P&S Flashcards

1
Q

Tell me about private treaty - what is it? advantage/disadvantage?

A
  • Most common method of sale.
  • Usually drives highest price
  • Property is marketed openly, (print advertising and online website portals).
  • Offers are then made and a suitable purchaser is usually selected after recommendations are made to the seller by their agent.
  • Allows for negotiation
  • Typical information to ask for when considering proceedability includes proof of funding, solicitor’s details and further contextual information on any chain sales.
  • Best bids are not legally binding – all due diligence done after the bid accepted

Advantages
Flexibility - the parties can negotiate in their own time and without commitment.
Advertising can be limited or extensive to suit the client’s requirements
It is relatively inexpensive
The seller is not obliged to sell
It is a confidential process

Disadvantages
There is the potential for gazumping or gazundering, both of which are considered to be unethical practices by RICS
There may be the risk of a late decision not to buy (withdrawals) and associated abortive costs
The quoting price could be under or over stated, requiring prudent advice on offers put forward or offers considered

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2
Q

Tell me about formal tender - what is it? an advantage/disadvantage?

A
  • The property is put on the market with a specific time and date that best bid offers must be received by
  • All due diligence by potential purchasers done BEFORE the best bid. The tender pack should include full marketing material, a legal pack and requirements for the contents of written bids.
  • The bid is made blindly and it must contain a SIGNED CONTRACT
  • Short marketing period, all parties are on an even playing field
  • Offers are opened in front of an independent witness. The seller’s agent will make a recommendation on which offer should be accepted.
  • At this point, a purchaser will be selected and either the parties proceed to exchange in accordance with the terms & conditions of sale or a banker’s draft is accepted and contracts are immediately exchanged.
  • Formal tender is generally used where there is strong demand for a property or public accountability is required. The process is generally expensive due to the administrative requirements of the tender process.
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3
Q

Tell me about informal tender -what is it? an advantage/disadvantage?

A

Informal tender, also known as sealed bids, is used where there is good market demand or where negotiations need to be brought to a close after a period of marketing via private treaty. However, the costs are generally higher than selling by private treaty.

The selling agent invites interested parties to submit their written ‘best and final’ bids at a specified time and date. This is generally accompanied by the interested party’s solicitor’s details, finance arrangements and any conditions.

The informal tender details should also confirm that the vendor the reserves right not to accept the highest, or any, offer made to avoid process becoming a binding tender. Offers of a variable nature should not be considered, e.g. offering an amount in excess of the next highest offer.

If a late bid is received, the seller should be informed as per the requirements of the Estate Agents Act 1979. However, RICS again consider accepting late bids to be unethical practice.

The bids should then be opened in front of an independent witness and the parties informed of the outcome. However, the process is not legally binding so either party can withdraw until the point of exchange. There may also be subsequent rounds of bidding to bring the process to a close.

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4
Q

Tell me about auction- what is it?

A

• Usually quickest method of sale
• Legally binding contracts signed on the day with a deposit of 10% of the purchase price
• Reserves are set (minimum price) but not guaranteed to get the highest price you can as it depends on the bidders that turn up on the day
Auction is sometimes called a ‘method of last resort’, where it is difficult to accurately assess price in the open market.

Auction should, therefore, produce the highest price in certain circumstances, e.g. a property is in poor repair, has serious defects or is unconventional, a quick sale is required, redevelopment or renovation is required or where high demand is expected. Typically, auctions may appeal to cash buyers.

Terms of engagement are agreed between the seller and auctioneer in advance of the auction, including the auctioneer’s right to refuse bids, bidding increments, types of bid accepted, reserve price and authority to sign the contract on the seller’s behalf.

Relevant legal and marketing documents are published prior to the auction, e.g. General Conditions of Sale, Memorandum of Sale, particulars and notices to bidders. Potential purchasers must undertake full due diligence prior to auction, including viewings and structural surveys.

When the gavel falls, contracts are exchanged and the purchaser generally pays a 10% deposit and arranges insurance.

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5
Q

Tell me about auction- an advantage/disadvantage?

A

Advantages

Short certain timescales can be achieved
‘Best price’ can be achieved after wide market exposure
The property can be sold with certainty over selling terms

Disadvantages

Expensive advertising costs
It is not a confidential process
The marketing period is likely to be short
A failure to sell might lead to the property becoming ‘blighted’
There is little control over the identity of the purchaser

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6
Q

What’s the difference between a formal and informal tender?

