Purchase & Sale Flashcards
What are the main methods of sale?
- Private treaty
- Informal tender
- Formal tender
- Auction
What factors should you consider when choosing a method sale?
- Clients objectives
- Public accountability
- Current and future market conditions
- Likely level of demand for property
- Timing requirements
What is private treaty?
Parties free to negotiate in own time without commitment
What are the positives and negatives of Private Treaty?
Advantages
- Flexibility
- Vendor control (No obligation to sell)
- Confidential
Disadvantages
- Potential gazundering
- Not guaranteed to sell + associated abortive costs
What is a formal tender?
A formal tender is known as sealed bids, the applicants bid blindly in a prescribed form without knowing what the other parties are bidding.
When is formal tender used and why?
Its often used by statutory bodies and gives control over the marketing process. It provides high level of public accountability, or when there may be strong interest in a property
What marketing information must be included for a formal tender?
A comprehensive legal pack & T&Cs
Can you increase your bid for a formal tender?
There is no opportunity to increase bids after the initial offer
What is the Caveat Emptor?
Buyer should satisfy itself on all matters relating to the property, Consumer Rights Act 2015 goes beyond this
What is an informal tender?
- Marketed for finite period of time,
- Not legally binding
- Either can withdraw at any point prior to contract
When is informal tender most used?
When good interest or to bring the proceedings to a close
How should bids be opened?
In front of the client or independent witness or line manager
Does the Vendor have to accept the offer for formal/informal tender?
No
What needs to be included in the bid letter?
· Date and time of the written offer
· Name and address of applicant’s solicitor
· Source of funds
· Details of any conditions attached to the offer
· Price
· Party detail
What is a formal tender / sealed bid?
- Single chance to bid
- High levels of accountability
- Detailed T&Cs for sale prepared ahead
- Can lead to immediate exchange of contracts
- Marketing material contains includes full legal pack
What is undertaken prior to an auction?
ToE, Conflict, AML, DD, Legal Pack, Reserve Price agreed, this means contracts can exchange at fall of gavel
What are some pros and cons to auctioneering?
Advantages
Short timescale
Certainty of sale
Unusual property hard to accurately value
Strong level of interest
Disadvantages
Cost
Lack of confidentiality
Short marketing period
What is included in HOTS?
Date, Subject to contract, Vendor/purchaser, Both agents/solicitors details, Price, Funding/cash, Any conditions, measured survey, Timescales
What is a typical timeline of a sales instruction?
- Instructions from client
- CIT (competence, independence, ToE)
- Money laundering
- Info and due diligence
- Check VAT position - TOGC
- Inspect and measure
- Undertake valuation (not Red Book)
- Prepare marketing report
- Written approval of marketing particulars
- Undertake marketing campaign
- Negotiate sale
- Liaise with lawyers - CPSEs
- Issue invoice, Retain file
What are the agency rights?
Sole selling - get paid even if don’t find purchaser
Sole agency - only get paid if you find the purchaser
What are the three bases of agency?
Sole agency - only one agent
Joint sole selling - shared fee, pre-agreed
Multiple agency - only successful agent gets a fee
What is included in an agency instruction agreement?
- Agency basis and rights
- Fee and costs
- Conflicts of interest
- Money laundering
- Timescales
- Complaints handling
Can you still charge a fee if the client withdraws the property from the market?
‘Ready, able and willing purchasers’ clause’ within Estate Agency Act 1979
What is the timeline of a acquisition instruction?
- CIT (competence, independence, ToE)
- Money laundering
- Understand client objectives
- Consider techniques find properties
- Measure, inspect, valuation
- DD & Negotiation
- Agree HOTs
- Instruct lawyers. SPV? reduces SDLT
