Purchase and Sale Flashcards
What are the four main methods of sale
Private Treaty
Informal Tender
Formal Tender
Auction
How do you consider what method of sale to use?
Client objectives
Current and future market conditions
Level of demand
Timings
What are the positives of Informal Tender
Can drive a higher price and increase competition
Negotiations, questions and answers can be fielded in advance of bids being submitted
What is informal tender?
When you call for best bids on a property.
Best bids are not legally binding so either party can withdraw
Used when there is good level of interest in a property.
What is the keywording to use for informal or formal tenders?
Vendor is under no obligation to accept the highest, best or any bid
What is formal tender?
Blind bids infront of client
Often used by statutory bodies to give control and transparency over the marketing process.
What is private treaty?
It is when parties are free to negotiate in their own time and without commitment in the open market
What are the advantages and disadvantages of private treaty?
Adv
- Flexibility
- The parties can control the process
- Vendor under no obligation to sell
- Confidential
Disadv
- The potential for gazumping or being gazumped
- Late decisions not to buy
- Associated abortive costs
What are the advantages and disadvantages for auction?
Adv
- Is a quick method of sale
- Certainty of sale. Assuming a reserve figure is achieved
- A useful method of sale for an unusual property
- Used for a property that is likely going to generate a high level of interest
Disadv
- Cost of promotion and publicity
- Vendor cannot pick the purchaser.
- Intensive nature of a short marketing period
What steps did you take when calling for best bids?
We invited selected interested parties to submit their ‘best and final offer’ via a bid proforma which included the following:
- Bid deadline and time
- Name and address of applicants solicitors
- Their financial arrangements
- Details of any conditions attached to the offer
- Magic word - the vendor is ….
What are the 7 key points under the Estate Agents Act 1979
Clarity as to the terms of the agency (section 18)
Honesty and accuracy
Agreement and liability for costs
Openness regarding personal conflicts (Section 21)
Absence of discrimination
Legal obligation to tell the client about offers received
Keep client’s money separate
What is the EAA 1979
The Estate Agency Act 1979 relates to principals agents must abide by when carrying out FH/LH acquisition/disposal in property interest. If failure to comply you can get warning or prohibition orders.
What is the Misrepresentation Act 1979?
Pre-contractual stage
Civil Offence
False statements which has the effect of inducing the party to purchase
Exclusive/disclaimer clauses may be effective in protecting the vendor and their agent.
Civil offence - sued for financial damages
What is the difference between the Misrepresentation Act and Consumer Protection Regulation
Misrepresentation Act 1967
* Action can be limited by an effective disclaimer
* Civil offence actionable by tort
* Relates only to misrepresentation or false statement of fact by a party during pre-contractual enquiries
Consumer Protection from Unfair Trading Regulations 2008
* Action cannot be limited by a disclaimer
* Criminal offence
* Related to the entire agency process
What is the Consumer Protection Reguations, 2008
During entire sale period
Criminal Offence
Not treating customer fairly or misleading marketing information
Unlimited fine, up to 2 years prison or prohibition order