A

A formal tender is used in a public or private tender method of sale. It provides the purchaser with a single opportunity to bid for a property, all due diligence is done before the bid and includes a signed contract of sale by the purchaser. An informal tender can be used in private treaty sales to conclude the sale, it does not include a signed contract and due diligence can be done after the bid is accepted.

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7
Q

What factors do I need to consider when advising on the most suitable method of sale?

A

• The client’s objectives – quick sale? Best price?
• Conditions of the market
• Likely level of demand
• Client’s necessary level of accountability – e.g. state uses public tender to show transparency and accountability
Timing of sale

Marketing budgets

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8
Q

Tell me about the legal processes to complete a purchase/sale.

A

The legal conveyancing process can be lengthy, starting with the circulation of a Memorandum of Sale by the estate agent to the parties’ legal representatives. This will document the selling price, any conditions, timings and details of the legal representatives.

The Memorandum of Sale will form the basis of the draft contract issued by the seller’s legal representative. This will be followed by local authority searches, which identify restrictions such as listed status, new public roads, rail schemes and Tree Preservation Orders. Planning and title will also be investigated, as well as any additional searches being recommended, e.g. flood risk, mining and radon.

The legal representatives will also raise enquiries based on the draft contract and results of the searches, which will need to be resolved before the process can move forward to exchange. A common way of dealing with appropriate issues is to take out indemnity insurance, e.g. against a chancel repairing liability. The parties will exchange contracts when any outstanding enquiries are resolved and the contract documentation is finalised. At the point of exchange, the deposit will be transferred over and the purchaser will need to arrange buildings insurance.

A completion date will also be set, which is generally 2-4 weeks after exchange, although it can be simultaneous.

At completion, the remaining funds and legal ownership are transferred to the purchaser and the keys will be released by the estate agent. The purchaser’s legal representative will register the change of title at the Land Registry and will settle any SDLT liability owed.

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9
Q

How do exchange and completion work in an auction transaction?

A

Exchange on the day of the auction. Close on the sale 3 weeks later.

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10
Q

Nb. Agency legislation as for leasing & letting.

A

Residential Tenancies Act (2004, as amended)
Land and Conveyancing (Amendment) Act 2009 (banned Upward Only Rent Reviews from 28th February 2010)
Landlord & Tenant (Amendment) Act 1980 and was further amended by the Landlord & Tenant (Amendment) Act 1994.

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11
Q

Tell me about a factor which drives property markets.

A

1) Demographic trends. e.g. Baby boomers v Millenials.
2) Interest rates.—lower rates bring in more buyers, and increase the demand for real estate, which can then drive up prices.
3) The economy.
4) Government policy and legislation. tax incentives, deductions, and subsidies can boost or hinder demand for real estate.

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12
Q

Tell me about supply and demand in the Cork property market.

A

Cork city - 5.5% increase in 2021. Average price of €313,000.
Cork county - 7.6% increase in 2021. Average price of €255,000.

The supply of property was higher than in 2020 but still much lower than pre-pandemic levels.

The economist said inflation in listed prices for homes is “stubbornly high” and that in the face of strong demand, the key to solving issues in the housing market is more homes coming up for sale.

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13
Q

Tell me about government incentives which impact demand in relation to your purchase & sale work.

A

The Help to Buy (HTB) scheme is an incentive for first-time property purchasers. It will help you with the deposit you need to purchase or self-build a new house or apartment. You must purchase or self-build the property to live in as your home.

Where you meet the required conditions, you will receive a refund of:

Irish Income Tax
and
Deposit Interest Retention Tax (DIRT) you paid in Ireland.
The refund will be from the four tax years prior to when you make your application. The refund will not include any refunds you have already claimed.

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14
Q

What are the different types of interest in land?

A
  1. Legal proprietory interest - ownership.
  2. Lease - right to possess/ occupy the land.
  3. Easement - right to pass through/ access portion of the land.
  4. Profit a prendre - right to enter land and remove resources e.g. gravel, soil, stone.
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15
Q

What is the difference between freehold and leasehold?

