Purchase and Sale

Question 1

What are the common methods of sale what are the advantages/disadvantages?

Answer 1

1. Private Treaty - Property marketed openly, using particulars and advertising. Affords potential purchaser opportunity to treat with seller

Advantages -
Flexibility
Relatively inexpensive
Parties control the process
No obligation to sell
Confidential Process

Disadvantages -
Potential for Gazumping/Gazundering (considered unethical by RICS)
Risk of late withdrawal and associated abortive costs
uncertain timelines - prolonged negotiations
Over pricing could deter buyers

2. Informal Tender - Structured process, Known as sealed bids, interested parties must submit best & final bids/offers by a specified date usually accompanied by solicitors details, finance arrangements & any conditions.
   The bids are opened infront of an independant witness. Should include that the vendor reserves the right not to accept highest bid or any bid to avoid the process becoming a binding tender.

Advantages -
Competitive Bidding - can lead to higher offers
Straightforward with clear timeframe - all bids are submitted at the same time.
Vendor has options to choose form multiple buyers, if sale falls through generally other purchasers waiting in the wings.
Flexibility - vendor not obliged to accept any offers
Structured process - all bid submitted at same time so easier to compare offers

Disadvantages -
No guarantee of multiple bids
Not legally binding - can withdraw till contracts are exchanged
Requires clear terms ie vendor reserves right not to accept highest or any bid to avoid process becoming binding

3. Formal Tender -
   Used where there is strong demand for a property or public accountability is required.

Applicants bid blindly, no opportunity to withdraw or alter bids after submission.

Should include full marketing. material, legal pack & requirements for the contents of written bids

Offers opened in front of an independent witness and sellers agent makes recommendations of which offer to accept.

Purchaser selected & parties proceed to exchange in accordance with T&C or bankers draft is accepted & contract exchanged immediately

Advantages:
Potential for quicker sale Period from accepting an offer to completion is quicker as purchaser is presented with everything upfront.
High level of accountability - all parties aware of T&C of sale
Clear transparent process
Legally binding

Disadvantages -
Expensive due to admin costs of process
No negotiating
Can’t withdraw

4. Auction - ToE agreed between the seller & auctioneer in advance
   Relevant legal & marketing docs are published prior to auction. Potnetial purchasers responsible for undertaking due diligence prior to auction.
   Fall of the hammer contracts are exchanged. Generally purchaser pays 10% deposit.

Advantages:
Short certain timescales
In theory best price achieved after wide market exposure
Property can be sold with certainty over selling terms

Disadvantages:
No control
Not confidential
can deter buyers
Expensive upfront costs.

Question 2

How would you consider a property whilst considering method of sale?

Answer 2

*Type/Character/Uniqueness
*Location/condition/Size
*Planning Permission/ Listed status
*Clients timeframes/objectives
*Current demand in a particular area
*Level of control

Question 3

How do the above factors affect property value?

Answer 3

Type -
Character uniqueness -
Location -
Condition -
Size -
Planning Permissions -
Listed Status -
Clients Timeframes/objectives -
Current Demand in a particular area -

Question 4

What are the broad elements of the Estate Agents Act 1979?

Answer 4

Act regulates estate agents to ensure fair trading practices and protect consumers in the property market.

s18: Clarity on terms of agency & when fees become payable within ToE

Honest & Accuracy

Agreement & Liability for Costs

s21: Agents must disclose any personal interests they have to the client and within heads of terms

Absence of discrimination

inform clients about offers recieved

clients money must be held securely

Question 5

What are the broad elements of the. Misrepresentation Act 1967?

Answer 5

1. Defines Misrepresentation
2. Deals with damages for misrepresentation - allows for claimant to claim damages for misrepresentation unless the other party can prove reasonable grounds for believing the statement to be true
   Allows for court to award damages in lieu of rescission for innocent misrepresentation

Question 6

What are the broad elements of the Consumer Protection from unfair trading regulations 2008?

Answer 6

The regulations impose general prohibition on traders in all sectors from engaging in unfair commercial practices with consumers

Prohibition of misleading actions & omissions

Prohibits aggressive commercial practices

Enforcement

Consumers rights to redress

Question 7

What are the broad elements of the Money Laundering, Terrorist Financing & Transfer of Funds Regulations 2017?

