Purchase & Sale

Question 1

What is the main document from the RICS that governs agency?

Answer 1

Real Estate Agency & Brokerage (3rd Edition) 2016 - RICS Professional Statement

Question 2

What is the UK specific document that governs agency?

Answer 2

RICS UK Commercial Estate Agency Professional Statement (1st Edition) 2016

Question 3

What are some of the key principles stated in the UK Commercial Estate Agency Professional Statement?

Answer 3

1. Act in an honest, fair, transparent and professional manner
2. Carry out work with care and due skill/diligence and have the skills needed to carry out the job
3. Provide clear terms of business that are fair and clear (explains complaints handling procedure)
4. Avoid conflicts of interest
5. All communications with clients are fair, honest and transparent
6. All advertising and marketing material is honest and truthful.

Question 4

What areas does the professional statement provide advise on?

Answer 4

1. Act ethically
2. Securing instructions - legal requirements, AML checks, types of agency
3. Marketing the Property
4. Implementing the disposal
5. Acquisition of the property
6. Ending the instruction

Question 5

What are the four main main methods of purchase and sale?

Answer 5

Private Treaty
Informal Tender
Formal Tender
Auction

Question 6

What are the advantages and disadvantages of Private Treaty?

Answer 6

Def: Free to negotiate in their own time without commitment on the open market
(+) Flexibility
(+) The parties control the process
(+) Confidential

(-) Potential for gazumping and gazundering
(-) Late decisions not to buy
(-) Associated abortive costs

Question 7

What is Gazumping?

Answer 7

Making a higher offer than other accepted offers to secure the property.

Question 8

What is Gazundering?

Answer 8

Making a lower offer than what was originally accepted just before the exchange of contracts.

Question 9

What is Informal Tender and what are the advantages and disadvantages?

Answer 9

• Used when there is a good level of interest
• Best bids procedure but is not legally binding
• All bids opened in front of the client
• Agent invites in writing all interest parties to submit best and final offer or best bid within a prescribed timeframe.

+ Not legally binding
+ Ability to negotiate further + Good negotiating mechanism to invite interested parties
+ Confidential.

• Longer to exchange
• Purchaser may drop out.