Good energy, awkward stage togetherness (that gets better with watching other bands play, and spending time together and working on moves/not moving, together. When the bass player stands still, one hops, and the other head nods, it's not tight visually. Get them together and it'll look ten times better.
There were some magic moments/commercial viability. I think they should each save up $1000 and hit the studio - I think a lot of those harmonies and cool bass/guitar descents would be incredible in the studio with guitars holding down the ass underneath.
Look - work on it, of course.
They could get signed if they got tighter, made a good record and focused on finding 3 very memorable songs with awesome hook/chorus, and became the hottest shit in their town. Vocals were not too bad. how old are they? My advice would be stay at it, and more importantly, spend 5 nights a week hanging out downtown with other bands getting to know everyone.
Twisted Method - my band used to play with them a lot. Those dudes were downtown 7 nights a week, just watching bands and shooting the shit. When they had a record exec come out and watch them, they spent the week getting everyone in town to come see them and scream their heads off. They had a line around the block and everyone in the place knew them and lovedd them, when the Geffen (?) rep came out to see them. They rocked, but they owned the crowd, titties everywhere, etc etc... they looked like rock stars. And they were signed over breakfast that night following the show, or so the legend goes. That one show - NO DEMO - and they were signed.