Purchase and Sale and Auctioneering AI Q's

Question 1

What are the four main methods of sale?

Answer 1

1. Private treaty
2. Informal tender
3. Formal tender
4. Auction

Question 2

What factors should be considered when choosing a method of sale?

Answer 2

• Client’s objectives
• Public accountability
• Current and likely future market conditions
• Likely level of demand for the property
• Timing requirements

Question 3

Define Private Treaty in the context of sale methods.

Answer 3

Parties free to negotiate in their own time, without commitment. Most popular method of sale.

Question 4

List advantages of Private Treaty.

Answer 4

• Flexibility
• The parties control the process
• Vendor not under any obligation to sell
• Confidential

Question 5

List disadvantages of Private Treaty.

Answer 5

• Potential for gazumping/gazundering
• Late decisions not to buy
• Associated abortive costs

Question 6

What is Informal Tender?

Answer 6

Used when there is a good level of interest; ‘best bids’ procedure is not legally binding.

Question 7

What details must be included in the bids for Informal Tender?

Answer 7

• Required date and time of receipt of the written offer
• Name and address of the applicant’s solicitor
• Confirmation of finance arrangements
• Details of any conditions of the offer
• Confirmation that offers of a variable nature will not be considered

Question 8

What is the vendor’s right in an Informal Tender?

Answer 8

Vendor reserves the right not to accept the highest, or any offer made.

Question 9

Define Formal Tender.

Answer 9

A structured process where prospective buyers submit sealed bids by a deadline, and the bids are legally binding once submitted

Question 10

What are characteristics of Formal Tender?

Answer 10

• Provides a high level of public accountability
• Vendor can state they are under no obligation to accept the highest bid
• Applicants bid blindly

Question 11

What happens after bids are opened in a Formal Tender?

Answer 11

No immediate exchange of contracts upon opening the highest bid.

Question 12

What is a key difference between Formal Tender and Informal Tender regarding bids?

Answer 12

Formal tender provides potential purchaser with a single chance to bid for a property.

Question 13

What is the outcome of a successful Formal Tender?

Answer 13

Possible for the formal tender to lead directly to a contract for sale.

Question 14

What is a key feature of Informal Tender in terms of negotiations?

Answer 14

Further negotiations can follow on from the outcome of this process.

Question 15

Fill in the blank: In a Formal Tender, the vendor prepares detailed terms and conditions for the sale and publishes them in advance with the _______.

Answer 15

offer to bid letter

Question 16

True or False: The informal tender will lead directly to a contract for sale.

Answer 16

False

Question 17

What summarizes the process for a Formal Tender?

Answer 17

Formal Tender only: Sale

Question 18

What summarizes the process for an Informal Tender?

Answer 18

Private treaty, informal tender, perhaps more negotiations, sale

Question 19

What is a sole agency?

Answer 19

One agent

A type of agency where only one agent is responsible for the sale.

Question 20

Define joint agency.

Answer 20

Two or more joint agents sharing a fee on a pre-agreed basis

This type allows multiple agents to work together, splitting the commission.

Question 21

What is multiple agency?

Answer 21

Any number of agents but only the successful agent gets a fee

In this model, several agents can be involved, but only the one who completes the sale is compensated.

Question 22

What is the first step in the timeline of a sales instruction?

Answer 22

Receive instructions from client

This initiates the sales process.

Question 23

What must be checked after receiving instructions from a client?

Answer 23

Competence and independence

Ensuring the agent is qualified and free from conflicts of interest.

Question 24

What is issued to the client after instructions are received?

Answer 24

Agency instruction agreement (to be signed and returned S.18 Estate Agents Act 1979)

This formalizes the relationship between the agent and the client.

Question 25

What must be completed and recorded according to the Money Laundering Regulations 2017?

Answer 25

Money laundering checks and sanctions check ## Footnote These checks are essential for compliance.

Question 26

List three types of information that must be gathered during the sales instruction process.

Answer 26

* Inspection details * Legal title documents * Planning information ## Footnote Gathering comprehensive information is crucial for a successful sale.

Question 27

What does due diligence involve?

Answer 27

Reading the lease and conducting statutory enquiries ## Footnote This ensures there are no issues that could affect the property's sale.

Question 28

What should be checked regarding the vendor's VAT position?

Answer 28

Whether the sale has TOGC status ## Footnote TOGC stands for Transfer of Going Concern, affecting VAT treatment.

Question 29

What is the purpose of inspecting and measuring the property?

Answer 29

Taking detailed notes/photographs ## Footnote This documentation supports the marketing and valuation process.

Question 30

What must be researched and verified during the sales process?

Answer 30

Market and comparable evidence ## Footnote This helps in setting an appropriate price for the property.

Question 31

What is the purpose of the marketing report prepared for the vendor?

Answer 31

To provide full recommendations ## Footnote This report guides the vendor on the marketing strategy.

Question 32

What must be obtained from the vendor regarding marketing particulars?

Answer 32

Written approval of the contents (Consumer Protection Regulations 2008 & Misrepresentation Act 1967 et al) ## Footnote Compliance with Consumer Protection Regulations 2008 is required.

Question 33

What is the next step after preparing the marketing report?

Answer 33

Undertake the marketing campaign as agreed ## Footnote This step involves actively promoting the property.

Question 34

What is involved in negotiating the sale?

Answer 34

Drafting HOTs and instructing lawyers ## Footnote HOTs refer to Heads of Terms, which outline the main terms of the agreement.

Question 35

What type of enquiries should be liaised with the vendor’s lawyer?

Answer 35

Commercial/Residential Property Standard enquiries (C/RPSEs) ## Footnote These enquiries ensure all legal aspects are covered.

Question 36

What must be facilitated during the legal formalities?

Answer 36

Practical arrangements for completion ## Footnote This ensures a smooth transition to the new ownership.

Question 37

What is issued upon completion of the transaction?

Answer 37

Invoice ## Footnote This finalizes the financial aspect of the sale.

Question 38

What must be retained after the transaction is completed?

Answer 38

File ## Footnote Keeping thorough records is important for compliance and reference.