seminar 15 june 2015 agency 40 mins + 10 mins questions monthly seminars @ cbre - 20th july –...
TRANSCRIPT
SEMINAR 15 JUNE 2015
AGENCY40 mins + 10 mins questionsMONTHLY SEMINARS @ CBRE - 20th JULY
– 24th AUGUST – 14th SEPTEMBER @
08;00hrs
SEMINAR NOTES ON WEBSITE www.douglasstevens.co.uk Seminars
AGENCY
Buying or Selling of a Freehold or Leasehold interest in land and buildings
THREE ASPECTS
The skills and standards required to be a good agent
The regulations and guidelines to follow as an agent
The statutes and guidelines to know for APC test
BUYING AND SELLING PROCESS
Instructions Are they clearWhat is objective SALE – speed – certainty -
price What is objective BUY – location – timescale -
price
Winning InstructionsEstablishing track record – market knowledge
COMPETENCY
Are you the right person / company
Do you have the necessary skills – market sector knowledge
Can you identify the best market
When buying do you have the contacts on & off market
INDEPENDENCE / CONFLICTS
Check for conflicts of interest
If there are potential conflicts disclose them early in process
Can you provide independent advice
TERMS OF ENGAGEMENT
It is a requirement to send Terms of Engagement to new clients
Standard Terms - Specific Terms
Ideally to be agreed by client
Estate Agents Act 1979 section S.18
MONEY LAUNDERING – VAT Anti money laundering controls and monitoring
You must put in place certain controls to prevent your business from being used for money laundering if you’re covered by the Money Laundering Regulations. These include:
assessing the risk of your business being used by criminals to launder money
checking the identity of your customers
checking the identity of ‘beneficial owners’ of corporate bodies and partnerships
monitoring your customers’ business activities and reporting anything suspicious to the National Crime Agency (NCA)
making sure you have the necessary management control systems in place
keeping all documents that relate to financial transactions, the identity of your customers, risk assessment and management procedures and processes
making sure that your employees are aware of the regulations and have had the necessary training
VAT is property registered for VAT. Is it a TOGC sale
PRIOR TO INSPECTION Collate all information from client and your own
sources Other deals done in town. Past details Read lease Check title docs – Land registry Ask for floor plans Goad plans or OS plan Planning consent Ask client / vendor re- deleterious materials
INSPECTION
Detailed Measurements for notes Double check calculations of areas on site Update Goad / floor plans
Check Rights of Light and Fire Escape
Photographs
Look at what is there – also record what is not there
PREPARING REPORT & VALUATION
Collate comparables and market activity in the sector
Report to client with valuation ( NOT Red Book ) and recommendation as to method of sale and marketing
Prior to marketing secure approval of recommendations from client
Progress the marketing reporting all offers drafting detailed Heads of Terms for lawyers to be instructed
On freehold sales anticipate pre-contract enquiries
FOUR MAIN METHODS OF SALE
Private TreatyInformal TenderFormal TenderAuction
Private Treaty
Sale by private treaty is the most common method
Party autonomy – can be private and confidential or open market
No obligation to sell but no certainty on timescale or completion of transaction
Informal Tender
Can follow on from private treaty to draw negotiations to a close in a ‘best bids’ process
Terms of the bidding process to be clearly set out and sent to all prospective bidders covering timing, funds or financial arrangements, any conditions on board approval, solicitors etc.
Reserving the vendor’s right “not to accept the highest or any offer made”
Formal Tender
Also known as sealed bids
Generally used where public accountability is an issue
Exercises more control
Comprehensive marketing and legal information provided with an ITT (invitation to tender)
Advantages
Parties bidding blind with no opportunity to impose conditions or increase or decrease their offer after submission
Fairness
Can lead directly to a sale contract
Even in a formal tender vendor can state that they are not obliged to accept the highest or any offer received
AUCTION
Quick and relatively certain method of sale (subject to realistic reserve)
Best means of disposing of quirky property Higher brochure cost Open sale
STATUTE AND REGULATIONS
Misrepresentation Act 1967
Estate Agents Act 1979
Property Misdescriptions Act 1991
STATUTE AND REGULATIONS Misrepresentation Act 1967
Agent has a duty of care to avoid a misrepresentation of fact or a false statement which has the effect of inducing the party to purchase however, use of a disclaimer clause clearly notified to the party may protect the vendor and agent if the disclaimer is fair and reasonable
Headley Byrne & Co Limited vs Heller & Partners (1964)
Agents liability for negligent statements subject to
three testsoForeseeability – was the damage reasonably foreseeable
oProximity – was the legal relationship between the agent and the purchasing party sufficiently proximate
oFairness – was it fair just and reasonable for a duty of care to arise
oImportance of the wording of disclaimer clauses
STATUTE AND REGULATIONS
Estate Agents Act 1979
Introduced to regulate estate agency particularly in relation to clients money
S.18 Agree terms - especially level of fees & when payable
Under Section 21 notification of a personal interest in a property
Policed by the Trading Standards Office of each Local Authority
STATUTE AND REGULATIONS
Property Misdescriptions Act 1991
An offence to make a false or misleading statement in relation to specified matters such as size, price, location, description, legal information
NB - This Act was repealed in 2013
STATUTE AND REGULATIONS Unfair Trading Regulations 2008
Misleading Marketing Regulations 2008
Consumer Protection Regulations 2008 ( CPR`s )
Business Protection Regulations 2008 ( BPR`s )
These regulations largely supercede the previous three main Acts.