A

Owning the leasehold interest in a property means that you own just the building and not the land it is on and that your ownership is for a fixed number of years. … Owning the freehold interest in a property means that you own the land and buildings (if any) outright.

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16
Q

Why would you use a marketing board for a purchase/sale transaction?

A

1) Brand Awareness
2) Cost effective marketing
3) A key tool in the marketing mix
4) Display your dominance

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17
Q

Tell me about an information pack you have prepared for a purchase/sale transaction.

A
The informaiton pack for 222 Blarney Street included:
 Property details i.e. block built, mid terrace, 1900's, rooms, condition, heating.
 Photos
 Walkthough video.
 Measurements.
 BER details.
 Details of auction date.
 Agent contact details and PSRA number.
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18
Q

Why would you use online marketing for a purchase/sale transaction?

A

Online marketing is essential to reach wide audiences. Daft/ MyHome for adverts, Social media marketing, and Goggle targetted ads. The shop window has moved online and if your property is not advertised in the online world it wont be seen.

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19
Q

What is a Memorandum of Sale/ Heads of Terms?

A

A memorandum of sale is a legal document that records the details of a sale of a property. It is used to record that the sale of a property has been agreed between buyer and seller subject to contract.

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20
Q

What are current Stamp duty levels for residential property?

A

The Stamp Duty rates on a transfer of residential property are:

1% on the first €1 million
2% on excess over €1 million.

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21
Q

What is Stamp duty?

A

Stamp Duty tax is the property transaction tax.

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22
Q

Tell me about the relationship between VAT and residential property sales.

A

New property - 13.5%
2nd hand property - exempt
Old property - further development post completion - 13.5%
Residential property being sold by developer - 13.5%
Old property - no development potential - exempt.

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23
Q

What is included in the PSRA TOE?

A
PSA Letter:
 • Parties
 • License
 • Nature – sole or joint
 • Services provided
 • Duration
 • Termination
 • Effect of termination
 • AMV
 • Fee
 • Outlays
 • Deposit
 • AML
 • Indemnity
 • PII
 • Complaints handling procedure
 • Conflict of interest declaration
 • Additional Terms of Business
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24
Q

What advice would you give to a client who was looking to buy an investment property in Ireland?

A

I would first ask what they were looking for – what budget they had, what their required return was and what their appetite for risk was, how long they wanted to hold the property for. I would enquire about their current portfolio and what their portfolio strategy was, whether they were set on only investing in one type of asset and that’s why they were diversifying into the Irish market, or whether they would want to diversify further by purchasing a property in an asset class they didn’t already hold.

After I have a better idea of their needs and objectives, I would then give them an overview of the investment market, prices they can be expected to pay, prime yields of certain asset classes, what buyers are currently in the market, what the available stock is like.

If they are not currently in the Irish market I would also give them advice on aspects that may differ to other countries, for example advice on tenant renewal rights, rent review processes, lease covenants and what them as the landlord would be responsible for such as insurance, quiet enjoyment.

25
Q

What other taxes may be payable upon sale of a residential property?

A

Stamp duty is payable by the purchaser or all types of property. For commercial properties the stamp duty is currently 7.5%, for residential properties it is 1% up to €1m, properties more than €1m, upwards of €1m will be 2%. VAT is also payable by the purchaser at 13.5% on new buildings or if the vendor and purchaser jointly opt to tax the sale of the building.

Capital Gains is payable by the vendor at 33% of the uplift in value of the property.

Local Property Tax.

26
Q

Tell me about the need for sales progression.

A

Progressing a sale efficiently requires hard work and dedication to ensure exchange of contracts is reached as quickly and smoothly as possible. Gathering information from everyone involved in the chain and keeping all parties up to date with regular contact is essential.

27
Q

What is typically in a sales brochure?

A
  • Info on the property
  • Maps
  • Photos
  • Floor plans
  • Lease details if tenant in place
  • BER
  • Agents details and PSRA number
  • Disclaimer
28
Q

What must a best bid offer contain?

A
  • Identity of the purchaser
  • Track record of acquisitions
  • Price (subject to contract, VAT, stamp duty)
  • Confirmation of funding
  • Approvals – board, third party, funding
  • Timescales
  • Conditions attached
  • Solicitor
29
Q

Tell me about approved redress schemes in relation to your estate agency practice.

