Purchase and Sale Flashcards
What is the difference between an unconditional and a conditional offer/ bid?
Conditional offer is an offer that is subject to certain conditions being met before it becomes legally binding e.g. subject to planning.
Unconditional offer is an offer that has no conditions attached. Once the offer is made and accepted, it is legally binding and cannot be withdrawn unless both parties agree.
What does the Consumer Protection from Unfair Trading Regs 2008 (CPRs) outline?
Relate to potential buyers and vendors and extend to the duty owned to not just clients but to potential clients, viewers, buyers and actual buyers. Max penalty for breach of CPRs and BPRs is unlimited fine and prohibition order. Key facts: reg apply to lettings and sales, agents have duty of care to clients and to all interested parties, agents must declare everything known about property- good and bad, agents must not exert undue pressure on potential buyers, full DD required for all new instructions
What does the Business Prevention from the Misleading Marketing ref 2008 (BRs) sate?
Business protection regs relate to business activities and mirror above. Regs prohibit misleading business to business advertising. Impose restictions on how business compare their products to products from other companies
What does the Estate Agency Act 1979 promote?
Promotes 7 key points:
Clarity as to terms of the agency (section 18)
Honesty and accuracy
Agreement and liability for costs
Openness regarding personal interest (Section 21)
Absence of discrimination
Legal obligation to tell the client about offers received
Keep client’s money sperate
What is outlined in the RICS UK Commerical Real Estate Agency standards 2016?
The statement outlines 12 core principles that agents must follow:
-Act honestly, transparently, and professionally.
-Work with due skill, care, and diligence, ensuring staff are appropriately skilled.
-Provide clients with fair and clear terms of business, including complaints handling procedures.
-Avoid conflicts of interest (COI), and address any that arise openly and fairly.
-Ensure no unfair discrimination in dealings.
-Maintain fair, clear, timely, and transparent communication with clients.
-Ensure advertising and marketing are honest and truthful.
-Keep client money in separate accounts, with adequate insurance coverage.
-Hold professional indemnity insurance (PII) to cover potential negligence claims.
-Clearly identify your client and ensure obligations to all parties are understood.
-Give realistic assessments of prices or costs based on market evidence and professional judgment.
-Conduct meetings and inspections per the client’s wishes, with regard to security and professionalism.
What are the key points in the RICS PS: Auctioneers Selling Real Estate (incorporating Common Auction conditions) March 2018?
Statement provides mandatory standards and best practices for RICS members acting as auctioneers in real estate transactions. Incorporate Common Auction Conditions (CAC), offering consistency and transparency for buyers and sellers.
Key points: Actioneers must act Honestly, professionally and transparently.
Pre auction- ensure accurate marketing, set reserve price provide property info.
Auction Process- conduct fair and transparent auctions, communicating terms clearly to bidders
Post auction- secure contracts, handle deposits properly and ensure timely transfer of legal docs
CAC- standard terms
Auctioneers must have PII and comply with consumer protection laws
What does it mean that you were the sole agent?
Sole selling rights means the remuneration will be payable if contracts are exchanged in period when sole selling rights exist, even if purchaser if not found by the agent but by another party, including the client. Also fee due after sole selling rights period ends when property sold to a purchaser within the term of instruction agreement
What are the methods of sale?
Private treaty, informal tender, formal tender and auction
What makes you decide on which method of sale to chose?
Clients objectives, public accountability, current and likely future conditions, likely level of demand for the property- likely target market, timing requirments
How do you dispose of the property/ site via private treaty?
Parties free to negotiate in their own time without commitment in the open market. Most popular used. It is a private matter. Advantages: Flexibility, parties control process, vendor not under any obligation to sell, confidential. Disadvantages: potential for gazumping, late decision not to buy, associated abortive costs
How do you dispose of a property via Informal tender?
(Best offers or bids) Used when good level of interest in property. Best bids procedure is not legally binding upon the parties, so that either party can withdraw at any point up to contract. All buds should be opened in front of the client or an independent witness. Agent invites in writing all interested parties to submit their best and final offer in accordance with the prescribed timescales.
How do you dispose of a property via formal tender?
Commonly used by statutory bodies to ensure control and transparency in the marketing process.
Provides public accountability, particularly when there is significant interest in the property.
The vendor is not obligated to accept the highest bid.
Full marketing materials and a legal pack must be provided beforehand, along with a clear letter outlining bid requirements.
Bidders submit blind offers without knowing other bids.
Bids are opened in front of the client or an independent witness.
Bidders cannot alter their offers after submission.
There is usually no immediate exchange of contracts, but the process allows for quicker identification of the preferred buyer and faster contract exchange.
How do you dispose of a property via Auction?
Advantages: achieving a relatively short timetable for the disposal property, certainty of sale assuming a reserve figure is achieved that is property is sold, useful method of sale for an unusual property which is hard to accurately value, used for a property which is liekly to generate good level of interest.
Disadvantages: cost of promotion and publicity, lack of confidentiality over price achieved, vendor cannot choose the purchaser, intensive nature of a short marketing period
What is included in the marketing materials?
Property description: Type of property, size and layout, features
Location info
Photos & Floorplans
Guide price or asking price
Legal info: ownership details, rights of way, planning permissions
EPCs
Property condition
Tenure and occupancy
Service and utilities
Terms of sale
Contact details
What Due Diligence needs to be undertaken to dispose of a property/ site?
Read the lease(s), environmental, planning, legal, contamination, tenant conveant status and other statutory enquires to ensure no materials which may be detrimental to sale of property
