What does it mean to sell a property by ‘expressions of interest’?
In a sale by expressions of interest, the real estate agent sets a deadline on which date the owner intends to sell the property. This is usually four-to-six weeks after the public marketing campaign begins. Until then, potential buyers can view the property by appointment, or at an open home, and decide whether they’re interested and how much they’re willing to pay.
If a potential buyer then wants to progress further, they must submit their ‘best and final’ offer before the deadline, or sale end date. They’ll usually also include conditions of offer, such as finance, settlement date and inclusions.
When the sale end date arrives, the seller and real estate agent together review each of the expressions of interest to determine the winning bidder.
In this sense, a sale by expressions of interest combines some of the features of selling by private treaty with some of the features of a sale by auction. However, it’s also a little different because it’s an entirely confidential process. No buyer knows what any other party is willing to offer. Only the seller and their real estate agent ever sees the bids.
Why has it become more popular recently?
Expressions of interest often work best when it’s hard to gauge the market value of a home or the number of interested parties. For this reason, it has always been a popular way to sell high-end and unique properties.
Recently, we’ve been encouraging some sellers to consider selling by expressions of interest due to the initial market uncertainty caused by COVID-19. Also, government restrictions on physical auctions and other social distancing measures mean a sale by expressions of interest can provide an effective alternative to an auction.
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What are the advantages of selling this way?
Some of the benefits of selling via expressions of interest include:
- You can quickly find out the true value of a property as buyers need to put their best foot forward or potentially miss out.
- It can provide for greater flexibility than a sale by auction because buyers can make their bid subject to finance or other conditions.
- As a seller, you don’t necessarily have to accept the highest bid. You can take non-price factors such as settlement date and the buyer’s finance into consideration.
- You can often receive a solid offer, even where there is only one interested party – something that’s more difficult to achieve in a sale by auction.
- You may receive an offer well above others – something that doesn’t usually happen in auctions when a second bidder is usually required to push up prices.
- It can create more competitive tension than a simple sale by private treaty.
- If you don’t get an offer that’s acceptable, you can list the property by another method and essentially have another go at it.
- It can give some buyers the confidentiality they want when purchasing a home. This can be an important consideration for buyers in the premium property market.
What are the disadvantages of selling this way?
Some of the disadvantages of selling by expressions of interest include:
- Sometimes a sale by expressions of interest can be less effective than an auction at driving up the sales price as potential buyers are unaware of other offers.
- The sales process can take longer than a sale by private treaty. This can be compounded if you don’t receive an acceptable offer and eventually do go to sale by private treaty.
- Some buyers can be put off by the lack of a formal sales price, especially if little comparable property has been sold. For this reason, it’s often less effective when there’s a lot of similar stock on the market.
Should you sell your home by expressions of interest?
Whether or not you should sell your home by expressions of interest depends on several factors, including both its likely value and whether there is similar property available on the market right now. It also depends on your own goals and expectations.
Before we conduct any campaign, we’ll always discuss potential sales strategies and will advise you on whether we believe your property is a candidate for selling via expressions of interest.
If you’d like to know more about buying or selling in Melbourne’s east, please get in touch.