A

Anyone can make a complaint against a licensed PSP about improper conduct, which happened when the PSP was providing a property service. These complaints are made to the PSRA. There are minimum standards and a Code of Practice outlining how PSP’s should behave when delivering their services, and these are used when investigating complaints. Information about how complaints are investigated, and how to use the complaint form is available on the PRSA website.

The PRSA administers a compensation fund, which is funded by the property services sector. This fund provides compensation to clients of licensed PSPs, who have sustained losses due to the dishonesty of a licensed PSP. In order to make a claim for compensation, the licensed PSP must have had a valid licence when the property service was provided. For more details on the process of making a claim, read the PSRA’s guide to making a claim.

30
Q

What other bodies govern / regulate estate agents? How do these differ from RICS?

A

The Property Services Regulatory Authority (PSRA) is responsible for licensing and regulating property services providers in Ireland. A PSP cannot work without a PSRA license, which makes it different from the SCSI.

31
Q

What is your opinion about the RICS’ call for a professional regulation scheme for estate agents?

A

Professional regulation in the profession is important to improve transparency and trust in the property industry.

32
Q

Explain legislation that affects your agency work in Ireland.

A

Property Services (Regulation) Act 2011
Property Services (Regulation) Act 2011 (Minimum Standards) Regulations 2020
Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (Competent Authority and State Competent Authority) Regulations 2016
Multi-Unit Developments Act 2011
Safety, Health & Welfare at Work Act 2005
Building Control Act 1990 - 2007
Arbitration Act 2010.
Urban Regeneration & Housing Act 2015 – 2018 Amendment Act (introduced the vacant site levy)

33
Q

Explain the Property Services (Regulation) Act 2011 to me.

A

The Property Services (Regulation) Act 2011 applies to all Property Services Providers (PSPs). The Act says that licensees must act in a fair, reasonable and just manner towards their clients. Some examples: licensees are obliged to act in the clients’ interests, are obliged to return client funds within defined timeframes subject to reasonable excuse and reply to queries within a reasonable timeframe. E.g. a reasonable timeframe for replying to a query, licensees may wish to bear in mind how they would justify or explain their actions or omissions to an Inspector who is carrying out an investigation into a complaint received based on a breach of the Regulations.

The PSA 2011 established the PSRA to control and supervise PSP’s.

34
Q

What are the requirements for HtB?

A

Must be a FTB.
Purchase/self build a qualifying property.
Live in property as main home for 5 years are purchase.
Be tax compliant
Mortgage LTV minimum 70%

35
Q

What is the role of the Property Services Regulatory Authority?

A

The PSRA is a body established under The Property Services (Regulation) Act 2011. Its main functions are to:

1) Operate the Register of Licensed PSP’s
2) Setting and enforcing minimum standards for the grant of licences

3) Investigation and adjudication of complaints
4) Promote increased consumer protection and public awareness
5) Maintain the Compensation Fund

6) Anti money laundering
7) Audit compliance investigations
8) Administers databases:
− Residential Property Price Register
− Commercial Lease Register
9) CPD.

36
Q

What is a PSP?

A

Property Services Providers (PSPs) are persons involved either as corporate bodies, partnerships, sole traders or employees.

  1. The purchase or sale
  2. The auction of private property other than land
  3. The letting of land
  4. The provision of property management.
37
Q

What does a PSP require before services can be provided to a client?

A

A PSP must not provide a property service without a letter of engagement in the specified form.

38
Q

Explain the use of drones in agency work.

A

Drones are being used for all types of real estate listings including residential homes, apartments, vacant land, and commercial properties. Current drone camera technology is capable of capturing still images, video and it is very effective.
I worked directly with drones on the Opera Lane and Lancaster Gate developments, to create marketing videos for the developments.

Drone Technology PQSL
Drones must follow Irish Aviation Authority Legislation - law is forward thinking in Ireland and its at the forefront of technology, however drone technology is progressing at a far faster speed than legislation. Drones fly themselves so that is not the difficulty, the risk lies in taking safety precautions, following the rules e.g. 30metres from a person, but its further if there are over 12 people. It must be 180m/400ft max from the ground, in order not to interfere with aircrafts. It is important to be aware of the personal data you are capturing and the mitigate the risk of wrongfully capturing this data.

