After you have gone over some numbers and have decided that you want to make an offer on a property, what is the next step? Is it a letter of intent? What exactly would you say in this letter? Is there a standard letter of intent form I can find somewhere? Do you need to have an attorney look this over before submitting? Thanks, Mike
Howdy Mike:
Letters of intent are boring and useless and a waste of time. They are also non binding and a waste of time and money to get an attorney involved. Get a standard contract and submit it. Give yourself 30 days to inspect and another 30 days to close and go for it.
Hi Ted, where would I get a standard contract? What would I have to say in it? Is the standard contract a binding legal agreement as oppossed to the letter of intent? Mike
Hi Tedjr,
I’m sorry to disagree with you but Letters of Intent are neither boring nor unenforceable.
A conditional LOI is absolutely enforceable if and when conditions are met.
Most sellers will not give you a binding agreement without an LOI and very often, even after you’ve given a deposit, the seller, requiring an LOI can keep your deposit if you run out of contract, however, an LOI will usually keep the deal alive and save you losing your deposit and deal.
Also, since when is an attorney involved in an LOI???
I can’t recall a single LOI issued for my borrowers that required or had an attorney involved.
An LOI is issued from a lender, not an attorney, and generally has states the loan amount, the time window of the LOI and the conditions and stips.
So, if there is something I am missing, please let me know.
Jeff
Jeff,
I believe that they are talking about making real estate offers to sellers via an LOI rather than on a real estate contract form.
Keith
I didn’t catch that, but I can’t imagine any seller that would go without a contract, at least from my experience over the past 15 years.
It’s not an either/or situation. its generally contract AND LOI.
The LOI, however, is not always necessary. If you have a seller that wants to sell you the property and you are keeping within the time frame contracted then it is not necessary, but if you are falling out of contract, an LOI can fix that.
One problem you run into without an LOI is that most sellers do not want to take their property off of the market and even give you a contract unless they know you can come up with the financing.
When you go to contract, the seller has to take his property off of the market for the until the contract runs out or the sale is done.
If you cannot get financing, it means they have taken it off market all that time and it cost them money to do that.
That wi why most serious sellers require both a contract, and an LOI.
Jeff
Jeff