Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Rics Questions > P&c > Flashcards

P&c Flashcards

1
Q

What are the four methods of sale?

A

Private treaty, in formal, formal tender, auctioneering

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What are the advantages of private treaty?

A

It’s flexible, confidential, no commitment.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What are the disadvantages to private treaty?

A

Gazumping and guzundering

Parties are able to withdraw, Abortive costs.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Why did you use a private treaty method?

A

We used it to open up negotiations with interested parties with no time limit. This was because it’s allowed interested parties to conduct a good level of due diligence.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the advantages of the informal tender?

A

It’s ensures best price, no obligation to sell.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What are the disadvantages of informal tender?

A

No certainty of sale, late bids can occur

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is the informal tender process?

A

Send out to all interested parties confirmation of the bid deadline and invite best bids.

Request the following information
Property details
Purchase a name
Bid level
Conditions
Timeline
Type of funds
Proof of funds
Solicitors details

Disclaimer. The client is under no obligation to accept the highest or any offer.

All Offers are opened in front of the client

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What are the advantages of the formal tender?

A

Legally binding,

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What are the disadvantages of formal tender

A

Only one opportunity to bid

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

When is a formal tender used?

A

Where the sale has a high level of public accountability?

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is the formal tender process

A

CIT

The marketing includes a detailed legal pack

interested parties are invited to bid on the date given

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is the auctioneering process

A

CIT

AML checks on Vendors and purchases

Marketing includes a comprehensive legal pack

Intensive marketing for around a month before option where viewings are conducted

If the reserve is met the property is sold and contracts are exchanged from the fall of the garage

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What are the advantages to auctioneering?

A

If the property is unusual

Relatively short timetable for disposal

Used for property which are likely to attract strong level of interest

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What are the disadvantages to auctioneering?

A

Cost of marketing

Lack of confidentiality

If the property doesn’t sell some may consider there to be an issue even if there was no one in the room that day to buy. Tainted

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is the private treaty method

A

The free negotiation within the open market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is the RICS UK commercial real estate agency professional statement?

A

Sets out 12 core principles which agents must observe.

Act in an honest and fair manner.

To issue terms of business

Has appropriate PI cover

Not to discriminate unfairly

Provides advice for conflicts, AML checks, methods of sale

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What professional statements are associated with purchase and sale?

A

Rics UK commercial real estate agency professional statement, 2016

Global conflicts of interest 2017

Conflicts of interest-UK commercial property, 2017

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What legislation is related to purchase and sale?

A

Misrepresentations act 1967
Estate agents act 1979
Consumer protection regulations 2008

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What is the agency process?

A

Receive instructions

Check competence

Undertake conflict check

Issue and receive signed terms of engagement

Undertake anti-money laundering check

Collect property details, Lease details, title plan, EPC, planning, legal title, floor plans

Undertake due diligence, Tenant covenant, flooding, business rates, read leases.

Check the VAT position

Inspect and measure the property

Research market comparables

Produce a marketing report which includes our market appraisal, methods of sale, recommendations, market commentary.

Draft brochure and get contents signed off with the client

Carry out marketing

Negotiate heads of terms

Instruct lawyers and assist with any legal enquiries

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What was the fee basis of Middlewich

A

1% of the sale price confirmed in the terms of engagement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is sole selling rights?

A

If the property is sold during the rights even if the vendor finds a buyer the agent is still due a fee.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What is a sole agent

A

If the client finds their own buyer no fee is due

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What marketing did you undertake for Middlewich?

A

Richard Barber created a marketing brochure.

Sent to internal mailing list, Rightmove, put on AY website

A flat board was erected

We did not disclose the guide price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

How did you reach the value of Middlewich?

A

I undertook a residual valuation

I analysed the rents and yields of industrial units.

I capitalised the rent To form my opinion of GDV

I deducted build costs £60 psf, finance, profit

I then reported the residual land value and provided a range of offers

I included capital value evidence of similar land

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

What was the method of sale from Middlewich?

A

We brought the property to market by private treaty.

Due to significant interest we concluded the marketing by an informal tender

26
Q

How did you recommend an offer to the client for Middlewich?

A

I reviewed the offers

The two top offers were similar in value

I recommended the second highest offer due to it being a cash offer with no conditions.The interested party was also a reputable industrial investor

27
Q

What was the planning consent for Middlewich for?

A

For two industrial units measuring just under 30,000 ft.²

28
Q

What were in the heads of terms?

A 
Client name
Property details
Anti-money laundering check
Solicitor details
Offer
Conditions
Timescales
Funding
Lease details
29
Q

What are in the agency terms of business?

A 
The clients name
The property details
Anti-money-laundering requirements
Fee
Agency basis
CHP
Professional indemnity insurance
Conflicts
30
Q

What was the Prestwich property

A

A steel portal frame trade counter units constructed in mid 2019.

31
Q

When you inspected the property at Prestwich what did you do prior to the inspection?

A

I did a pre-inspection risk assessment to understand the hazards on site.I considered the local area and assessed the properties use

32
Q

What were the investors considerations prior to making an offer?

