L1 Purchase and Sale Flashcards
What are the 4 methods of sale?
1) Private Treaty (free to negotiate in open market)
2) Informal Tender (best + final bids, not binding, reserve right to not accept)
3) Formal Tender (Bids are blind, full market material sent in advance
4) Auction (MV difficult to assess, AML checks in advance, all info published prior,
gavel falls legally binding, reserve price)
What are the advantages / disadvantages of Private Treaty?
Advantages
- Flexible
- Parties in control
- No obligation to sell
Disadvantages
- Potential to Gazump / gazunder
- Potential late pull outs
What are the advantages / disadvantages of Informal Tender?
Advantages
- Known time period
- Maximise bids
- No obligation to accept
- Allows for further negotiation
Disadvantages
- Not legally binding (pullouts)
- Doesn’t lead to contract
- Terms need to be agreed
What are the advantages / disadvantages of Formal Tender?
Advantages
- High level of accountability
- Can speed up process to exchange
- Terms set by vendor in advance
Disadvantages
- No opportunity for higher bids
- Expensive (legals)
What are the advantages / disadvantages of Auctions?
Advantages
- Certainty of sale
- Quick
- Can achieve best price
- Certainty of terms
Disadvantages
- Lack of confidentiality
- Cost of promotion
- No control over purchaser
- May blight property
What types of agency are there?
Sole Agency - One agent appointed
(Fee only if agent finds buyer)
Joint Sole Agency - Two agents appointed
(Share fee on pre-agree basis)
Multiple Agency - Two Agents appointed
(Only successful agent gets fee)
Sole Selling Rights - Fee even if another agent / client finds purchaser
RICS Agency Requirements?
Professional Statement - UK Residential Real Estate Agency or Blue Book
What are the principles of the UK Residential Real Estate Agency? (Blue Book)
Same 12 principles of the Agency & brokerage statement
1) Honest & Transparent
2) Due care and diligence
3) ToE are fair and clear
4) Avoid collusion
5) Don’t discriminate
6) Communicate with clients
7) Marketing materials
8) Client money held separately
9) PII
Name the Key legislation relating to Purchase and Sale?
The Estate Agents Act 1979
What is your understanding of the Estate Agents Act 1979?
Provides a process and a set of rules for those in agency to adhere to in the hopes of consumer protection
7 Key Principles
1) Clarity of Terms (S.18)
2) Honesty and accuracy
3) Agreement and liability for costs
4) Openness regarding personal interests (S.21)
5) Do not discriminate
6) Tell vendor / LL of offers promptly and in writing
7) Keep client money separate
Who Polices the Estate Agency Act 1979?
Trading Standards Commission
What are the Two Key legislations protecting marketing in agency?
Misrepresentation Act 1967
Consumer Rights Act 2008
Please explain your understanding of the Misrepresentations Act 1967?
Governs mis-statement and fraud made in the pre-contractual enquiries by the vendor or agent to the purchaser
Civil offence, actionable by tort (can be limited by disclaimer (exclusion) clause)
Sued for financial damage / contract rescinded
Please explain your understanding of the Consumer Rights Act 2008?
Governs the whole agency process in relation to mis-statement and fraudulent behavior
Criminal offence
- Not treating customers fairly and providing mis-leading information
Unlimited fine, 2 years in prison or court order
What are the current Stamp Duty Rates? and what is an exemption for first time buyers?
£250,000 - 0%
£935,000 - 5%
£1.5m - 10%
Over 1.5m - 12%
First time buyer £425,000 - 0%