39
Q

Explain a factor which impacts upon sale value/sale terms.

A
Affordability
 Location
 Transport links
 Flat/house
 New-build/second-hand, i.e. any impact of a new build premium
 Energy performance, including impact of MEES
 Number of bedrooms
 Amount of living space
 Internet speed
 Car parking
 Scope to extend
 Garden
 Conservation area
 Listed building status
 Condition
 Freehold/leasehold, including, if leasehold, the associated costs of ground rent and service charge and any additional requirements of restrictive terms or conditions
 Investment potential if the property is rented out, which will carry associated legal, tax and mortgage implications
40
Q

Explain an example of when you have provided marketing/sale strategy to a client.

A

Lancaster Gate Disposal of Apartments.

41
Q

Are there any restrictions on for sale boards?

A

Yes, those more than 1.2 sq m require planning. They must be removed after 7 days of a sale or letting. One board per property. Georgian buildings – must be on railings.

42
Q

What are the different types of agency?

A
  • Sole Agency - The client shall not dispose of the property through any other agent for the duration of the agreement
  • Joint Sole Agency - Two agents, the fees are jointly paid to both agents
  • Multiple Agency - The client has the right to engage other agents to sell the property
43
Q

Talk me through an example of when you have purchased/sold a property.

A
  1. Receive instruction – do COI check and gather AML docs
  2. Gather all info on property e.g. title deed, any leases
  3. Inspect and measure the property
  4. Gather comparable evidence and arrive at opinion of value
  5. Discuss marketing strategy and cost with client
  6. Devise a PSRA – signed and returned within 7 days
  7. Begin marketing the property
  8. Conduct viewings
  9. Agree sale
  10. Issue HOTs and instruct solicitor
  11. Purchaser undertakes due diligence
  12. Legal process – usually about 12 weeks – constantly liaise with client, purchaser, solicitors etc
  13. Close, invoice and archive
44
Q

What conditions could be attached to an offer?

A

Typical conditions would be that it is subject to completion of a technical survey. However, there are sometimes more onerous conditions such as that the sale cannot be closed until a certain date, in which case I would advice my client to consider this carefully.

45
Q

Greystones – how did you price the units?

A

I was asked to value the individual unit house types based on the comparable method of valuation. I collated the list of units and their attributes, i.e., house types, total area, orientation, garden dimensions and any other detail that would influence the value e.g., overlooking green space. I researched the recent sales in the local area on the property price register, and I called local agents to confirm details of the sale. I asked the local agents questions including: How long was the property on the market? How many active bidders on the property? Was parking included? Size of the property? I considered the comparable evidence and made relevant adjustments to reach my opinion of value. The local area had multiple new home developments, so I had strong comparable evidence.

I valued each unit by house type with slight adjustments as they are mostly the same product but with differences, i.e., orientation. I provided background information on the key inputs and rationale on how I came to my conclusion, and advice on market value. I submitted the valuation report to the developer.

46
Q

Greystones - Why were the units eligible for Help to Buy?

A

The townhouses were eligible for the HTB as they were under €500,000. The other house types in the development were not eligible.

47
Q

Greystones - How did you agree sales?

A

Marketing Campaign.
Sales calls, qualify purchasers.
Prepare for launch day (site map, floorplans on boards, stickers, brochures, price lists, booking system).
Advise the purchasers on how to get ready for launch day (AIP, preferred house type, solicitor details).
Booking system (ensure property listing has all available units, mark each new applicant against unit).
Report sales to the client and the team.

48
Q

Greystones - Why was your marketing campaign successful?

A

Digital marketing and print advertising. Glenveagh had a relationship with Daft so the ads were always Premium and Featured, which means they were at the top of the search page in the area and a large size.

The marketing campaign generated a high number of leads and we qualified all leads by phone call. We were able to update the client on expected sales.

Irish Times wrote an editorial on the release as they were eligible for HTB, beachfront homes, on the Dart line.

All units sold out at the launch and the client was very happy with the quality of the buyers.

49
Q

Greystones - How did you deal with any snagging works?

A

As the agent,I let the purchaser know the estimated timeframe of the snagging appointment. Disclaimers were very important to say that delays are common. I provided recommended snagging contractors, and explained the process to purchasers. The builder would contact the purchaser directly when the property was ready to snag. I was not directly involved with the physical snagging appointments.