Fundamental difference is that the regulations now apply to potential buyers and vendors extending the duty of care not just to actual clients but to potential clients, potential viewers and potential buyers in addition to the actual buyer
In addition to the giving of false or misleading information it is regarded as an unfair practice to hide or fail to provide information, to fail to demonstrate professional diligence and to exert undue pressure on any party
It is policed by the Competition Markets Authority (CMA) previously the Office of Fair Trading (OFT)
PURPLE BOOK RICS UK Commercial Real Estate Agency and Brokerage Standards 2012 - Updated Oct 2014 150 pages
1 Duty of Care to client - guidance on conflicts of interest - the Bribery Act 2010.
2 Securing instructions: Information that an agent must provide to his client under the Estate Agent Act 1979. When commission is payable & how much.
3 Disposals: marketing the property: includes an explanation of auctions and tenders and detailed guidance on how to market a property without falling foul of the Property Misdescriptions Act 1991.
4 Acting for the seller: implementing the disposal: sets out the information that an agent is legally bound to supply to his client on offers received and provides guidance on post-offer conduct.
5 Letting a property: Provides glossary of the key terms in commercial leases. 6 Acquisitions: guidance for agents to meet clients’ acquisition specifications.
Does not envisage that the agent will for buyer and seller when a property is found.
7 Ending the instruction: Tying up all loose ends at the end of an instruction. 8. Security & Safety - Data protection. and health and safety /inspections. 9 Agency management: -money laundering, insurance client money
management .
BLUE BOOK for Residential Estate Agency Standards 2012 (2014)
RICS GLOBAL AGENCY & BROKERAGE STANDARDS – ( UK REAL ESTATE AGENCY CODE )Lists 12 Core Principles
Act in an honest, fair, transparent and professional manner
Carry out work with due skill, care and diligence and ensure all staff employed have the necessary skills to carry out their tasks
Ensure that clients are provided with terms of business that are fair and clear with details of the firm’s Complaints Handling Procedure
Avoid conflicts of interest and where they arise deal with them openly and fairly
Non-discriminatory
Fair, clear, timely and transparent communications
Marketing and advertising material to be honest and truthful
Client money separately accounted for and insured
Professional Indemnity Insurance
Identify client and your obligations to them & other parties
Give realistic assessments of selling prices / rents based on market evidence and professional judgement
Carry out viewings in accordance with clients wishes
2014 ADDENDUMS TO 2012 CODE Consumer can be your contractual client, a potential client, a potential or actual
buyer and a potential or actual viewer.You must ensure that you do not engage in any unfair commercial practice by saying, doing or omitting to do something that causes, or is likely to cause, the ‘average consumer’ to take a different ‘transactional decision’ .You must critically assess the relevance and accuracy of the information you do or do not provide to consumers at each of the transactional process and must also undertake effective due diligence on each transaction and maintain complete and accurate business records.
Definitions
Average consumer A consumer who is reasonably well informed and reasonably observant and circumspect, taking into account social, cultural and linguistic factors. Someone who takes reasonable care of their own interests. This definition can change depending upon the target of a particular business or of a marketing campaign. The average consumer will then relate to a member of that target group.
Material information The information that the average consumer needs, according to the context, in order to take an informed transactional decision.
Misleading action A commercial practice that contains false information, or in its overall presentation deceives or is likely to deceive the average consumer or create confusion and causes or is likely to cause the average consumer to take a transactional decision that they would not otherwise have taken.
Misleading omission Omitting, hiding or otherwise disguising material information.