Advantages for a Vendor of Sale by Auction - Assignment Example

Part A 1. B 2. D 3. D Part B Question 1a Advantages for a vendor of sale by auction 1. Vendor has control of how much money is spent on marketing or advertising 2. Vendor dictates the terms and conditions of sale 3. Vendor is likely to double their profit if more than one person bids for the property Disadvantages for a vendor of sale by auction 1. The bidding process may be longer, hence undermining the true value of a property 2. Marketing and advertising are rather intense and may drain the vendor financially 3. Poor turnout of buyers, due to the competitive nature of bidding in an auction. Question1b Reasons for sale by auction based on property 1. It is an effective method as buyers are aware that the seller is committed to selling the property 2. Auctions provides a market place where all kinds of properties can be sold Reasons for auction as a method of sale based on vendor’s circumstances 1. It is a great way of driving up the price as auctioning creates more urgency among potential buyers 2. Vendor’s are in a position of avoiding to incur the costs of marketing as they can communicate with potential buyers before the auctioning date. Reasons for sale by private based on property 1. Value price of a property as stated by seller is normally within the current market range 2. Potential buyers can place their offers without fear of competition from other buyers as there is no bidding Reasons for private sale as a method of sale based on vendor’s circumstances 1. Once the vendor has placed the asking price in the market there is no bidding or bargains, therefore attracting specific property buyers 2. Vendor has the ability of controlling how much is spent on marketing by choosing a convenient way of advertising their property. Question1c Name and describe a variation to the private method of sale The private method of sale involves negotiations between buyers and sellers. This takes place once the seller has put up his or her property up for sale, with a fixed asking price and with the assistance of an agent the seller is able to negotiate with potential buyers. The private method of sale also has a conditional contract that includes at least a three working days that are considered as the cooling-off period. The contract also involves the evaluation of financial payments mode of the buyer or building reports among other things concerning the property. Question2 Situation Type of authority A factory offered for sale with an asking price Exclusive sale Residential land offered for sale with multiple agents working on ‘winners takes all’ basis General sale A retail shop offered for sale by a public auction Auction authority A buyers advocate acting on behalf of a purchaser Purchaser authority A unit offered for sale with a price range Exclusive sale A family home offered for sale with a closing date Exclusive sale A farm offered for sale with auction Auction authority Question2 A) The most relevant piece of legislation relating to property sale in Victoria is the Estate Agency Act 1980 (EAA, 1980). B) The regulations (statutory rules) that deal with the conduct of estate agency practioners in Victoria are called Estate Agents (Professional Conduct) Regulations 2008. C) The most recent version of the Estate Agents Act 1980 is authorized version number 119 Estate Agents Act 1980 Number 9428 of 1980 which incorporates amendments as at 1st July 2015 D) List two pieces of commonwealth legislation that have parts that apply to Victorian estate agency practice i. Application of for estate agent’s license as an agency practioner ii. Land use planning that must be prepared and administered by the local state council Question3 Name and describe the purpose of s52 Estate Agents Act 1980 The main purpose of s52 in the Estate Agents Act 1980 is to provide detailed information concerning a business that is placed on sale. The information required as stated by s52 include current assets, profits and losses involved with the business, so as to allow the buyer to make an informed decision during the purchase. Therefore a seller must prepare a detailed statement to provide a purchaser as the s52. Question4 Identify four sources of potential new property listings or new business listings i. Australian Property Investor ii. The realestate.com.au iii. realestateVIEW.com.au iv. collier International Question5 Situation Type of ownership A single individual Sole ownership An entity separate from its owners partnership Two or more individuals with defined ownership percentage Joint tenancy Two or more individuals with no defined ownership percentage Tenancy in common Question6 Explain the difference between freehold and leasehold Freehold title means that as the owner of a property you ownership rights of a building as well as the land in which the building sits. As a result as the owner it is your name that appears on the land registry form as a ‘freeholder’ thus owning the title deed. Leasehold on the other hand means that one acquires ownership of a property by renting from a freeholder. For instance most people rent homes from landlords for a period of time and may pay on a weekly, monthly or annual basis. Therefore a leaseholder normally acquires a contract with the freeholder. Part C Item 1 1.1 Andrew should go with Ann Wells the Officer Effective Control of ABC Pty Ltd. This is important in order for them to be able appraise the property on behalf of the agency and provide reliable information for listing purposes. 1.2 Five Topics to be discussed while meeting with the vendor Topic Person responsible Requiring effective communication strategies (yes/no) The method of sale Sales person yes The authority period OIEC yes The commission negotiations Agency representative yes Marketing plan Sales person yes Terms and conditions (amendments, deletion) OIEC yes Item 2 Five types of advertising Types of advertising Target market Billboards and signs Neighbors, passersby, drivers Use of internet tools such as social medias People outside and within the community who are unable to see the billboards Magazines Home owners, real estate investors Television and radio commercials All groups of people capable of buying a home, real estate investors Auction announcement Potential buyers and investors TASK 1 Item3 3.1 Section 32 vendor’s statement is a detailed statement that a vendor is required to prepare and present it to a buyer before the contract of sale is signed. The information required to be included in this statement include; 1) contracts showing that the vendor has financial rights over the property example mortgage. 2) a declaration that explains in the property is prone to any forms of fire or if it is a bushfire zone. 3) a written agreement that allows or warns the owner of the property to carry out some practices. 4) zoning- this explains to the purchaser how the council in that area allows the land to be used. 5) a declarative right that may be allowing the owner to use another person’s land for instance for drainage purposes. 3.2 Without a detailed s32 vendor’s statement in this scenario, the purchaser of victor’s property may be buying the property which may be overvalued and may purchase the property on false accounts. 3.3 Victor should talk to his lawyer who will assist him in preparing the s32 vendor’s statement and therefore presenting it to Andrew who will make it available for potential buyers. Item4 4.1 name the section and the act that applies to the circumstances that Amelia may be getting involved in Section 52 of Estate Agency Act 1980 4.2 If Amelia’s brother wishes to purchase the property he may consider taking the following steps: 1. Inquire about the asking price of the property and the payment options. 2. Go view and inspect the property with Andrew 3. Contact his lawyer and seek his or her advice about the property as well as explain some terms. 4. Avail himself for the bidding process. 5. If he manages to buy the property his lawyer and that of the vendor should be available during the signing of the contract. 4.3 Can Green Hill Real Estate claim commission of the property if Amelia’s brother purchases the property? Yes Item 5 5.1 Name the section and the act that applies to the circumstances that Andrew may be getting involved in section 37 estate agents acts 1980 5.2 Numbers of years for imprisonment for an individual Description of fine for individual or corporation Approximate dollar value for this fine Can an individual be penalized by both imprisonment and fine 12 months 120 penalty units $120 No Item 6 Identify two items included in the vendor’s list that is not familiar to your understanding and the steps you would take to address the discrepancies. Item of discrepancies Steps to address the issue Item 1 The following services are not connected gas & foxtel Make arrangements with the agency and local authorities to see how this issue can be resolved. Item2 There have been no building approval for the past seven years Arrange a meeting with the local state council within the area and discuss the matter at length to reach a possible solution Task 2 Item 7 7.1 When the purchaser pay the deposit what will Andrew provide the purchaser? A receipt indicating that he has placed a down payment for the property hence it should be reserved until the purchaser has settled the remaining amount. 7.2 What will the agency do with the deposit cheque once Andrew puts it into the office safe? The agency will cash the cheque and deposit the money into its account until the purchaser has settled the full amount. 7.3 On the Monday following the auction, Anne Wells is keen to find where the deposit is. Explain the reason why? she would be interested to know where it is as the Officer executive control Anne is mainly concerned with the whereabouts of the deposit cheque as she wants to be informed in case of the event that it is misplaced or lost. 7.4 When must the deposit cheque be banked? The cheque must be banked within 3 days of business hours. 7.5 What advice should Andrew give the vendor if they are seeking access to the deposit? To wait until the settlement is complete as the process of obtaining the deposit at this stage is cumbersome. If the vendor is stubborn Andrew should advise him to go through the section 27 act with his lawyer and follow the detailed steps. 7.6 Name the section of the act that may lead to the release of the deposit prior to the settlement Section 27 of the sale Land Act 1962 Item 8 8.1 For the agency to be entitled to a commission and recovery of market expenses, list four items that would now be completed in the sale file i. name of seller and buyer ii. Seller’s agent iii. price of the property and deposit paid iv. settlement amount and date 8.2 Where will the office now store the completed sale file? In the safe with files that indicate the sale of a property with new ownership 8.3 identify two different possible points in time when the agency will be entitled to commission from this sale i. once the settlement is complete ii. If the vendor succeeds in acquiring money from the deposit before the settlement is complete 8.4 What is the total amount of commission and market expenses that will be claimed for this sale? 5% of the agreed amount 8.5 What is the amount that will be used to base the calculations on? $811, 000 8.6 How much commission will Andrew earn as a result of this sale? 10% of the settlement amount Item 9 9.1 What advice should Andrew give the purchaser? The purchaser can view the property before the actual settlement and can negotiate with the seller during settlement. 9.2 When will Andrew know that settlement has taken place? Once the vendor and the buyer provide a contract indicating that the buyer and purchaser have transacted the necessary documents to show change of ownership and the agency has received the settlement amount from the purchaser. 9.3 When will Andrew provide the purchaser with possession of the property? Once the settlement is complete and the necessary documents presented to the seller and buyer Read More