Expression of interest explained
HAVE you ever wondered why agents put a fixed price on some properties and auction or ask for an expression of interest on others?
Real estate professional Dan Dwan, managing director of Colliers International Toowoomba, said: “There are many advantages in marketing a property without a price”.
“This can occur either through an Expression of Interest Campaign (EOI) or by putting the property to auction.
“Both methods have proven to achieve better results for the sellers, quicker compared to sale by private treaty.”
An ‘Expressions of Interest’ (EOI) campaign is often suggested by agents when there is a likelihood of achieving a greater sale price if there is the opportunity for interested parties to introduce conditional terms to the purchase process.
Such terms might include terms subject to Development Approval or Material Change of Use for the property.
This could also include terms such as raising finance or the ability to establish a new entity suitable for a SMSF. Auctions are conducted on an unconditional basis.
“During both an EOI and auction campaign, the agent markets the property without a price indication,” Mr Dwan said.
“During an EOI campaign, potential buyers are invited to submit their proposed terms of purchase, usually on a pre-prepared form provided in the property Information Memorandum, where they can outline their offered price and any conditions prior to an advertised deadline,” he said.
“The advantage of an EOI campaign is that it takes pricing out of the hands of the vendor and gives an indication of the true price point from the market of the day and provides instant feedback, similar to an auction but without the added hype.”
Mr Dwan said the difficulty with EOI campaigns is that some buyers are unfamiliar with the market or the process and are not sure how to make an effective offer.