Say you’re looking at a property, and you and the seller are able to come to a verbal agreement. Do you whip out the giant purchase agreement contract and work through it right there, potentially giving the seller time to talk himself out of doing the deal? Or would you just do a quick letter of intent on the spot to get the property under contract and do the full purchase agreement later?
Where can I find a good sample letter of intent?
Do you write your own offers, or do you have a realtor do that? What if the prospect of saving realtor commissions is one reason you were able to convince your seller to sell so low?
Where can I learn what all the legal mumbo-jumbo in the standard purchase agreement means? If I’m going to be writing my own offers, especially if its in the presence of the seller after coming to an agreement, then I need to know what EVERY section of that thing means. Three quarters of the purchase agreement document I have seem completely alien.
Any input you may have would be very much appreciated! Thanks!
You have some really good questions to cover here. I will do my best to answer them honestly and exactly the way I run my business.
First - never, never negotiate or try to buy over the phone. Negotiating is best done eyeball to eyeball.
Second - Never make an offer without doing all your homework. This isn’t a wild west gunfight, so don’t shoot from the hip. Take careful aim at your target. I’ve never been able to come up with a meaningful offer around a kitchen table on the spur of the moment. (I’m not that good!!)
As for your question about letters of intent - I have never used one for residential property. I use them all the time in the commercial construction and development business I’m in, but they are usually accompanied with a substantial payment as compensation for us to perform preliminary design work to check out the validity of a project before the customer signs a full contract. My point is, you should try to avoid paying for something that may not move forward. Most sellers, if convinced you’re serious, will allow a reasonable amount of time for you to collect your thoughts and make a bonefide offer.
Always, always, always use your own contract. If you don’t have access to great buyers and sellers contracts you’re going to lose valuable advantages in your negotiating. Do not use the same contract for buying and selling either. Each need to be written to your advantage depending on what side of the deal you are on. DO NOT use simple Office Depot style contracts !! They don’t protect you enough. Save your money, bite the bullet and purchase a REI package with modifiable contracts. There are several out there to choose from. Russ Whitney is just one. I’m not promoting him, but he does have good contracts! Just as you are looking for property deals, look for “deals” on those systems . . . . do you catch my drift ???
Sorry to get so long winded here Quazi, but I hope something here will help you to become the investor we are want to be.