest using a Private Treaty method
- Draw ‘sale process’ to a close using an Informal Tender
Why would you request proof of funding or purchasing entity as part of a parties offer?
- Standard Due Diligence
- Verify the severity of the offer, can the party complete on the purchase?
- Mitigates risk of withdrawal
How would you ensure that offers were processed in accordance with the Estate Agents Act 1979?
In order to act in accordance with the Act and act with:
- Transparency
- Fairness
- Accountability
- Must be in written form
What value did you bring to the disposal process?
- Valuation expertise
- Negotiation skills - led to purchase over Book Value
- Reasoned advise re the marketing a sale process
How would you change your advice to your client if you had to do this project again?
- The removal of the LH marketing and valuation would have ‘streamlined’ the process
- Focused my marketing
- Rediscussed my clients objectives in light of the ‘Abortive’ negotiation
How did you encourage parties to submit offers with limited conditionality?
- Helps to frame the sale process
- An offer with ‘excessive’ conditionality ‘weakens’ the applicants bid
Can you give an example of how you followed an Ethical Principle?
Ethics Level 3 Example: Nottingham, Public House
- Didn’t disclose other offers to an interested party.
- Acted with integrity in lien with the RICS Rules of Conduct
- Didn’t disclose any of the other offers
Can you give an example of how you followed the RICS Rules of Conduct?
Rule 4 - Treat other with respect / encourage D&I
- Gave feedback to an unsuccessful party with respect in a clear manner
Rule 1 - Acting with integrity
- Avoid Conflict of Interest wherever possible
How would removing the reference to marketing the property to lease decrease the timeframe to sell?
- Clearer marketing strategy
- Avoid time delays - more viewings and applicants to ‘vet’
- More targeted applicant pool
If it were always your clients intention to sell why did you also market the lease - was it your advice to do so?
- Offered my client flexibility should there not be FH interest at an acceptable level
- A LH offer from a strong covenant would mean a future investment sale more achievable
What steps could you have taken to reduce the risk of the Abortive Deal happening - could you have vetted the parties stronger?
- Hard to say - all the necessary Due Diligence had been collected and Proof of Funds provided.
- Tough market
Why was a Residual approach not considered?
Due to Planning and Heritage constraints
- Planning - would take too long. Change of use from ‘sui generis’ use class means explicit planning permission is required
- Heritage - Located in Eton Conservation Area Southern Area, likelihood of development was low.
Based off of your Market Rent analysis and sale price what yield would your property have achieved on an investment method?
6.47% NIY on reflecting any voids or rent free.
How many sq ft is the Eton Mess?
4,678 sq ft
How were your Rent Review, Market Rent Comparables agreed?
Via 3rd party representatives.
Surely the Crown and Cushion Rent Review had been agreed via a % turnover?
Agreed via representatives however the basis of which I am unaware on the basis of the agreement.
Why couldn’t you do an Investment method is you already had your rental comps and yield evidence could be collected?
- Tried to put myself in the shoes of the end purchaser as the type of purchaser for this property would be an ‘owner-operator rather than an investor’
- Moreover, an investment method would incur costs for my client e.g. voids and rent free
- Therefore a comparable method was the most appropriate
