Tricky real estate terms defined
Sometimes, reading real estate advertisements can feel like wading through words written in a foreign language. We're not living in the 1800s, so why are some properties advertised as 'for sale by private treaty'? And what's the point of selling a property by expression of interest - why not just tell the prospective buyer the asking price, and take all the guesswork out of it?
GoRegional has teamed up with real estate agent Anthony McDonald of Charles Stewart to offer you a guide to some confusing real estate jargon. Feel free to use this page as a resource as you make your way though the farm advertisements on our site!
Stands for 'Expression of Interest'.
If a farm is for sale by EOI, it means the seller is asking the potential purchaser to submit a written offer to purchase by a set date and time. The offer should include all details such as the price, deposit, preferred settlement date and any conditions the potential purchaser places on the offer.
Immediately after the closing date and time for EOI applications, the agent will present all written offers received to the vendors. The vendor will then decide which of the offers received are most attractive to them, and if they are willing to accept any of the offers.
If an offer is accepted the purchaser will then be asked to sign a contract of sale and pay the deposit as soon as possible. The other potential purchasers will be informed that the property has been sold, without any opportunity to submit further offers. The agent may not disclose to any buyer the details of any offer submitted by other potential buyers, or attempt to induce that buyer to increase or change their offer after the closing date.
However, should the vendors not receive an offer they will accept, the agent will probably be instructed to go back to all parties who submitted offers and advise them of the price at which the vendor is willing to sell. For this reason, a potential purchaser should always submit the best offer to purchase at the closing date.
Vendors choose to sell their property by EOI as it is a method of sale that does not put a fixed price on the property, and provides an opportunity for purchasers to submit their highest and best price for the property, without the pressure and intense scrutiny that an auction creates. EOI is also a method of sale that allows some flexibility, as offers can be submitted subject to finance (unlike an auction) or other conditions. In the case of multi-lot properties it also allows purchasers the flexibility to submit offers on multi combinations of lots.
Stands for 'Statement of Information'.
In Victoria agents are required to prepare an SOI for every residential property they offer for sale (whatever the method of sale). Farming properties and commercial property do not require a statement of information to be provided.
The SOI must contain certain details:
- An indicative selling price for the property. This may be a single price or a price range of up to 10%. It must not be less than:
- The agent's estimated selling price
- The seller's asking price
- A price in a written offer that has already been rejected by the seller
- Details of the three most comparable properties, including the address, date of sale and sale price, or, if you did not take into account three comparable properties when setting the estimated selling price, a statement outlining that you reasonably believe there are less than three comparable sales within the prescribed period.
- The median house or unit price for the suburb. This may be for a period of between 3 and 12 months, and must not be more than 6 months old.
Walk in Walk Out
Describes a sale in which the vendor has 'walked out' and left all livestock, plant and machinery on the property, and the purchaser 'walks in' and takes over the operation of the enterprise with all these resources already available from the previous owner.
The sale price will include the value of the land and buildings and also the livestock and any plant, machinery, fodder and other consumables.
In practical terms, if a property is advertised as WIWO this is often taken to mean that some combination of livestock, machinery and fodder is available for purchase with the farm, but not necessarily all of the above.
For Sale By Private Treaty
Another way of saying 'private sale'. In other words, it is a sale by negotiation.
The vendor will typically have an asking price and the purchaser is invited to ‘treat with them’ in the old parlance, meaning to negotiate.
This means a vendor has accepted an offer to purchase the property. If the contract has been signed and is subject to finance, the sale will not be unconditional until the purchaser has received approval for their finance. Alternatively, the contract of sale may not yet have been completed because lawyers are preparing or altering the contract in readiness for it to be signed and exchanged between parties.
Typically, once a property is declared under offer, agents will not conduct further inspections of the property.