Answer 7

Customer Due Diligence and Enhanced Customer Due Diligence
Ongoing monitoring
Risk Assessment
Suspicious Activity Reporting
Nominated officer to oversee implementation of MLR 2007
Training for all staff
Record Keeping for firms
Policies and procedures to prevent & detect money laundering
Regular audits and reviews - to ensure ongoing adherence & effectiveness

Question 8

Who does these Acts Protect & how?

Answer 8

1. Estate Agents Act 1979 - Protects both purchasers & vendors - by ensuring Estate Agents act honestly, fairly and promptly and in best interests of their clients. Regulates work of estate agents setting minimum standards of behaviour and ensure compliance with certain requirements.
2. Misrepresentation Act 1967 - protects individuals who enter into a contract based on false or misleading statements made by the other party - makes provision for recession of contracts if induced to enter by a misrepresentation.
   Makes provision for financial damages due to a misrepresentation even if it wasn’t fraudulent
3. Consumer Protection from Unfair Trading Regulations 2008 - Protects consumers - by prohibition of unfair or misleading trading practices and bans misleading omissions & aggressive sales tactics. Affording consumers the right to redress
4. Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2007 - Protects firm, clients & members of the public from being used by criminals to launder money - by preventing the use of financial systems for criminal activities, promoting transparency & safeguarding integrity of financial systems

Question 9

What documentation do you require prior to a sale/ purchase from both sides of a transaction.

Answer 9

Proof of ID
Utility Bill (Issued within the last 3 months)

Question 10

What would you need to find prior to undertaking an instruction?

Answer 10

Establish competence to carry out the instruction
Client passes AML checks
There is no Conflict of Interest
Proof of ownership

Question 11

How would you produce Particulars?

Answer 11

Using the firms software Expert Agent - which involves inputting the information, photographs & plans and the particulars are then generated with a reference number specific to that particular property

Question 12

What are key requirements/elements of particulars?

Answer 12

All material information must be provided (Consumer Protection from Unfair Trading Regs 2008)

1. Location/Address
2. Situation
3. Description of the Property/Land
4. Guide Price
5. Rights, covenants & Wayleaves
6. incase of land (RPA, Schemes)
7. EPC
8. Council Tax
9. Local Authority
10. Tenure
11. Viewing Arrangements
12. Directions
13. Photos which clearly show the property for sale

UK Residential Real Estate Guide 6th Edn. will provides guidance in this regard.

Question 13

How would you manage offers on a property? what would you need to do?

Answer 13

If an offer is made over the phone, I ask for confirmation via email inc how they will finance the purchase ie cash buyer/loan

I report all offers received to my client promptly and in writing in accordance with the Estate Agents Act 1979

I confirm with the offeror that the vendor has been informed of their offer

I do not disclose other offers made to any 3rd Party unless I have express permission & confirmation in writing from my client.

If the offer is not accepted I will inform the offeror upon confirmation from the vendor

If the offer is accepted I will confirm with the purchaser & request the relevant AML documentation & solicitors details

All offers are logged on our firms software (Expert Agent) against the property

With file notes and emails detailing offers kept on the physical file.

Question 14

What Legislation covers cash in purchase & sale transaction?

Answer 14

Proceeds of Crime Act 2002
Anti Money Laundering,Terrorist Financing and Transfer of Funds Regulations 2017

Question 15

What is the current market in your area for Land, Houses, detached properties.

Answer 15

Land Permanent Pasture - 8,000 10,000
Arable - 10,000 - 15,000
Overall average - £398,00
Detached - £550,000
Terraced - £275,000
Semi-detached - £314,000

Question 16

What factors affect the property market?

Answer 16

Economic conditions
demographics
supply & demand
location

Key drivers
Inflation
economic growth
interest rates
population dynamics

Question 17

What are the current factors affecting the property market?

Answer 17

The spring statement from government didn’t have much in it for homebuyers but the industry believe there is no doubt that the UK Government is making changes or looking to make changes to policy to ensure activity across the market remains consistent.

Stamp Duty changes which came into effect on 31 March lowering the Nil Rate band which will have the greatest impact on first time buyers

Housing stock remains relatively high & continuing to increase - supply & demand gap has lessened upward pressure on house prices

US Tariffs announced on 2nd April - Caused global economic turmoil but too early to assess impact on UK housing market. The wider effect on consumer confidence will take time to become clear but economic outlook has certainly weakened. , with price growth & sales activity likely to be affected

Outlook for mortgages will remain a key factor - rates have remained steady over recent weeks. BoE is still expected to cut base rates in May, but rises in tax & utility bills will impact affordability

Question 18

Where do you get comparable data from?

