Expression of Interest: What does it mean?

There is a lot of terminology to wrap your head around if you are new to the real estate game, so you may not know what EOI means. Huh, what’s that?

In Australia, there are three main ways to sell a home: auction, private treaty, and the less common method expression of interest (EOI). Whether you’re a buyer or seller, understanding how each selling method works is vital in ensuring you know how to play ball and what your options are.

This article will run through the definition of an EOI, how it works, and the pros and cons from both sides of the fence (buyer or seller).

What does expression of interest (EOI) mean?

Selling a home via EOI is a sale process whereby prospective buyers are invited to submit their highest & best offer by writing on a property on or before a certain deadline.

An EOI is similar to a silent auction or bidding approach, as there’s no price guide given to buyers and there is a due date by which the property must be sold. It is essentially up to the buyers to decide how much they are willing to pay since they’re given no formal guide to the home’s worth.

All bids remain private and must be submitted on a Contract of Sale that includes the terms of their offer (e.g. the buyers name/s, price, deposit, finance conditions, proposed settlement, etc).

After receiving all offers, the vendor will then either choose an offer to accept, opt not to sell if the offers are not as high as expected, or contact the highest bidder to continue negotiations.

EOI campaigns tend to be more of a premium property tactic as demand for and the price of these types of properties can be hard to gauge.

If you are buying a property via en EOI, it is important to do your own due-diligence and conduct some research about the home to ensure you don’t pay too much or too little (and potentially miss out).

Pros and cons of buying by EOI

Pros

• Some buyers like to remain confidential, which can take away the pressure you would usually receive with an auction - there is no bidding war.
• Set timeline by which you will know whether your offer is successful or not.
• Your offer can be subject to conditions such as finance and settlement, which isn’t possible with an auction.

Cons

• You do not know how many buyers you are competing against, and this could influence how high or low you place your offer.
• The chance you might overvalue the property is higher if there are not many comparable properties in the area.
• If you are looking to move in a hurry, a 4-6 week waiting period may be too long, especially if you could be making offers or attending auctions elsewhere.

Pros and cons of selling by EOI

Pros

• Allows for privacy as your neighbours won’t know how much the property is worth.
• You will be less likely to take the first good deal you are presented with as buyers have a deadline to provide their highest offer. As a seller, you are given more offers to choose from.
• You could end up getting more than you expected due to the competitive nature of an EOI sale. Buyers that are keen might offer a high price to lock in a property.
• You can accept an offer that suits your personal situation best.

Cons

• An EOI sale may not be as competitive as an auction where the idea is for buyers to compete openly with one another until the highest offer is left on the table.
• Lack of information or a price guide can discourage some buyers.
• The process can take longer than a private treaty sale, which could see your home sold within days or even hours in a hot market. If you are in a rush to sell, an EOI may not be the best move.

What’s the difference between an EOI, private treaty, and an auction?

An EOI can be viewed as a mix between a private treaty sale and auction - however, there are major differences.

Unlike an auction, EOI bids are not disclosed to other parties, only to the agent and the vendor. While an auction will have bidding in real-time (where bids are open knowledge to all attendees), bidding parties at an EOI will only be informed if they are successful. AN EOI sale usually lasts from four to six weeks while auctions are run across one or two days.

Unlike a private treaty, bids made through an EOI are generally not accepted until the set deadline to give all interested parties the opportunity to put their best foot forward. However, this is not always the case as the circumstances of a sale can differ.

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