50
Q

How did the legal process work?

A

Sales Advice Note (purchaser and vendor details, property address, price, closing date, deposit paid.)
Contracts are issued to the purchaser solicitor. Pre contract queries are raised and answered.
Mortgage loan offer issued to purchaser solicitor (skip if cash buyer)
Sign the contracts and pay the contract deposit.
Requisitions on Title (standard set of q’s that deal with fixtures, fittings etc)
Planning and land registry searches
Solicitors agree the closing date.
Closing documents are issued to the purchaser solicitor.
After sale closes, deeds must be registered with Land Registry.

51
Q

Explain how you handled deposits. When were these taken?

A

I provided the client bank account details to the purchaser. Advised the purchaser to reference the deposit with the property name. Deposits are mostly paid by EFT, though cheques were also accepted. Cash was not accepted due to Anti Money Laundering Policy. Once received by our accounts team, they issued the deposit receipt letter. The booking deposit was help in the client account until the contracts were exchanged. At that point, I instructed our accounts team to forward the deposit to the vendor solicitor.

52
Q

How did you prepare a Sales Advice Notice?

A
After the property was sale agreed, I requested the below information from the purchaser in order to prepare the SAN:
 Purchaser details
 Purchaser solicitor details
 Booking deposit
 Any conditions of sale

I added in the property details, vendor solicitor details and any other key information e.g. flooring type chosen.

I would always review the SAN multiple times to ensure all information was accurate before sending, as this is a legal document.

53
Q

New Homes – explain how you developed knowledge of buyer profiles. How did this allow you to better advise clients?

A

When I made my sales calls to all new and repeat customers, I would ask about their buying position (FTB/ trade down), their financial position (mortgage / cash) and their interest in property types. I also noted any extra comments they made on our CRM system for future reference. This information was invaluable to me when preparing reports on expected sales/ buyer profiles/ setting targets/ and settting client expectations in advance of the launch.

By providing the above analysis to the client, I added value and developed the client relationship.

54
Q

Explain your strategic advice to a client at one of the schemes you mention.

A

Disposal of apartments in Lancaster Gate. Different sales routes, so as not to flood the market.

55
Q

O’Connor Murphy – how did you advise on a method of sale to a client?

A

We didn’t want to flood the market so chose to use a variety of sales methods. PT, PRS , auction.

56
Q

How did you advise the investment fund effectively?

A

Provided quarterly sales strategy docs (Irish market, Cork market, apartment market, comparables, sales achieved, pricing, NTQ’s, Upcoming vacant units, targets). Weekly sales and marketing updates.

57
Q

PRS - Tell me about the process.

A
  • Received instruction from client – COI check, AML docs
  • Devised PSRA TOE letter – signed and returned within 7 days
  • Received all info from client on the property and the tenancy
  • Inspected and measured the property
  • Gathered comps to establish ERV and yields – comparison method of valuation for rents achievable– discussed opinion of value with client
  • Discussed marketing methods and costs with client
  • Begin marketing the property – online, newspapers, brochure, sign board
  • Several viewings
  • Best bids date - Two bids
  • We recommended the client proceed with the highest bid
  • They were happy to accept as it exceeded the guide price and was not a conditional offer
  • HOTs were issued
  • Purchaser undertook their own due diligence
  • Legal process took 10 weeks, constantly liaised with all parties
  • Sale closed, invoiced and archived file
58
Q

How did you manage the sale process?

A
  1. Receive instruction – do COI check and gather AML docs
  2. Gather all info on property e.g. title deed, any leases
  3. Inspect and measure the property
  4. Gather comparable evidence and arrive at opinion of value
  5. Discuss marketing strategy and cost with client
  6. Devise a PSRA – signed and returned within 7 days
  7. Begin marketing the property
  8. Conduct viewings
  9. Agree sale
  10. Issue HOTs and instruct solicitor
  11. Purchaser undertakes due diligence
  12. Legal process – usually about 12 weeks – constantly liaise with client, purchaser, solicitors etc
  13. Close, invoice and archive
59
Q

What are the four methods of sale?

A

“Private treaty

Informal tender, also known as sealed bids

Formal tender

Auction”