Purchase and Sale & Market Appraisal Flashcards
What is a Capital Allowance?
A form of tax relief upon capital expenditure for the construction or purchase of a commercial building.
I will always consult with an expert on this matter as I am not competent enough.
Different types of agency
Sole selling rights - Agent gets paid regardless who finds the buyer - quite rare to see
Sole agency - Agent gets paid unless vendor/client finds the buyer
Joint agency - Two agents with a pre-agreed share of the fee upon the sale, either agent can find the buyer.
Joint sole agency - Two agents, but whoever finds the buyer gets the whole fee
What are the four methods of a sales?
Auction
Private Treaty
Formal Tender
Informal Tender
What are the pros and cons of Auction?
Pros
* Speed and certainty
* Competitive bidding
* For properties that are hard to accurately value
* Strong level of interest
Cons
* Short marketing period
* Cost
* Not confidential
What are the pros and cons of Private Treaty?
Pros
* No time limit
* Confidential
* Negotiation
* Vendor control
Cons
* Gazumping
* Not guaranteed sale
What are the pros and cons of Informal Tender?
Pros
* Set period
* No obligation to sell
* Create competition
Cons
* Gazumping
What are the pros and cons of Formal Tender?
Pros
* Contract (if vendor accepts purchase is bound)
* Transparent
Cons
* Not good in weak markets
What is one main difference between informal and formal tender?
Informal tender creates opportunity for negotiation as Formal Tender you have one chance to bid.
What factors would you consider when deciding on the method of sale?
I would consider…
- Timing requirements
- Client’s objectives
- Market conditions
- Target market
What is meant by caveat emptor?
The buyer should satisfy itself on all matters relating to the property
What happens when a property goes under offer?
It enters the exclusivity stage and the solicitors are instructed.
What are the 12 core principles of the RICS UK Commercial Estate Agency Professional Statement 2016?
1 - Act in an honest, fair and professional manner
2- Carry out work with skill, care and diligence.
3 - Terms of business that are fair and clear
4 - Avoid conflicts of interest
5 - Not to discriminate
6 - All communications to be clear and timely
7 - Marketing material to be honest and truthful
8 - Client’s money to be held in separate accounts
9 - Hold appropriate PII
10 - Obligations to client must be clear
11 - Realistic assessments of price / rent
12 - All meetings, inspections and viewings to be carried out with clients wishes
What are the 7 key principles for the Estate Agents Act 1979?
THIDOCC
T - Clear Terms of the agency
H - Honesty and accuracy
I - Personal Interests
D - Absence of Discrimination
O - Tell clients all Offers
C - Agreement and liability for Costs
C - Keep Clients money separate
What is the Consumer Protection Regulations 2008?
The Consumer Protection Regulations 2008 is a criminal offence which could lead to 2 years in prison.
Extends duty of care beyond clients to all interested parties
Aims to protect consumers from unfair business practices. Preventing tricky tactics and false information.
What is a Commercial Property Standard Enquiries (CPSE)?
This is a set of questions that are asked during the disposal/acquisition process. When a property goes under offer. The buyers solicitors would ask the seller/property manager questions are the property.
