Purchase and Sale (L3) Flashcards
When advising clients how do you determine which method of sale to use? What factors do you need to consider?
Marketability, clients objectives and timescales, public accountability
You received an offer on the Bellshill property you were selling. What was included in the offer letter?
• The name of the purchaser and their solicitor and agent • Offer price • Details of the due diligence undertaken thus far • Method of finance – cash or bank funding. If Bank funding which bank • Track record on the buyer if not known to the vendor • Timescales to exchange and conclude • Conditionality attached to the offer
Was there any conditionality attached to the offer letter? Can you tell me 5 common examples of conditionality that you typically encounter in offer letters?
Subject to conclusion of missives, subject to board approval, subject to change of use, subject to confirmation of purchasers funds, subject to measurement, subject to inspection
Did you undertake any financial due diligence on the proposed purchaser?
Standard CDD was undertaken How are they funding the purchase? If it’s with cash then can you see proof of funds i.e. a statement of their account or a letter from their accountant. If it’s bank funding who is the bank – can they offer a letter to show that the funds are in place etc.
How did you report the offer received through to your client?
In writing to client and within 24hrs
In your terms of engagement for the sale in Rutherglen. Did you have sole agency or sole selling rights? Can you tell me what is meant by sole selling rights?
Fee due if missives concluded during period of sole selling rights, even if purchaser found by another agent or client. After expiry of sole selling rights, fee due if missives concluded with purchaser introduced during period or with whom agent had negotiations.
The sale for Rutherglen was by private treaty. What are the advantages and disadvantages associated with this method of sale?
Control, Confidentiality, more room for negotiation, no time restrictions
Open to gazumping, can pull out at any time, not competitive, no urgency
On the Rutherglen sale why did you advise your client to accept the offer which was below the quoting price?
As it had no conditions and was a cash offer, it could be dealt with quickly and therefore offered more value
If the property had been on market for some time did you consider recommending a sale by auction? What are the advantages and disadvantages of sale by auction?
Considered it but client wanted to have control over the process.
Adv - quick process, can lead to conclusion of missives, guaranteed sale if min price met
Dis - short & intense marketing period, lose an element of control, lack of confidentiality
Can you tell me a piece of legislation that you were mindful of when undertaking the Rutherglen sales instruction?
Estate Agents Act 1979
What are the current LBTT rates?
- > £150,000 = 0%
- £150,000 - £250,000 = 1%
- > £250,000 = 5%
You bid to purchase an office in Bellshill at closing date. What was included in the closing date letter?
• The name of the purchaser and their solicitor and agent • Offer price • Details of the due diligence undertaken thus far • Method of finance – cash or bank funding. If Bank funding which bank • Track record on the buyer if not known to the vendor • Timescales to exchange and conclude • Conditionality attached to the offer
Why did you feel it necessary to advise your client on the holding costs on the vacant element? What marketing void did you allow for?
So that my client could account for this within his costing analysis. We accounted for a void period of 12 months.
What is the difference between formal and informal tender?
Formal:
- one chance to bid
- high accountability
- detailed sales pack issued
- can lead to direct sale
Informal:
- Room for negotiation
- less onerous
- usually says no obligation to sell
What are the different methods of sale?
Auction, Private Treaty, Informal Tender, Formal Tender