Answer 18

Agents Websites
Auction Websites
Rightmove
Our own comparable spreadsheet.

I also ensure to verify the evidence before using it.

Question 19

How do you maintain comparable data as current?

Answer 19

I ensure that records are regularly updated, ensuring evidence used is recent, verifiable and consistent with local market practice.

Question 20

How do you rank comparable data?

Answer 20

Using the Hierarchy of Evidence.

Cat A - Direct Comps
Cat B - General Market Data
Cat C - Other sources

Question 21

What is marriage value, why is it significant?

Answer 21

An additional element of value where the combined value of multiple assets is more than the sum of the separate valued

Question 22

What is lotting & why is it important?

Answer 22

Is the dividing up of a larger property eg an estate, farm or land into separate lots/parcels.

Important because:
Garner interest from a wider market - people may not be able to afford or be interested in the property as a whole

Gives a relative value of each asset.

Question 23

What is the difference between market value & sale/guide price?

Answer 23

Market value - estimated price a property would fetch in a competitive unrestricted market.

Sale Price - The actual price a property sold for in a specific transaction on

Guide Price - An indication of the sellers expectations and a starting point for offers

Question 24

Can you tell us about a property inspection you have undertaken?

Answer 24

Land at Holne - stable block & 8.45 ac of PP

I downloaded the Land Registry Title & Plan.

Measured the stable block and walked the land. Noting access, topography, services, boundaries, construction of the stable block and any other features on the property which included an electric pole, an dilapidated building to the northwest corner of the eastern paddock & galvanized drinking troughs in each of the paddocks.

I checked that the boundary corresponded with the title plan.

Question 25

Why did you take photographs?

Answer 25

To compliment the written descriptions Can illustrate specific features of the property To document the property at the the time Audit trail

Question 26

Why did you take measurements?

Answer 26

So that potential purchasers understand the size and layout of the property. The measurements must be accurate to comply with the Property Misdescriptions Act 1991

Question 27

How did you determine where the boundaries were?

Answer 27

Downloaded the LR Title Plan and ensured that that this corresponded with what was on the ground

Question 28

What due Diligence did you undertake prior to inspection?

Answer 28

Ensured i was competent had sufficient knowledge & experience to act. Completed CoI checks Drafted ToE & ensured we had a signed copy Downloaded LR Title & Plan Verified clients identity Researched planning history for current uses on site Risk Assessment Implemented firms loan working policy

Question 29

What details are required in sales particulars?

Answer 29

All material information must be provided in line with the Consumer Protection from Unfair Trading Regulations 2008) 1. Location 2. Description 2. Aspect, outlook/environment 3. Availability & nature of services 4. Tenure 5. Rights of way, Easements & Wayleaves 6. Fixtures & Fittings 7. Local Authority 8. Access 9. Council Tax 10. Planning 11. EPC 12. Method of Sale 13. Viewing details 14. Post Code 15. Health & Safety 16. Disclaimer to state particulars have been prepared in good faith and are believed to be correct. For Land Subsidies & grants Sporting rights/mineral rights Plan of the property / floor plan Site location plan Photographs

Question 30

What RICS Guidance relates to Estate Agency?

Answer 30

RICS Professional Statement - UK Residential Real Estate Agency 6th Edn. Sept 2017

Question 31

Why do sales particulars need to be agreed with the client?

Answer 31

To ensure accuracy and avoid legal issues. it is crucial for complying with with consumer protection laws as agents are legally bound under the Consumer Protection from Unfair Trading Regulations 2008 which prohibit misleading or false descriptions. Allows for vendor feedback and ensure the particulars accurately reflect the property and their expectations

Question 32

Land at Holne what did you do?

Answer 32

I attended the site inspection I drafted the particulars Completed the money laundering checks on the vendor

Question 33

How did you undertake the money laundering checks?

Answer 33

I requested the client come into the office with a form ID such as a driving license or passport and a recent utility bill that was issued in the last 3 months. I took copies of both I then entered the relevant details from their documentation into smart search to run AML check. Which came back with no issues

Question 34

Why did you undertake anti money laundering checks?

Answer 34

To comply with Legislation and RICS Professional Statement Countering Financial Crime: Bribery Corruption, money laundering, terrorist financing and sanctions violations To protect the parties and the firm from being used to laundering illict money

Question 35

Marketing why did you use your firms website?

