Expression Of Interest

[NBS]

I am looking at a property on Monday - sale by Expression Of Interest (EOI). I assume if I elect to move forward with it I put in an EOI stating my offer and what ever subject clauses IE building, pest inspection, finance etc etc.

Or do I just submit with a contract and deposit and this is my EOI.

The only reason I can see to do it as an EOI is if they get a number of EOI's this allows them to sit down and work out the best one or two to start bargaining with.

After input from anyone that has submitted an EOI before and what are the Pro's and Cons of doing so.

Thanks
Brian

 

[boomtown]

If its resi I would just ignore it and put in a regular offer. Its just marketing rubbish.

 

[JWR]

Offer them $xyz with an expiration for acceptance in 24-48 hours.

This way the agent won't use your offer to conduct a dutch auction with other interested parties and push the price up for the vendor.

 

[NBS]

I sort of considered an EOI (this one anyway) as testing the market as its not out to the open market as yet.

Boomtown - It is residential. Was not sure if it was just marketing ploy so figured I'd ask here.

JWR - If I was putting in an offer I would have set a time frame and most likely low ball it this one.

I am considering setting a time frame on all offers I put in on property one can always come back with an offer.

Thanks
Brian

 

[Aaron_C]

Expression of Interest is also known as a tendering process...I am sure you are familiar with the concept since you are a builder. It is beneficial for the vendor because;

a) It avoids the publicity/transparency of an auction and gives the vendor a good estimate of the value;
b) It gives potential purchasers plenty of time to get finance/inspections organised so they are proper, qualified buyers who you are dealing with; and
c) All offers on the property submitted will be binding otherwise they will not be allowed to be submitted - so you weed out the tyre-kickers.

Usually it is done for large commercial buildings rather than residential property, though, so I am a bit surprised at this one.

 

[Propertunity]

How you approach this depends on if you want to buy the property or not. I've purchased a number of times by EOI and been 100% successful to date.

You need to find out the rules of the game. Ask the agent:
1. Is this the method of sale or are they just getting market feedback on price?
2. Is this a once off chance to put in a highest and best offer or will the agent come back and give each respondent a chance to increase their offer?
3. Why are the vendor's selling?
4. What else might they want other than price? ie rent back period or delayed settlement?
the answers to these questions will determine how you structure your EOI response.

If you lowball and put deadlines you'll get put into the "no" pile.
Treat it seriously like a tender and be reasonable and you'll have a much better chance.

If you want help, give me a call on Monday and I'll give you some tips.

 

[NBS]

Thanks for your responces.

One of the reasoning I have been contacted is because I'm a builder as the place has some issues and thats what I can see from the photos sent to date. I know the reason for the owners selling (from what the agent has said) kinda beleive the agent looking at the photos.

Propertunity, I take your point on getting the rules of the game dare say I will start with my usual questions and ask the agent for any specific conditions the owners are wanting ie rent back, time frame etc.

Aaron_C, yes I am very familer with the tendering process was more wondering as this was with a residential property if it was different in some way and needed to be treated differently, apparantly not it seems.

Will know more tomorrow.

Brian

 

[Dazz]

If you lowball and put deadlines you'll get put into the "no" pile.

Yep.

The EOI process firmly gives 100% control of the selling process to the Vendor. Don't like that - don't play.

If your intention is to try all of the Buying 101 tricks you've learnt at some property seminar - you'll get spat out the back and rejected quicker than a blink of an eye.

• Finance clause - bzzzzt - rejected.
• Sneaky little get out clause from some McKnight buying seminar - bzzzzt - rejected.
• Building inspection clause - bzzzt - rejected.
• Pest inspection - bzzzzt - rejected.
• Squeeze them with a sunset clause - bzzzzt - rejected.

EOI and Offers to Purchase are serious methods of sale, where the Seller is offering their title deed and the Buyer is offering cash. The two are swapped.


Every sale method eventually boils down to this on settlement day anyway, it's just this method gets to that stage a lot quicker without all of the legal hurdles in the way.


Most inexperienced Buyers do a bit of reading, and after that relish the thought of putting as many barriers between the cash and title deed as possible. Eventually, they all need to be removed if you are serious.


This method simply tests your resolve as a Buyer - how serious do you want that title deed ??

 

[NBS]

Thanks Dazz,

I don't mind playing. So it comes down too - know the rules of the game, DD prior (naturally), no get out clauses, have the ready cash or monies all ready to go, EOI unconditional at x amount of $$$ and x days to settlement, sleep on it if you feel good about it in the morning submit EOI.

Fair point about the "NO" pile.

Brian

 

[BayView]

We see them from time to time down our way - it's almost always a high-end property and often a bit unique, sometimes architect built etc.

Given that all the usual clauses are not permitted, and it seems to be more yer high-end places, has anyone here ever sold a property using this method?

 

[boomtown]

I see them a fair bit in Ascot, Hamilton, Wilston etc. Agree with Bayview it is the places 2 million plus that are really struggling to find a buyer and the agent iis trying to drum up some competition. Invariably the place is straight back on the market after the tender closing date / EOI date. Which is why my comment about it being marketing claptrap. Its the same as auctions of high end properties - they almost never sell at auction in Brisbane (1 in 10 if you are lucky).

If this place is at the opposite end of the spectrum, uninhabitable heap of crap then maybe they might be genuine about selling it on a commercial basis. But in resi I still expect it is the agent trying to drum up some interest. In part by forcing you to do the DD up front it is more likely you will become emotionally invested in the deal. Or at least that is probably what the agent is hoping. And I would not be too flattered that he has invited you as a specially qualified bidder. Generally speaking any time you get a special invitation to buy something its not a good deal. Real deals are the ones that are hidden or poorly marketed.

 

[matto_]

so is there more restrictions than an auction (ie. no subject to clauses allowed)?

 

[Aaron_C]

so is there more restrictions than an auction (ie. no subject to clauses allowed)?

Well auctions have no 'subject to clauses' anyway...so it's basically the same. Only difference is that an EOI is less transparent than an auction because you are making a binding offer without knowing what everyone else is submitting - so it's basically a blind auction.

 

[Propertunity]

so is there more restrictions than an auction (ie. no subject to clauses allowed)?

No, not really. You can put whatever 'subject to' clauses in your EOI response that you like. Just understand, that it makes your offer 'unattractive' when being compared, as it will be, to the other responses that do not have 'subject to' clauses in them.

 

[Propertunity]

.... an EOI is less transparent than an auction because you are making a binding offer without knowing what everyone else is submitting - so it's basically a blind auction.

That's correct. Which is why it is a good idea (if you can) to go and meet with the agent to see if you can find out what the other EOIs have in them before submitting yours. Otherwise it is just a 'lucky dip'.

 

[Jtkumnick]

I agree with Propertunity & Dazz on this one. Thats very good advice.

Also in with an actual contract, not an EOI form, unconditional (assuming you can) and you will get real attention. Even if the price is lower you might blow some of the other "subject to this, subject to that" people out of the water.

You will still have the 5 day QLD cooling off period in case something changed.

An agent and a vendor will never just toss aside an unconditional contract, without at least trying to negotiate.

Also if there is no price advertised, you cant really be lowballing them can you?

 

[NBS]

Thanks everyone for your comments. I have looked at the property and no wonder they wanted a builder There is SO much illegal work and dangerous work in progress I can only see a $hit fight getting it sorted out and a host of $$$$s. How the hell he could have tenants in place is unreal.

One of the tenants was a real charmer as well and went off like a fire cracker ranted and raved abuse with Fs and Cs flowing.

Less hassles elsewhere with easier outcomes.

Brian