The high stakes poker game of expressions of interest

In footy parlance, this past weekend was a bit like the pre-season competition.

But things are charging back into the big time this week, with February 22 and the following week March 1 both looking like being Super Saturdays and there are some really interesting homes on offer across Melbourne in that $1.5 million to $3 million plus price range.

On a personal note it was certainly good to be back and out there bidding this weekend. I love being back full-time on the tools, knee deep in the puddles of emotion dotted across Melbourne on a Saturday -  the smell of fear, the looks of anticipation, the cringes of excitement and the hush of uncertainty all rolled into an incredible 15 minute sensory overload. 

If you’ve had your ear to the ground you might have noticed that there is a lot more happening in Melbourne $1 million property than auctions right now.

Expressions of interest

This is a form of buying/selling that is increasingly taking place in the inner Melbourne market.

Expressions of interest might seem straightforward. You put in your price and a deal is done. But you need to understand the unwritten rules – because in a way what they are a game of poker: of bluff and counter bluff, of maneuvering, of patience and of risk – with high stakes, indeed very high stakes for all involved, and few or no rules.

High stakes poker in Kew

Have you seen the home at 22 Rowland St, Kew (pictured below), markerted through Scott Patterson and Ross Savas of Kay and Burton?

{yoogallery src=[images/stories/2014/02/20/Kew]}

I’m calling it The Biosphere and I mean that as the highest of compliments – go inside and you are totally immersed into the space, light and moods created by the owner and the architect Nick Boschler. 

But this article is not all about the home at 22 Rowland, it is also about the high stakes poker game you will need to play to be the buyer. This is a genuine expression of interest – there is no bulltish quote and no bulltish rules from Kay and Burton – it’s put in what you think and then they will talk.

So, what price in the first instance do you offer, what terms and through which agent at Kay and Burton? There were four agents on the job when I visited and it was mid-week.

How do you make that offer – verbal, in writing or on a contract? Do you have a deadline, is it conditional and is your offer negotiable or firm? Pretty straightforward so far, with only about 20 different combinations.

But wait there is more – what happens when they say no, or more to the point what if they don’t say no but they don’t say yes either? What is your next move and the one after that? And what about the questions – the 10 or 20 any good selling agent will ask you under these circumstances? How do you answer them – openly or guardedly or should you just not answer them at all?

Once you put in your actual expression of interest, that is when things will get interesting. Even if you put in your best price, the agent will probably think it wasn’t and even if he or she does believe you, his or her vendor probably won’t. And so the dance starts – backwards and forwards, upwards and downwards – though probably more upwards or sideways than otherwise.

The thing to remember is that expressions of interest are long distance runs not sprints.  So after a week or so – unless you are 'High and Mighty Charlie' with a limitless chequebook – the agent is likely to tell you that you have a new friend, no not him, it's another buyer. And so a new dance begins, only this time it’s more of a group conga than the previous intimate waltz. Well, that’s what you are made or may think.

So back to 22 Rowland – this really is the right type of campaign for the seller, as the buyer is going to be a special one. Of course the seller also knows he or she is involved in the same game and there are some risks for a seller in an EOI process – where the rules can be vague and the way forward a little unclear. Sometimes buyers drop out or just don’t start the engagement process as their fear of uncertainty is greater than their love of the home.

How much is this ethereal creation at 22 Rowland worth? Is it $3 million or is it $9 million?

That is the question. So what is the answer?

We can’t tell you specifically at this stage, but the way we would go about finding that out involves relationships and truths, as well as a number of judgments and non judgements.

We’re not trying to be a smart alecs here. What we are trying to say is the answer to securing 22 Rowland lies in the process more than a specific number.

Off-markets

Another trend taking place is the “off-market”. Off-markets, are where properties are bought and sold without any 'for sale' board, advertising or internet marketing. This week the mysterious off-market widened and continued – especially at the very high end. As a group we have been looking and dealing in homes in Bayside, Port Phillip, Stonnington and Booroondara that to the casual passerby show nothing to indicate a transaction may be happening.

Note to Sellers: If you have a family home for sale, you know your price and will allow access to our buyers and can get contracts if requested, then we can in many cases bring a very real, but private buyer to your door.

We recommend you get a selling agent to represent you, but that is your call whether you do or you don’t.

Mal James is principal of James Buyer Advocates, which advocates on behalf of buyers of property over $1 million. Mal writes weekly auction reports, advice and in-depth market analysis on James' website.