Purchase And Sale

Question 1

4 main methods of sale

Answer 1

Private treaty
Informal tender
Formal tender
Auction

Question 2

What is private treaty

Answer 2

Parties are free to negotiate in their own time and without commitment in the open market. Most popular method of sale

Question 3

What are the advantages and disadvantage of private treaty

Answer 3

Pros-
Flexibility
Parties control process
Confidential
Vendor not under any obligation to sell

Cons-
Late decisions not to buy
Associated abortive costs
Gazumping-when a seller accepts a higher offer after agreeing a previous offer
Gazundering-when a buyer lowers their original offer just before contracts are exchanged

Question 4

What Is informal tender

Answer 4

Used when there is a good level of interest in a property, best bids procedure that is not legally binding upon the parties so either party can withdraw at any point up to contract

The agent invites in writing to all interested parties to submit their best bids in accordance with prescribed timescale

Question 5

What do you put in a best bids email

Answer 5

Name and address of applicants sollicitor

Required date and time of receipt of written offer

Confirmation of any finance arrangements

Details of any conditions attached to the offer

Confirmation that offers of a variable nature will not be considered ie.10,000 above the highest bid

The vendor reserves the right not to accept the highest or any offer made. (Most important)

Question 6

What is formal tender

Answer 6

Often used by statutory body to give control and transparency over the marketing process. Provides a high level of public accountability

All bids to be opened in front of client or independent witness/line manager

No opportunity for the prospective purchaser to change or increase their bid after the submission of the offer

Terms and conditions of sale with legal pack already provided with marketing particulars

Question 7

Difference between formal and informal tender

Answer 7

Formal
Provides potential purchaser with a single chance to bid for a property.
High level of accountability
Detailed T&C for sale prepared by vendor and published in advance with the offer to bid letter
Highest figure is accepted unless vendor reserves the right
Possible for the formal tender to lead directly to a contract for sale

Informal
Sometimes used as a negotiating mechanism to invite all parties to bid
Less onerous terms and conditions are prepared
Further negotiations can follow on from the outcome of this process

Question 8

Pros and cons of auctioneering

Answer 8

Advantages include
Short time for disposal of property
Certainty of sale
Useful method for unusual properties which are hard to accurately value
Used for properties which are likely to gain a strong level of interest

Cons
Cost of auctions
Lack of confidentiality over price achieved
Vendor cannot choose the purchaser
Intensive nature of a short marketing period

Buyers may not have the time to do the necessary due diligence to put in an offer

Question 9

What are the 3 types of agency

Answer 9

Sole agency

Joint agency- two or more agents sharing a fee on a pre agreed basis

Multiple agency- any number of agents but only successful agent gets a fee

Question 10

What is the difference between sole selling rights and sole agency rights

Answer 10

Sole selling rights is beneficial to agent as even if purchaser is not found by agent they are still entitled to a fee where as with sole agency rights they’re not

Question 11

What are sole agency rights

Answer 11

A fee is only due if the agent introduced a purchaser within the term of the instruction agreement

Question 12

What are sole selling rights

Answer 12

If sold and not found by agent a fee is still payable
also a fee is payable even after sole selling right period ends when the property is sold to a purchaser introduced by the agent during the period of sole selling rights

Question 13

What is a ready able and willing purchase clause

Answer 13

Defined in the estate agents act 1979

Basically means that an abortive fee is payable if a willing and able purchase wants to buy the property but then the client decides to withdraw

Question 14

Timeline of a sales instruction

Answer 14

1)Receive instruction from client

2) check competence and independence

3)issue agency instruction agreement to client and receive signed copy

4) complete and record money laundering check

5) gather info such as leases, title plan and do statutory due dilligence

6) check vat position of vendor

7) inspect and measure the property

8) confirm position with fixtures and fittings

9) research market and assemble comps

10) prepare marketing report include estimated value and full recommendations

11) obtain written approval of marketing particulars

12) undertake marketing campaign

13) negotiate sale, draft heads of terms and instruct lawyers

14) liaise with solicitors and assist with any queries

15) facilitate practical arrangement for completion

16) issue invoice upon completion and retain file

Question 15

How long does the vendor have to back out of the agency contract once signing

Answer 15

14 days statutory cooling off period (Consumer rights act 2015)

Question 16

What should be put in the agency instruction agreement (TofE)

Answer 16

Agency basis (sole/joint/multi)

Agency rights (sole selling or agency rights)

Proposed fee

Marketing costs and disbursements

Confirmation of no conflict of interest

Money laundering requirements

Timescale for payment of fees

Details of CHP

must be signed and returned to agent before marketing can commence

Question 17

What happens if the purchaser is failing to complete a transaction

Answer 17

Vendor can serve a notice to complete on proposed purchaser giving them a deadline to complete. Legal costs paid for by purchaser

If deadline passed vendor can rescind the contract and remarket the property

Any deposit can be retained by vendor

Vendor can sue for damages to claim for any loss in value following sale of the property to another party at a lower sale price

Question 18

What does subject to contract mean

Answer 18

Shows that the agreement is not yet legally binding and that the parties are still negotiating terms.

