From the industry that brought us SLUG (single lock-up garage) and BIR (built-in wardrobes), comes EOI – you might have come across it on the odd real estate listing.

EOI, or expression of interest, is another way for potential buyers to bid on a property that’s for sale in Australia.

EOI meaning

A seller calling for ‘expressions of interest’ is much like asking a prospective buyer to bid at a silent auction. Buyers who are ‘interested’ are invited to submit their best offer for the property in writing, usually before a set deadline.

There is typically no advertised price range, and all bids must be submitted via a formal document that also includes any terms of the offer, such as finance conditions and a proposed settlement date.

Unlike a public auction, these bids remain private. The process also differs slightly from a ‘private treaty’ sale, where the seller will generally stipulate a minimum price or a price range.

How does an EOI sale work?

Potential buyers will generally be able to inspect the property and conduct any research that’s needed before the EOI deadline.

Sometimes, EOI may only be accepted in a specific period or, alternatively, bidders may be free to submit their offers at any time before the deadline.

When all bids are received, the homeowner and their real estate agent will review the offers.

Often, the homeowner will already have a price in mind, although this isn’t made known to those making offers. If the reserve (or the lowest price the seller is willing to accept) isn’t met, the top bidders may be given another chance to submit another offer or negotiate to reach agreement on a sale price.

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

As we’ve already touched on, private treaty sales can offer a little more information than an EOI sale, such as a minimum price or advice that the owner will consider offers over a nominated sum.

Private treaty bids can generally be made at any time a property is on the market and aren’t restricted by a set receiving period, as EIO offers can be. But the rules differ from sale to sale.

Generally, buyers may be given a little more guidance in private treaty sales. By their nature, EOI sales are wide open when it comes to price but usually have a stricter deadline on submitting offers.

Is an EOI offer binding?

No, an EOI offer is not a legally binding contract obliging you to purchase. It is, as the name implies, an expression of interest, providing a price and terms that you're prepared to proceed with via a formal contract in the future.

Many property agents in Australia will have a standard EOI form, either electronic or hardcopy, on which you can record the details of your EOI and submit it to the agent.

If you wish to withdraw an EOI after it’s submitted, you can provide written advice to the seller or their agent, stating your intention to withdraw it. Although an EOI is not legally binding, if you wish to back out, it's courteous and professional to let the agent know as soon as possible.

However, in some cases, EOI sales may require offers to be submitted via a formal contract of sale.

What if I’m asked to submit an EOI via a contract of sale?

Submitting an offer this way needs to be very carefully considered, as the contract can be binding as soon as the seller countersigns and it's distributed among the parties and their lawyers.

Before you sign any contract of sale, it’s strongly advised you consult a solicitor who can assist with researching the property and ensuring the contract stipulates the appropriate terms and conditions to suit you.

Of course, if you’re serious about buying a property and want your EOI offer to stand out or be taken seriously, you may choose to submit it via a contract of sale. This is up to you but, again, is best done with legal advice.

Once a contract of sale is countersigned, it's subject to the normal cooling-off periods set down by the state or territory you're buying in. Beware, some states have no cooling-off periods, and the contract will be binding.

Why have an EOI sale?

Expressions of interest, or EOI, sales are relatively rare in Australia’s residential property sector and tend to be more common in commercial property.

They are most commonly used as a sales strategy for premium or unique properties that may be difficult to price. It can be a way of seeing what potential buyers are willing to pay when value can be hard to determine or there's very little on the market to compare the property to.

Sometimes it can be used for homes that have historical value or highly customised features, such as golf simulators, bowling alleys, or extensive temperature-controlled wine cellars. Not everyone will see the value in such features.

Pros and cons of buying by EOI

Advantages

  • Can take away the stress and bidding wars sometimes associated with auctions

  • You’ll have a general timeline in learning whether your bid is successful

  • You can make an offer subject to any conditions you want to include, unlike at an auction

  • You can make any offer you wish, unrestricted by a minimum price

Disadvantages

  • With no price guide, you may overvalue the property, particularly if there is little on the market to compare it to

  • You have no indication of your competition or how many other buyers may be interested

  • EOI periods may be long, typically four to six weeks

  • You’ll be unsure whether your offer will be taken seriously or if it’s even in the right ballpark

Pros and cons of selling by EOI

Advantages

  • Affords you maximum privacy

  • Allows you to consider all the best offers from multiple interested buyers at one time, rather than taking the first decent offer that comes in

  • Prospective buyers who are genuinely interested may submit higher offers as they're unaware of your price target or how many other offers you will receive

  • You will have the opportunity to continue negotiating with selected bidders

Disadvantages

  • There's no opportunity for a bidding war that can drive prices higher at public auctions

  • You may get some very low, time-wasting offers

  • Some buyers will choose not to submit offers as they have no information about the price range and fear they will overbid

  • Others might choose not to engage as the EOI process may be unfamiliar to them

  • EOI sales can take considerably longer than sales via auction or private sale

See also: Selling your home via private sale vs at auction

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