What's an EOI?
An EOI in the property market is something we here at The Property Room use on a daily basis, but there are still quite a number of individuals who aren't to savvy with the term.
An EOI is an abbreviation for the term - Expression Of Interest.
It is often used when dealing with 2 contracts (for land & build), an off the plan apartment or simply just a new property.
How does it work?
Let's say you find a property you like, but you need some time to; sort finance, do research or just have a coffee and give yourself some time to think about it. You can (in some cases) submit an EOI to the vendor to put a temporary hold on it.
When submitting an Expression Of Interest you are basically saying to the vendor that you are seriously interested and you wish to put a temporary hold on the property. An EOI will (almost always) only be accepted if you put down a holding deposit at the same time as submitting the EOI. The deposit is normally a nominated amount from the vendor, usually $1,000 or $2,000.
BUT WAIT FOR THE BEST PART - The holding deposit should always be fully refundable!!!
How does it put you in power?
An EOI along with a holding deposit will allow you to put a hold on the property in question. Normally for a period of 2 weeks. It will be temporarily taken off the market and no one else can purchase it.
Now that it's essentially off the market, the pressure is off and the power is in your hands to take your time to dot your i's and cross your t's.
In this time, you can do any further investigating into the property, you can organise your finance and the vendor will start preparing contracts.
What it really does is gives you breathing space so you can do all the thorough checks on a property, without having to worry about it being taken from you. That way, you will never have to make a rushed decision and you will have plenty of time to make up your mind.
What happens if you change your mind or finance isn't approved?
The property will go back on the market, you will get back your holding deposit and you will have no obligations or commitments to the property in question.
As i'm sure you can understand it's not the most common tool used in the sale of a property because it takes the power away from the vendors and essentially puts more power into the hand of the purchaser. Therefore, existing properties (mum and dad selling their home) will generally not accept and EOI because they don't want to cut out the chance of getting a better offer from another purchase.
Whenever we have a property that will allow an expression of interest we will get all the details and notify our clients. The details will also be written clearly on the EOI from before signing.
However, it's important to understand that not all companies have strict procedures like our.
When dealing with the property market in general (if you go through anyone else) it is recommended to still ask some questions of the vendor to make sure before signing. Ask:
What is the holding deposit amount?
Is it refundable?
How long can I hold it for?
When done right - an EOI can be a very powerful tool to help you purchase a property!
If there is anything else you wish to know about Expression Of Interest, then please feel free to contact us.
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