Purchase and Sale Flashcards
What are the six principles of the Estate Agents Act 1979?
- Honesty and Accuracy.
- Clarity on TofE.
- Openness and transparency.
- No discrimination.
- Pass on all offers in writing.
- Keep clients’ money separate.
How does the Misrepresentations Act 1967 fit in to this?
Relates to a misrepresentation or false statement of fact made by a party during pre-contractual negotiations which has the effect of inducing the party to purchase.
How mortgageable is a long leasehold property? What are lenders views on such investments?
Generally long leasehold properties under 90 years tend to find mortgaging more difficult.
What are the differences between sole selling rights and sole agency?
Sole letting rights - Fees are due if the property is let during the agency agreement. This INCLUDES private introductions.
Sole Agency - Exclusive right to introduce a tenant during the agency period but does NOT INCLUDE private introductions.
What does the Real Estate Agency and Brokerage statement set out and what is its purpose?
This mandatory professional statement sets out the principles of fairness and transparency that underpin all activities undertaken by real estate agents.
- Ethics.
- Securing instructions.
- Acting for seller - marketing.
- Acting for seller - agreeing sale or lease.
- Acting for buyer.
- Ending instruction.
- Safety and security.
- Agency management.
Explain the advantages and disadvantages of private treaty?
Advantages:
- Flexibility.
- Parties control the process.
- No obligation until exchange.
Disadvantages:
- Gazumping (make higher offer than accepted bid).
- Late decisions to withdraw and associated costs.
- Can be slow, no defined course.
At Battersea Exchange explain how you undertook your market appraisal?
I wrote to the client to advise on the best disposal method for each of the commercial blocks at Battersea Exchange. I included a range of realistic capital values and suggested that we quote slightly higher to allow room for negotiation.
To arrive at my figures I used a market approach, citing a range of local comparable evidence, of both completed transactions and availability. I confirmed that I would closely monitor activity in the locality throughout the period of instruction and update my advice accordingly.
For each unit I advised the client on which uses I thought would be of most value (e.g. B1 office, D1, D2 etc).
I also advised where best value would be found on terms of prospective purchasers (e.g. owner-occupier, investor etc)
For block H I felt that best value uses would be either A2, B1 or D1 planning consent and that the best sale price would be achieved by a sale to an owner-occupier.
advice into 3 sections, citing values for a sale to an owner-occupier, sale to an investor, and fitting the units and retaining for leasing.
I advised the client that best value would be achieved by targeting the owner occupier market
What was your marketing strategy for this property? Why this strategy?
I advises the client to commence marketing 6 months prior to practical completion.
I advised that my firm would manage all marketing in house, and that we would produce a brochure for circulation across our own website and a number of external property portals.
I advised that a “For sale” window vinyl should be installed at the earliest opportunity to maximise exposure.
I advised that we could buy in to various local occupier mailing lists, and I set out the costs of this clearly for the client to review.
What documentation, if any, did you need to supply to the superior landlord?
I requested information from the buyer including: Proof of funds. Company details. ID. Fitout proposals for approval.
At Point Pleasant what is D1 planning consent? What does it cover apart from a nursery?
D1 planning consent, under the old Use Classes Order related to educational and medical uses. Medical uses and nurseries have now been subsumed into the new Class E, while learning institutions such as schools now come under Class F1.
What EPC was required for this property?
An EPC rating of E or above was required to sell the property.
Any fines for not having an EPC?
Fine of 12.5% of the rateable value subject to:
Minimum - £500.
Maximum - £5,000.
How did you market this nursery? How did you arrive at an asking price?
I marketed the premises in by producing property particulars with my marketing team, putting the details on our website and external portals, circulating via agents’ databases and targeted mailing lists, and installing a “for sale” window vinyl with the size of the unit and our logo and contact details.
To arrived at an asking price, I approached this in two ways, by adopting the investment method (taking a hypothetical lease, applying a rental value to the floor area and using a multiplier to reflect an investment yield) and by the comparable method (applying a rate per sq. ft. based on comparable evidence).
What was the advice around the investor market as opposed to the owner-occupied market at Battersea Exchange?
My advice was that we would be able to secure quick interest from commercial investors but that this would be at a substantially discounted rate compared to what an owner-occupier would be prepared to pay.
Why would there be a discount to the investor market?
By their very nature, investors are seeking a return on their investment and taking fitout costs, void periods, incentives, and agents and legal fees into account, they need to transact at a much lower level to make the investment viable.
