Purchase and Sale Flashcards
What are the four main methods of sale?
- Auction
- Informal Tender – sealed bids
- Formal Tender
- Private Treaty
What are the advantages and disadvantages of each method of sale?
Informal Tender
Advanategs:
* Allows for negotiation
* Multiple rounds of bids
* Creates competitive tension
* Sets clear timescales
* No obligation to sell
Disadvantages:
* Buyers can pull out of a deal
* Needs a good level of interest
Formal Tender
Advantages:
* Transparent process
* Accountability
* Can lead directly to contract so certainty of sale
Disadvantages:
* Only one chance to bid
* Not able to negotiate or increase offers
Private Treaty
Advantages:
* Flexible timescales
* Can negotiate
* No obligation to sell
* confidential
Disadvantages:
* Gazumping and gazundering
* Associated abortive costs
* Buyers can pull out of deal
Auction
Advantages:
* Certainty of sale if reserve is met
* Vendor sets the reserve
* Allows for short timescales
* Creates competitive tension
Disadvantages:
* Lack of confidentiality over sale price
* Doesn’t always achieve best price
* Bound by timings of auction
What CPD have you undertaken in relation to Purchase and Sale?
Compliance training
APC workshops
How do you advise client on the most appropriate method of sale?
client objectives
timescales
money
anticipated interest
market conditions
type of client
How would you advise a client on the acquisition of a property?
I personally have limited experience of acquisitions, as I predominately work in disposals. I would therefore advise the prospective client of another member of my team who has further knowledge of acquisitions.
How do you ensure that you adhere to the requirements of Countering Bribery and Corruption, Money Laundering and Terrorist Financing?
AML checks and compliance procedure
What experience do you have in preparing marketing brochures and online data rooms?
talk about any example
What is hope value?
Hope value is the value attributed to land with the potential for planning permission.
Not recognised by the red book RICS so wouldn’t explicitly include it in valuation but would provide commentary on potential of land
Agency, Chelmsford – Why did you decide on a brochure and online advert for this property?
It was quite a grand building and we wanted to market to a wide audience. The client were also not limited on budget
Agency, Chelmsford – why did you include the asbestos management survey in the marketing data pack?
in line with the relevant legislation (misrepresentation act in particular)
being transparent about the property and making potential buyers aware of a likely potential cost
Agency, Chelmsford – What did you include in the marketing data pack?
Asbestos management survey
EPC certificate
Floor plans
Planning precee on development opportunities
What are the Minimum Energy Efficiency Standards? (MEES)
for commercial - E
C by 2027
B by 2020
For residential - E
C by 2025 for new tenancies
C by 2028 for existing tenancies
What are EWS1 forms and when are they required?
Assesses safety of the external wall system
When the building is above 18 metres in height
what made the marketing list GDPR compliant?
consent to marketing
blind copying
giving them the opportunity to opt out
Why did you keep a record of all registered parties?
meant to say interested parties - to inform the client of the number of interested parties
What is private treaty method of sale?
negotiation between parties
What are the advantages and disadvantages of private treaty method
flexible
good when you dont know the level of interest
cheapest
does not have to accept offer
disadvantages is that it may not lead to a sale
doesn’t have a deadline
What would influence you to use an informal tender process over private treaty?
time scales
high level of interest
When would you recommend the use of formal tender?
when you require accountability and transparency (for a public body for example)
What is the key estate agency legislation? And when does that apply
Estate Agency Act (1979)
- clarity as to ToE (Section 18)
- honesty and accuracy
- agreement and liability for costs
- openness regarding personal interests (section 21)
- absence of discrimination
- legal obligation to tell client about offers received
- keep clients money separate
what are the different agency rights?
sole agency, joint agency, multiple agency (only sole and joint definitely get a fee)
what are selling rights?
always get a fee and comission even if you dont introduce the buyer
what is the difference between sole selling rights and sole agency rights?
in agency, the agent has to introduce the buyer
in selling rights, you’ll get a fee regardless
Can you tell me about your agency job in Moulsham?
bids on both a STP and uncon basis
Tell me about your agency job in Maldon
strategic site 47 acres - marketing
Tell me about your agency job in Chelmsford?
asbestos and GDPR marketing list
Tell me about your agency job in Ipswich?
600 units in HDL - Sustainability
How do you ensure you have full details of a site?
ask the vendor to complete a property information form and go inspect the site
how did you advise the client on both a STP and uncon basis?
you would usually calculate the NPV -
On this occasion, the uncon was the highest monetary offer
What is gazundering? How do you prevent it?
Occurs when a buyer lowers their offer just before contracts are exchange. To prevent is you would gather as much data as possible from the prospective buyer to minimise scope of reduction
what is gazumping? how do you avoid it
gazumping is when the seller accepts another offer prior to exchanging contracts despite accepting another bid.
To avoid you would ask for the property to be removed from the market to prevent any other possible buyers coming forward. be organised and get documents signed quickly
How do you ensure you comply with the PS UK Commercial Real Estate Agency
that i follow correct marketing procures, such as checking whether there i an EPC, asbestos risks, that i am following correct standards and procedures, such as conflicts and gift policies
Agency, Moulsham – what rules do you need to follow for a disposal for a Charity?
Adhere to the Charities Act:
1. obtain a valuation for the land from a RICS member
2. Be satisfied that the proposed terms are the best you can reasonably obtain for your charity
You mention marketing a site in Maldon as part of a larger scheme, how did you ensure that the party adheres to the wider infrastructure plan
ensure there are details of s106 within the marketing, include long stop dates in the heads of terms
Why did your client elect to market the site subject to planning in Maldon?
the client objectives
the council
the wider allocation
How did the property conform to MEES? Did you refer to this in your marketing?
had an EPC of above E
You assisted in marketing land in Ipswich where your client was specifically interested in Sustainability. How did you ensure in the contract that the purchaser would adhere to this point?
restrictions on titles but client didnt want this - was unconditional sale
How did you assess the cost of infrastructure in the bids for a scheme of 600 dwellings?
had a cost estimate prepared so compared against that. also compared against all bids and looks for anomalies
Why did your client decide to disposal was best rather than a development agreement?
wanted rid of the site as quickly as possible - we did give them options but advised them of risks of both promotion and option
What is the meaning of cooling off period?
14 day period to end agency instruction with client
what legislation do you follow when undertaking agency and marketing instructions?
misrepresentation act (1967)
Consumer protection regulations (2008)
what are the consumer protection regulations?
the consumer protection against unfair trading regulations cover the broader agency work.
key points include:
-due diligence audit trail needed
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