Contract will only become enforceable when all parties formally sign and exchange document

Question 19

Level 2 office block Newcastle (Purcase and sale)

Answer 19

In Dunston by metro centre

Office block investment

Conducted aml checks
prepared marketing particulars.
Logged interest from data room and viewings
Updated client on progress of sale

Question 20

Purchase and sale lvl2 gosforth

Answer 20

Gosforth on church road
Newcastle retail unit with office space above fully vacant. Conducted viewings and received 2 similar offers which I sent to client.
Client expressed he was keen to get rid of the property and therefore accepted the offer from the cash buyer

Question 21

Purchase of an industrial asset Bradford

Answer 21

I was aware that one of our clients in Newcastle was seeking an high yielding asset in West Yorkshire

I became aware of a single let industrial unit achieving just under 8% in Bradford. I prepared a detailed report for the client and upon review of my report, my client and I submitted an offer adhering to the requirements in the request for offers email.

Question 22

Disposal of a single let industrial unit Teesside

Answer 22

A66 southbank

Standard start and then lots of offers multiple parties so we did best bids and still had a lot of offers so invited cash buyers back for a second round of best bids.

Accepted the highest bid

Question 23

what is the duty of care to a seller in a purchase and sale transaction

Answer 23

Exists throughout period of instruction, advuse on appropriate asking price and wheter to accept orr not accept an offer

Question 24

what is the duty of care to a buyer in a purchase and sale transaction

Answer 24

exists throughout instruction, must not mislead buyer in anyway

Question 25

key points included in UK Commercial Real Estate Agency October 2018

Answer 25

sets out general duty of care as an agent: must do best for your client.

must not accept bribes

must not discrimiate

must take additional care with vulnerable customers

matters to deal with before accepting instructions

Question 26

what should you do if your client wants to sell off-market

Answer 26

inform clients of risks of this and seek written confirmation before commencing negotiations.

Question 27

what added checks should you do in the case of insolvency or selling of a deseased persons asset

Answer 27

ensure client has the relevant authority to sell the property, ensure sight of relevant paperwork.

Question 28

what are the epc requirements for putting a property on the market

Answer 28

must have an epc within 28 days of going on the market, an epc should be no older than 12 months at commencement of marketing.

Question 29

what do you typically include in your marketing advice

Answer 29

analysis of current market,

method of sale reccomendation

budget

documents to be provided

likely selling price

arrangement for keys or access

timescales

viewings

period of reviews and reason for change.

Question 30

when do you inform yur client about viewings

Answer 30

should inform a client at least 3 days after a viewing with a brief description of why you think the party did not submit an offer

Question 31

if your selling a property what do you need to obtain from the buyer

Answer 31

proof of funds

Question 32

what should an offer include

Answer 32

need to report to client within 24 hours include date and time of the offer

any conditions

funding

any other factors which could influence purchase

Question 33

acquisitions when should you send and chase up an offer

Answer 33

send the offer within 1 working day of client saying so and chase up a response after 2 working days

Question 34

what legislation are you aware of regarding agency

Answer 34

UK Commercial Real Estate Agency 2016

Real Estate Agency and Brokerage 2016

Question 35

if you were to employ a sub-agent what must you do

Answer 35

ensure they have the relevant insurance

written confirmation from client or is a breach of duty

Question 36

section 19 estate agency act 1979

Answer 36

states that when an offence is committed by a company, not only the company but any director, manager, secretary or similar officer can also be held accountable. If the offence was comitted with their consent, convenience or negligece.

Basically states that you cant hide behind the company.

Question 37

section 21 estate agency act 1979

Answer 37

this section gives the government power to introduce or approve new codes of practice that estate agents must adhere to. Secretary of state can approve, amend or create. Designed to protect consumers.

Question 38

business protection from misleading marketing regulations 2008

Answer 38

The Business Protection from Misleading Marketing Regulations 2008 prohibit businesses from making false or misleading advertising claims and require that marketing is clear, accurate, and not deceptive. They also regulate comparative advertising, ensuring comparisons are fair, factual, and do not discredit competitors. These rules protect businesses and consumers from unfair practices.

Question 39

consumer protection from unfair trading regulations 2008

Answer 39

The Consumer Protection from Unfair Trading Regulations 2008 prevent businesses from engaging in unfair, misleading, or aggressive commercial practices that could harm consumers. This includes false advertising, omitting key information, or using high-pressure sales tactics. The regulations aim to ensure fair treatment and informed decision-making for consumers.