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Might some of the methods of sale be combined?
Yes, Informal Tender can be used to obtain the best bids during Private Treaty negotiations
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What did you include in the TOE's?
- ID of surveyor
- Client info
- Type of work to be carried out
- Agency basis
- Agency rights
- Fee basis
- Marketing and disbursement costs
- Payment of fees
- CHP
- Confirmation there are no COI
- PII details
- Signatures
- Dates
- Date of commencement
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What would you do if the timescales weren't met before exchange?
Serve a notice to complete?
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What if the purchaser was still taking their time after you issued a notice to complete?
- Rescind the contact
- Remarket the property
- Keep the deposit
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What would you do if you received a bid a week into legals?
- Inform client of the bid
- Have regard to the Estate Agents Act
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What would your recommendation be to the client if the bid was £1m more?
- Inform client immediately
- Underlining duty is to the client
- Could be seen as unethical however it is not illegal to pull out of a transaction
- Must determine whether the extra £1m bid is feasible, what have they based this on, seems a little high and unrealistic.
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What are the 4 methods of sale?
- Private Treaty
- Informal Tender
- Formal Tender
- Auction
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What factors should you consider before determining which to use?
- Timing
- Clients aims and objectives
- Type of property
- Public accountability
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What is Private Treaty?
It's the most common method of sale in England and Wales
Parties are able to negotiate in their own time without commitment to the open market
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What are the advantages and disadvantages?
- Advantages
- Flexibility - both parties able to negotiatiate in their own time
- Confidentiality - less likely people will find out purchase price
- Vendor under no obligation to sell
- Disadvantages
- Late decision not to buy from the purchaser
- Potential for gazumping
- Associated abortive costs
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When is Informal Tender used?
For when there is likely to be a good level of interest for a property
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What's the process for informal tender?
- Vendors agent invites all parties to submit best offer in accordance with the prescribed timescales
- Offers received to be opened in front of client or client representative
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What's required in a typical letter to interested parties?
- Required date and time receipt of the written offer
- Name and address of solicitor
- Name and address of party
- Confirmation of finance arrangements
- Details of any conditions attached to the offer
- The vendor reserves the right not to accept the highest or any bid
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If 'The vendor reserves the right not to accept the highest or any bid' is not included, does it make it legally binding?
Yes, it can make it legally binding
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What is a formal tender?
- Used for when there is expected to be a large amount of interest for a property and
- When there is expected to be a high amount of public accountability
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Who typically uses this form of sale?
Statutory bodies as it provides them with more control over the marketing process
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What is required from the vender / vendors agent before the tender process?
Full marketing details, legal pack and letter to prospective buyers
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What's included in the legal pack?
Details so that prospective purchasers can undertake due diligence work
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Can parties negotiate their bid?
NO - their bid is a sealed bid therefore best and final
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Is it legally binding?
Of the bid is accepted then it is legally binding
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What is the difference between Informal Tender and Formal Tender?
- Formal
- - Provides purchaser with single chance to purchase property
- - Can lead to an immediate contract for sale
- - Cannot increase bid or negotiate further
- Informal Tender
- - Can be used to obtain best offer during Private Treaty negs
- - Can negotiate further from original bid
- - Can pull out at any point until exchange
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When might you use auctioneering?
- When there is likely to be a high level of interest for a property
- To obtain short timescales
- Property may be unusual
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What are the advantages and disadvantages?
- Advantages
- Achieve a short timescale
- Good for unusual property
- Useful method of sale for a property that is hard to value
- Certainty of sale (assuming reserve is met)
- Disadvantages Cost of promotion
- Lack of confidentiality over price achieved
- Vendor cannot choose purchaser
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What's are the actions for the purchaser prior to the auction date?
- View the property and obtain a structural survey
- Take legal advice and complete due diligence
- Read the Notice to Prospective Buyers
- Arrange 10% deposit
- Provide ID for AML checks
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Whst must the marketing details comply with for auctions?
- Consumer protection Regs 2008
- Misrepresentation Act 1967
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What needs to be agreed with the vendor prior to the auction date?
Reserve price
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Can a vendor apply pressure on a purchaser if they are using up time?
Yes, they can serve a Notice to Complete outlining the deadline it needs to complete
The required legal costs for this notice is paid for by the purchaser
If the deadline is passed, the vendor can rescind the contract and deposit can be retained
Vendor may also be able to sue for damages for any loss in value in comparison with the originally agreed price
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What's the 'ready able and willing purchasers' clause
Within the EA Act 1979 and included in TOEs
Clause included so that when an applicant is ready and able to proceed with a purchase but the client then decides to withdraw, an abortive fee may be charged by the agent
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What is the Notice to Prospective Buyers?
A notice that consists of information on the auction
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What's the timeline of a sales instruction?
- Receive instructions
- CIT check
- Receive agreement signed by client (S18 EA Act 1979)
- Gather info on property
- Carry out DD checks
- Check VAT position
- Inspect and measure
- Collate comparable evidence
- Form opinion of value
- Submit report to client along with recommendations
- Draft marketing details and fully market property
- Carry out viewings
- Receive offers, negotiate and draft HOT's
- Instruct sols
- Answer to CPSE
- Exchange, complete
- Invoice
- File correctly
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What must be clearly set out in the TOE's?
- Agency basis (sole / joint)
- Agency rights (sole agency rights / sole selling rights)
- Proposed fee
- Marketing fees and disbursements
- Confirmation no COI
- AML checks
- Timescales for payment of fees
- CHP
- TOE must be agreed in writing before commencement of instruction
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What actions are included for property acquisitions?
- CIT check
- ML check
- Understand clients aims and objectives
- Search for properties
- Inspect and measure
- Undertake DD checks of property
- Arrange for structural survey to be undertaken
- Consider property advs / disadvs.
- Submit offer along with conditions
- Negotiate offer
- Complete
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What types of purchase vehicles are there?
- SPV - company formed specifically to buy a property to reduce SDLT
- REITS - UK company listed on LSE with at least 75% of its business in property
- Joint venture
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Tell me about the recent sale which you were involved in? (Farnborough)
- Disposing of the freehold interest of a building in Farnborough
- CIT check (agreed sole selling rights)
- AML check
- Agreed and signed TOE's
- Met with client to discuss aims and objectives which we decided on the informal tender method of sale
- Inspected and measured the property
- Assisted in drafting the marketing brochure in which I got approval from client and solicitor to upload to data room
- Headed the drafting particulars with 'The vendor is under no obligation to accept the highest or any bid'.
- Assisted in uploading other docs in data room such as photos, inspection details, title documents, OS plan, EPC, floor plans
- Set out bids requirements
- Conducted viewings
- Received bids
- Client unhappy with the level of bids
- Client opted to sell via auction in which we were not involved in
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Tell me about the recent sale you were involved in with the development site in Bletchley?
- Disposing of the freehold interest of a workshop in MK
- CIT check (agreed sole selling rights)
- AML check
- Agreed and signed TOE's
- Met with client to discuss aims and objectives which we decided on the informal tender method of sale
- Inspected and measured the property
- Assisted in drafting the marketing brochure in which I got approval from client and solicitor to upload to data room
- Headed the drafting particulars with 'The vendor is under no obligation to accept the highest or any bid'
- Assisted in uploading other docs in data room such as photos, inspection details, title documents, OS plan
- Set out bids requirements
- Due to the vast number of interest received, we opted to organise an open day so that all parties were able to come in time slots to view the property
- Received bids
- Client was particularly happy with one offer which exceeded expectations
- Offer was negotiated via Private Treaty method of sale
- Concluded
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