Purchase and Sale and Auctioneering (level 3) (level 2) Flashcards
(32 cards)
What are the four methods of sale
- private treaty- dealt with privately negotiated between two parties
- formal tender-successful bidder is deemed to have exchange contract on accepting bid (sealed bids) (we don’t do this)
- informal tender-not legal binding, there is time to exchange contracts (best bid) (this is basically what we do)
- auction
What guidance do I consider when reviewing an asset for sale
- RICS commercial Real Estate Agency standards 2018
- Scottish Public Finance Manual
- Scottish Water disposal policy
What are some of the advantages and disadvantages of private treaty
adv
- save on marketing and agency fees
- parties control the process
- SW not under an obligation to sell
- flexible
dis
- buyer might pull out last min
- associated abortive costs
- might achieve more on open market
What are some advantages and disadvantages of former tender
adv-
- high level of accountability
- detailed terms are prepared before hand
dis-
1.no opportunities for further bids
2.
What are the advantages and disadvantages of the informal tender process
adv-
1.less onerous terms need to be prepared in advance
2. no obligation to accept any offer
3.
dis-
1.could take longer
2.doesnt lead to a direct contract for sale
3.
What are some of the advantages and disadvantages of auctioneering
adv-
- short timescale for disposal
- somewhat guaranteed a sale assuming the reserve is met
- reserves can be set so asset wont sell for anything less
- good for unusual properties that might otherwise be hard to value
dis-
- short marketing period
- less control over purchaser, so less accountability
- lack of confidentially over price achieved
Can you explain the auction process
- terms of engagement agreed- SVA on framework so this is not necessary for us when we instruct SVA
- Check for Conflict
- Money laundering checks- auctioneers must do for all vendors and proposed purchasers
- clarify auctioneers right to refuse bids, regulate bidding increments, excepting proxy bids, telephone bids etc
- All relevant info relating to property made available for inspection prior to auction- title, asbestos report, EPC, service info, if VAT applies
- article of roup, memorandum of sale and any notices to be made available by auctioneer prior to auction
- auction catalogue prepared
- Reserve price set
Can you explain the auction process
- terms of engagement agreed- SVA on framework so this is not necessary for us when we instruct SVA
- Check for Conflict
- Money laundering checks- auctioneers must do for all vendors and proposed purchasers
- clarify auctioneers right to refuse bids, regulate bidding increments, excepting proxy bids, telephone bids etc
- All relevant info relating to property made available for inspection prior to auction- title, asbestos report, EPC, service info, if VAT applies
- article of roup, memorandum of sale and any notices to be made available by auctioneer prior to auction
- Reserve price set
- auction catalogue prepared
Why do send the particulars out to the client before pulishing
To ensure they are in agreement. This places the liability onto the seller.
What preparation did you take for Strutherhill?
1.look at LDP
2.look at planning the planning portal
3.desktop planning review
4.
Tell me about a formal tender
- A legal pack is available ahead of time to allow purchasers to do due diligence.
- bids submitted by closing date. 3.bids will be submitted with a contract for sale and deposit
- Once a bid has been accepted this is seen as a legally binding contract.
(Failure to complete can mean lots of deposit and possible other costs.)
Tell me about informal tender
- bids submitted by closing date
- the seller then has a chance to review those bids and select one, or they may choose none.
- If the seller does wish to except one this acceptance is not legally binding and it will be accepted subject to legal contract being conclude
What is sole agency?
When a property is marketed by only one estate agency
What is sole agency?
When a property is marketed by only one estate agency
Can closing date offers be conditional
Yes unless the seller specified otherwise. They may not wish to accept conditional offers.
What are the stages of a property acquisition
- check SUK
- check conflict
- ToE
- check clients objectives
- assess options for finding property- check websites, code calling
- value measure any options
- carry out due diligence - title pack, asbestos report, service info, contamination to ensure there is nothing that will impact negatively upon value
- check rental or service charge arrears
- Neogiation
- instruct solicitor
What is the relevant guidance/legislation for auctions
- auctioneers selling real estate
- Auctioneers Act 1845
- sale of land by auction act 1867
- estate agents act 1979
- money laundering act
- RICS common auction conditions
What are the usual pre-auction actions
- check for conflict
- agree ToC
- adopting the RICS common auction conditions 2009
- agree info to be made available prior to auction- legal info, plans, inspection
- guide price provided- this should not be misleading
- particulars prepared/auction catalogue prepared
- VAT/EPC position confirmed
What might go into an action pack?
title, plans, article of roup (conditions of sale), memorandum of sale, any info on leases or service charges
Can you explain preparation of the auction catalogue and marketing material
- prepared in line with consumer protection regulations
- should include conditions of sale (aka article of roup) and memorandum of sale (aka contract of sale)
- disclose any details of rent or service charge
can you explain how a reserve price should be set
- day before
- in writing
- kept confidential
What type of info might you expect the day of the auction
- any changed to the auction lots, any withdrawals. These should be openly disclosed to the room
- info on proxy bids and phone/online bidding
what are the post auction actions you might expect for successful bidder
- ID checks
- completion of memorandum of sale
- 10% deposit paid
- auction results should only be published with permission
- details of purchaser and sellers should only be disclosed with party consent
can the reserve price be higher than the guide price for an auction?
It shouldn’t be- this would be deemed to be misleading as a property cant then be bought for the guide price.
Goes against the RICS guidance which provides clear definitions.
