Purchase and Sale/Market Appraisal (L3/2) Flashcards
What is the Estate Agents Act 1979?
regulates work as an estate agent. make sure that an agent works in the best interests of your clients, and that both buyers and sellers are treated honestly, fairly and promptly.
What is the Misreprisentation Act 1967?
helps to protect buyers who are persuaded to buy something that isn’t as it seems eg not disclosing things accurately when asked questions about items, like structural defects or disputes with neighbours, may result in a misrepresentation claim. Civil offence, can be avoided with a disclaimer (in brochures)
What is Consumer Protection Regs?
control descriptions used by estate agents and letting agents. They create criminal offences for traders that breach them. Criminal offence
What are the different methods of sale?
Private treaty, auction, informal and formal tender
What are the different types of agency?
Sole agent, joint agent and multiple agent
what is private treaty?
most popular method of sale, without commitment from seller and has full flexibility, control, confidentiality and not obligation to sell. risk of gazumping or gazundering
what is informal tender?
used when there is a good level of interest, either at the off or to bring negotations to a close. Requests best bids from parties, but not legally binding and parties can still withdraw. bids must be opened in front of client or independent witness. in both this and formal tenders, the client is under no obligation to sell to the highest, or any bidder, but INFORMAL can be further negotiated
what is formal tender?
(sealed bids) usually used by statutory bodies for control and transparency over the process. there is no further bidding and the offer can lead directly to exchange of contracts.
What is gazumping
when the seller accepts an offer verbally, but then is offered a higher bid
what is gazundering?
after agreeing a sale, the purchaser substantially reduces their offer
what are sole selling rights?
when an appointed agent is the onyl person with the right to sell and is entitled to full commission. the seller may be liable to fees even if the agent doesn’t find the buyer, and if the house is sold via another agent but the buyer is instructed by the first agent. the agentsmust make seller aware that this is the deal they are entering into.
what is the difference between sole agency and sole selling rights
sole agency just means that they are the only agent instructed, but doesn’t necessarily mean they would be entitled to the commission if they did not instruct the buyer.
what is the current bank of england base rate
5.25%
what are the current mortgage rates?
vary between 5.5% - 7% depending on the bank, whether or not its a fixed rate and length of term
what is a fixed-rate mortgage
guarantees the same monthly repayments for the term. means you aren’t affected by increasing base rates, but equally means that you don’t benefit when rates go down
what is a variable mortgage rate?
monthly repayments rise and fall with the base/interest rates.
what is stamp duty land tax?
tax paid when purchasing property or land over a certain price
what are the sdlt rates
- only pay over £250,000
- 5% on the next £675k (up to £925k)
- 10% on the next £575k (up to £1.5m)
- 12% on the remaining amount (over £1.5m)
(First time buyers get relief on first £425k, and then only 5% up to £625k, no relief if price is greater than £625,000)
How do you agree a fee basis?
openly, transparently, encouraging healthy competion. no undercutting/colluding
must state the amount payable, the circumstances at which a client would be liable to pay, particulars of payments that aren’t included (eg marketing costs), fee structure (eg in joint agency, what is the split)
four agents in Somerset were fined by the CMA for colluding minimum commission rates of 1.5% in 2014/15 £137,000
how do interest/base rates affect the property market?
- harder to afford/obtain mortgages, reduces buyers, decreases property prices
- more expensive to own/run a home, less demand, prices fall
- conversly, as mortgage repayments increase, people can’t afford to keep paying, need to sell their house.
- market is opened up to more cash buyers = typically higher priced top end property and those in a tax bracket that aren’t affected by changing rates
why are aml checks important?
to ensure that money is coming from a legal, legitimate source. red flags include unusual currencies, unwillingness to provide id, unrealistic speed to transact
what did you include in the brochure?
photographs, description, address, guide price, method of sale, EPC, any defects, services, easements, wayleaves, planning notes, rights of way
why did you carry out an EPC?
the property did not have one, and it is a legal requirement for all proeprties to be marketed with a valid (10 years) EPC unless exempt (listed buildings, buildings due to be demolished, buildings of less than 50 sq. m)
What did you include in the memo of sale?
name of vendor and purchaser, address, agreed price, deposit amount, finance/cash, HMLR number, contact details incl. address of buyer, seller and both solicitors, any fixtures and fittings included and any conditions of sale
what did you consider when putting up a for sale board?
i ensured to follow the local authority’s rules and regs, and the Town and Country Planning Regs 2007. generally, this includes
- only erected with the clients permission
- must be inside the boundaries of the property
- clearly state what it realtes to (ie block of flats)
- must be removed within 14 days of completion of transaction
- must not exceed 0.5 sq.m or be more than 4.6m off the ground
what is included in a sales agreement?
- scope of work
- address of the property
- name and contact info of client
- fee basis, including any OPE and upfront charges
- business terms and duration of works
- include a copy of complaints handling.
what is the difference between a red book valuation and an appraisal?
Red book is undertaken by a member of the RICS and usually has a fee, an appraisal is an opinion of market value by an estate agent given current market conditions
what is market value?
the price agreed between a willing buyer and a willing seller in an open market sale, at an arms length transaction where both parties have acted willingly, prudently and without compulsion