Answer 35

Target audience - people visiting the website are interested in properties in the area. Consistency - layout & presentation are controlled by the firm Lead Capture - capture enquiries directly eg through enquiry forms & sign ups etc. Cost Efficiency - no 3rd Party listing fees. Cross promotion - can link the listing to social media t through the site to amplify exposure

Question 36

Marketing why do you use regional/national advertising?

Answer 36

Wider reach/exposure - potentially leading to more interest & higher competition. Targeted demographics - rightmove Potentially a quicker sale - with more exposure properties may sell faster due to a larger pool of buyers

Question 37

How do you deal with enquires?

Answer 37

I respond promptly & professionally. Provide Accurate information. Schedule viewings & log these on expert agent. Gather information from interested party Follow up on enquiries/viewings to get feedback, gauge interest. Log all enquiries/viewings/offers on Expert Agent against the property.

Question 38

How do you log viewings that are unaccompanied?

Answer 38

All viewings are logged on Expert Agent. Create a profile on EA for the interested party and select unaccompanied viewing on the system against the property for the date & time

Question 39

What have you done to forward offers to the client?

Answer 39

I will contact them via email or by letter if email is not an option, I will do this immediately or as soon ss practicable (no more than 2 days after receiving an offer) when I am in receipt of an offer. Detailing time & date Amount Conditions attached (if any) Source of funds (cash buyer, mortgage) Any other factors that might influence the purchase This applies to all offers up to exchange.

Question 40

What have you forwarded offer to the clients this way?

Answer 40

It is a legal obligation under the Estate Agents Act 1979. Compliance with RICS Professional Standard UK Residential Real Estate Agency 6th Edn.

Question 41

How do you record the clients response?

Answer 41

I generate a offer acceptance/offer refusal letter on expert agent for both the vendor & offerer and send this to both parties. Saved on file and digitally on the cloud. Record vendors accpetance/refusal on EA against the property

Question 42

When have you refused to disclose offers to potential purchasers?

Answer 42

This happens quite frequently. for example on the 10 acres of permanent pasture I was pressed by 3 individual parties to reveal offers made.

Question 43

How did you manage the situation?

Answer 43

I politely & professional advised that I could not reveal any other offers made only that there offers made which the vendor was considering. I made a file note of the conversation, informed my supervisor & the client. Following up on the telephone discussion with an email to the client confirming that they did not want me to disclose offers made

Question 44

Why did you not reveal the other offers?

Answer 44

I did not have the clients express permission to do so.

Question 45

10 acres of permanent pasture what did you do when the offer was accepted?

Answer 45

I Requested the successful party come into the office with ID and a recent utility bill & requested their solicitors details. I took copies of both and ran a money laundering check on EA. Once the money laundering check was completed i drafted & issued the memorandum of sale & sent this via email to the relevant parties and their solicitors.

Question 46

What is included in the memorandum of sale?

Answer 46

Date Property Ref Property Address Vendors details Purchasers details Solicitors details Sale Price Other relevant info Local authority We also send a scale plan & the property particulars

Question 47

Why was money laundering check important?

Answer 47

To comply with Legislation and RICS Professional Statement Countering Financial Crime: Bribery Corruption, money laundering, terrorist financing and sanctions violations To protect the parties and the firm from being used to laundering illict money

Question 48

What would have been a red flag in money laundering?

Answer 48

Secretive - unwilling to provide info needed to process AML check Discrepancies in spellings of names & addresses shell companies - will need to run Ultimate Benefical Owner check to check identity of who is buying property and then runsncheck on indiivual Income discrepancy - between buyers official income & property value Politically Exposed Person or close relative/associate Special Interest Person - involved or been involved in serious crime Foregin buyers - unexplained distance between buyer and property, from countries with weak AML, high corruption of support terroists Suspicious source of funds - using 3rd party funding with 3rd party have no apparent connection with the transaction or funds from a foreign country with no apparent connection unusual choice of professional services - ie lawyer from a different country Unusual transactions - withdrawing receiving large amount of money regularly, using multiple/foreign banks accounts without good reason.

Question 49

What would you do?

Answer 49

I would report this immediately to the firms appointed money laundering officer

Question 50

Why do you require solicitors details?

Answer 50

To progress the sale so the legal process of coveyancing can begin

Question 51

Bowderdon Pasture land what advice did you give retarding the methods of sale?