A 
Considered the length of the lease
The covenant strength
The age of the property
The location
The industrial market
33
Q

KWhat due diligence was required for Middlewich?

A

Due diligence of the planning consent And if this was the most suitable consent for the purchaser.

Due diligence on the construction cost

Site inspection to assess any abnormal costs

34
Q

What were the lease terms for Prestwich?

A

A 15 year lease and a 10 year lease

35
Q

What type of funding were the top two offers?

A

The highest was subject to third-party finance.

The recommended bid was a cash offer

36
Q

How did you adhere to GDP are during the marketing

A

I use agency pilot to send out messages to internal interest and agents who have given their permission for marketing of this type of assets.

37
Q

What was the completion timescale for Prestwich?

A

Six weeks to exchange and a further six weeks to complete

38
Q

Why did you inspect the property?

A

I wanted to see if there was any marketability issues. Such as mezzanines reducing the clear height.

To confirm the details provided by the client

To assess the local area

To get an understanding of how well the tenants are trading from this location

To check the quality of the building

39
Q

What went into your marketing report for Prestwich

A 
The property details
Local market commentary
Investment commentary
Likely interest
Comparable evidence
Market appraisal
Marketing recommendations
Costs
40
Q

How big was Prestwich

A

The two units total is approximately 9000 ft.²

41
Q

What was the specification of Prestwich

A

Roller shutter doors, 7 m eaves, LED lighting,

42
Q

What was the EPC for Prestwich?

A

B

43
Q

Was VAT elected for Prestwich?

A

Yes and it was dealt with by way of a transfer of going concern

44
Q

Was Middlewich elected for VAT

A

Yes

45
Q

Why did you adopt the private treaty process

A

The private treaty method enables negotiation with prospective buyers and flexibility

46
Q

What are the methods of sale did you consider? Why did you disregard those?

A

We considered formal tender however due to the client not having any public accountability we considered this would not get the best price.

We considered auctioneering however due to the nature of the development site we wanted to provide interested parties with a longer timescale that was not as intense in order to undertake their due diligence

47
Q

What happened after you drafted heads of terms?

A

Heads of terms were agreed by the purchaser and the client.

Company details were gathered to undertake AML check

Solicitors were instructed to take undertake buyers searches including local area drainage flooding etc

48
Q

Which parties did you carry out AML checks on

A

In accordance with company policy and statutory regulation we undertook AML checks on both the vendor and the purchaser.

49
Q

What types of conditions were on the offers

A

Subject to third-party finance
Subject to a £20,000 for drainage
Subject to contract
Subject to planning being amended

50
Q

Did you recommend one of the conditional or unconditional offers? Why?

A

I recommended an unconditional offer due to it being only slightly below the higher offer.

The offer was also cash from a reputable and experienced industrial investor therefore less likely to price chip

51
Q

Did you carry out viewings

A

Yes I undertook viewings for this property.I walked around the Boundry and answered any queries the interested parties had. Anything I could not answer I directed them to the data room that we had set up.

Interested parties asked about the planning permission, interest in the property, timescales, type of offers.

52
Q

Did you set a guide price for Prestwich

A

Yes this was stated on the brochure.

I calculated the value of the property by gathering rental and yield evidence And undertaking an investment valuation

53
Q

Did you get an EPC

A

Both of the properties had an EPC of B

54
Q

Did you can carry out viewings? How did you consider health and safety for Prestwich

A

The viewings took place before Covid therefore I followed usual health and safety protocols.

I insured whilst on site that we signed in with the tenant and adhered to the health and safety measures whilst in the property.

55
Q

When did you report offers to your client?

A

During the private treaty process, any offer that was sent to us I would send to the client.

During the informal tender process, we collected the offers and sent them to the client together once the deadline had passed.

The offers were kept confidential

56
Q

Did you correct a marketing board for Prestwich?

A

A marketing board was not affected, as we Considered the tenants position for a board as well as not being very effective for investment sale

57
Q

What would you do if the property was under offer on a different party then submitted a higher offer?

A

To adhere to the estate agents act 1979, I send Any offers in writing in a timely manner to the client.

If we were in an informal tender process, I would recommend that it would be unethical to accept an offer received after the bid deadline

58
Q

How did you communicate with your client throughout the marketing process,

A

We communicated regularly to update them of the interest by email and inform them of any offers that came in.

59
Q

Were there any conditions to the offer for Prestwich?

A

Condition included

Subject to contract
Subject to satisfactory leases
Subject to satisfactory warranty

60
Q

How would you deal with acquisition?

A

You would have a contractual agreement in place with a buyer.

Depending on if they have found a property or they are looking, I would produce a schedule of potential properties that fit their investment criteria.

Assess their objectives and risk

Understand if they are a speculative investor or looking for long-term income

I would inspect the property with them to confirm the condition and specification and tenant trading

I would then negotiate an offer which would then hopefully lead to the negotiation of heads of terms

Rics Questions (4 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions