Kate Taylor discusses what APC assessors are looking for when testing knowledge of purchase and sale and how this fits into the “agency” competency
Purchase and sale, leasing and letting, and property management are often collectively referred to as the “agency competencies”. Candidates declaring these competencies will need real-world experience in the market where commercial property changes hands.
Commercial property varies from a small Northern lock-up store valued at a few thousand pounds to London offices and retail with values in the hundreds of millions. These represent distinct markets with different drivers and participants. Candidates will be expected to show business awareness in discussing supply and demand and commercial awareness in levels of value in their area of practice. In other words, know the relevant market.
A good agent can broker deals that have a significant impact on the operation of a particular business and, at the high end, on the economy. This competency can be a chance to showcase that all important surveyor “gut instinct”. This is an intangible that goes beyond competency description but adds real value to the client.
Agency unfairly gets a bad press and surveyors need to actively address this with explicit demonstration of ethical standards and clear communication. The RICS sees professional ethics as central to chartered status. Dealing with practical problems in purchase and sale using ethical principles can be a great way to demonstrate this or, be warned, a potential pitfall.
The Level 1 knowledge is important background but this competency is about the cut and thrust of the real world and candidates should never forget the big-picture context presented in an ethical framework.
Purchase and sale and leasing and letting competencies share most of the Level 1 knowledge in the form of the law and RICS guidance. For both of these agency competencies a candidate will need to learn key parts of the Estate Agents Act 1979 (“the 1979 Act”) and the RICS UK Commercial Real Estate Agency Standards, also known as “the Purple Book”. The six principles of the 1979 Act, section 18 (terms of engagement) and section 21 (disclosure of interest) will be particularly relevant.
Handling money is a key part of agency competencies and candidates should ensure they have studied the Money Laundering Regulations 2007 and RICS Guidance Note Protection Against Money Laundering 2010 as well as the applicable requirements under the RICS rules.
Knowledge of the legal principles in marketing is likely to be probed and candidates will need to understand the Consumer Protection from Unfair Trading Regulations 2008 and the Consumer and Business Protection Regulations 2008. The fundamental differences with the position under the Property Misdescriptions Act 1991, which was repealed in 2013, should also be appreciated. Candidates should not focus solely on accuracy but on ensuring nothing is omitted which may affect the transactional decision of the average consumer.
It should be remembered that permitted development under the Town and Country Planning (Control of Advertisements) (England) Regulations 2007 controls the size and position of a for sale board. A standard sign on commercial property should be no more than 2m² (21.5 sq ft) (or 2.3m² for a V board). Energy performance certificates (governed by the Energy Performance of Buildings (England and Wales) Regulations 2012) and the impact of BREEAM certification will also be relevant Level 1 knowledge.
There are four bases of agency defined in the 1979 Act and candidates need to know the definitions of sole agency, sole selling rights, multiple agency and joint agency as well as how the contract terms vary. There are also four methods of purchase and sale and all four are specifically mentioned in the pathway guide competency description. Candidates should know the difference between private treaty, informal tender (best bids), formal tender and auction. Auctioneering is, in addition, a separate competency in its own right.
Keeping up to date is vital, as is keeping abreast of issues such as the changes to the management of pre-pack sales from November 2015.
Level 2 requires specific examples as evidence of experience. This should be more comfortable as candidates will be describing what they have actually done in this field. The questions will be led by the summary of experience and candidates should describe what they did step by step.
Often assessors will choose to talk about marketing properties. This involves describing how the marketing information was put together, including due diligence, timeframe, online marketing, managing the viewings and contingency plans. This can lead nicely into describing dealing with acceptance of offers. This can make a good example of Level 3 complex reasoned advice to the client, based around the client’s specific objectives and the characteristics of the property and the market.
The pathway guide does seek experience in all four methods of purchase and sale at Level 3. The problem is that it is very rare for a candidate to have examples including both formal tender and auction. The solution is to articulate the thought processes on the advantages and disadvantages of each method when advising a client which one is most appropriate for the subject property.
More complex examples may include informal tender and putting together the information pack and tender terms. Dealing with offers after deadline and ethically advising the vendor can be a good example which ticks all the boxes.
At Level 3 a candidate would be expected to have experience of dealing with more complex and sensitive problems and applying an ethical solution to their advice to a client; for example, gazumping or gazundering. The purchase or sale of property off-market can also make a good Level 3 example. Candidates need to find a way of describing what they did clearly to meet the competency requirements without disclosing any commercially sensitive or confidential information. This can be a tricky balance as assessors strive to establish veracity.
Purchase and sale competency can be a great way to show the assessors maturity as a surveyor and tangible added value to a client, provided it is approached in an ethical way.
- Consumer Protection from Unfair Trading Regulations 2008
- Consumer and Business Protection Regulations 2008
- Pre-pack sales – changes from Nov 2015
- State of the market and economy
- What are the four methods of purchase and sale?
- What do you know about the Estate Agents Act 1979?
(The likely questions at levels 2 and 3 will depend on the examples you provide.)
- Talk through the marketing for X property that you sold.
- What were the relevant dates for this appeal and what was happening on those dates?
- Describe your advice to the client regarding the acceptance of offers in the informal tender (best bids) sale of X. What would your advice have been had there been any offers after the deadline?
*Don’t assume that the questions given here will be asked at an APC assessment. Assessors will focus on and pose questions on the basis of the candidate’s declared competencies, pathway guide requirements, up-to-date developed knowledge base and the examples provided in their summary of experience, etc.
APC Final Assessment Competency Revision Workshop 28 February 2016
This preparation day covers everything a candidate needs to know for the APC plus other useful resources:
Supervisor and counsellor APC training/recordings – formal CPD Guidance on how to appropriately manage and support candidates to get them through the APC. Free 1-2 hours of formal CPD: www.delever.com
APC Explained Masterclass This helps candidates to understand what needs to be done to achieve the APC, including a walk-through of the DeLever APC process timeline and myAPC Diary: www.delever.com
APC Commercial Property Revision Guide A reference book for preparation: www.delever.co.uk/katetaylor
Timeline wallchart An A2 pictorial view of the APC process. It can be used to track progress. Free copies are available at: www.delever.com
RICS APC Guides These should be read at least once every three to four months and fully understood. Candidates from outside the UK also need to check their regional websites for any local APC requirements: www.rics.org
USEFUL WEB LINKS
RICS pathways, templates and guides www.rics.org/pathway
SUPERVISORS AND COUNSELLORS
How to help
Candidates can often be focused on the buzz of selling and fail to clearly articulate the legal background and contractual position.
Encourage candidates to talk about their successes emphasising the compliance and ethics they demonstrated. This will often be a core company policy protecting clients and surveyors that candidates take for granted and fail to articulate at final assessment interview.
Acquisitions are also valid experience and a well-rounded candidate will have experience in both purchase and sale.
Kate Taylor FRICS is an APC chair and a DeLever APC consultant trainer. Follow Kate Taylor and Jon Lever on Twitter: @katetay73593006 and @deleverapc