Answer 51

After discussing the clients reasons for selling, timescales and expectations I advised the client to proceed with a Private Treaty sale - the rational being: The client had no time pressure to sell the property. This method affords a great deal of flexibility being able to enter into negoitations early on the marketing peroid. No upfront legal costs associated with auction or formal tender such as legal packs, fees which the client was concerned about. Offered a large degree of control of the purchaser.

Question 52

How did you balance time pressures, flexibility, negotiation strategy, costs

Answer 52

Time pressures - there were none the client was under no pressure to sell the property. Flexibility - provided a guide price allowing room for offers Advised the client to take reasonable time to consider offers I kept both sides informed in a timely fashion. Negotiation strategy - upon receipt of numerous offers ask for best & final offers by a specified date & time Costs - An outline budget was agreed inc. travel, incidental expenses, costs of producing plans etc. It was agreed that all costs would be payable upon completion of the sale.

Question 53

What advice did you give regarding lotting?

Answer 53

I advised to market the property in three lots with any potential purchaser having the ability to offer on all three as a whole. The block of land lent it self to being split into three individual parcels - with: Lot 1 - extending to 26.96 acres Lot 2 - extending to 14.46 acres Lot 3 - extending to 4.52 ac with a handling area. Each parcel had their own indiviual access point off the adjoining public highways Lot 3 was an obious indivual lot being set slightly away from the others.

Question 54

Why did you think this would garner more interest?

Answer 54

The property as a whole was 45.94 acres which is substantial amount of land with offers in excess of £390,000 for the whole. By lotting the land it would open up a wider to include people who did not have the funds to purchase the property as a whole or who didn't that amount of land. This proved to be their ight decision as the land sold in 3 three lots for above the respective guide prices.

Question 55

How did you advise regarding the mowing licence?

Answer 55

An offer was received and accepted on Lot 1 - with the purchaser requesting they be allowed to take a crop of hay off the land, given the predicted timeframe for exchange I advised the client that a mowing license could be drawn up. detailing: Date Property (inc our reference) Property address Parties details Details of the agreement - that prospective purchaser could cut the grass in Lot 1 only and store this in the vendors barn free of charge until completion, when it is to be removed within 5 working days. If the sale was to fall through the purchaser would have no right to the fodder cut & stored and will not be reimbursed for the same.

Question 56

How did you manage the solicitor situation?

Answer 56

I had no correspondence from the purchaser solicitor in several weeks after emailing them on several occasions to ask for a update on how the sale was progressing. I contacted my clients solicitor to see if they had been on contact with purchasers solicitor & they confirmed they hadn't. I contacted my client in the and discussed matters with them, advising that I would contact the purchaser and their solicitors to get to the bottom of matters. I spoke to the purchaser who said his solicitor had left but he assumed that the matter was being dealt with my another solicitor in the firm. I asked him to contact the firm to establish what was happening. He came back to me the next day to confirm that he had engaged another firm of solicitors to deal with the matter and provided me with their details. I subsequently informed client and their solicitor, redrafted to memorandum of sale to reflect the changes and issued this to the a parties

Question 57

Standing Straw Sale what did you advise?

Answer 57

I advised that the firm were holding straw sale for a local estate owner and subject to the estate owners approval we could include their crop in the sale. Clients did not want this as they wanted control over the purchaser. So I advised that we could sell the crop by informal tender. Specifying a date & time by tenders had to be recieved. Provided we included that the included in the conditions of sale that the vendor is not bound to accept the highest or any offer. It would avoid a legally binding tender and they could retain control of the purchaser and the process

Question 59

What did you advise regarding the documentation?

Answer 59

I advised that we would need to include the tender form Catalogue including: Time and Date for tenders to be received, method of delivering tenders Conditions of sale a plan details of the lots - cropping & size

Question 60

How did you advise the method of sale to ensure control was maintained by the client?

Answer 60

Advised to include in the conditions of sale that that the vendor is not bound to accept the highest or any offer. It would avoid a legally binding tender and they could retain control of the purchaser and the process

Question 61

What advice did you give about the tenders recieved?

Answer 61

I advised to discard two tenders that were incomplete Several of the tenders had bid for all the lots I advised the client that we had dealt with a number of bidders through previous sales and they had been trust worthy & paid on time. Two of the bidders we had no knowledge on. I advised the client to consider all offers as the highest offer was not always the best.