A hot new listing will attract a lot of buyers, even 10 to 20 offers on the first day. Why does the seller pick my buyer? The answer…I keep my LOI simple.
The Letter of Intent is an opportunity to put simple terms and conditions on one page and to win the deal, not for the broker to show how much they know about real estate. Truly, the only info that needs to be on the LOI is:
1. Is the buyer experienced or not
2. How much will the buyer pay and will it be cash or financed
3. How fast can the buyer study the property info and close
4. How much earnest deposit will the buyer put up and who will be the title/escrow agent
5. The LOI is subject to a mutually agreeable purchase agreement
That’s it! Here’s an example of a typical LOI Property Info Delivery paragraph vs my LOI:
Their LOI: “The purchase is subject to the seller providing acceptable copies of the following items, but not limited to just these items, that will be delivered to the buyer within 5 days of the execution date of the purchase agreement, that shall include the lease, all lease amendments, all tenant correspondences, a lease commencement date agreement, tenant acceptance of the property, the formal certificate of occupancy from the municipality, existing insurance certificates showing adequate coverage, tenant financials, copies of the current year tax bills, copy of the previous title insurance policy, an updated title policy, a full ALTA survey, all environmental reports, all soil and structure reports, a full set of construction drawings, a copy of all contractor warranties, interior and exterior photos of the property, articles of organization and all other corporate documents, a resolution signed by all company members showing that the signatory is authorized to sign on behalf of the ownership entity, a copy of the seller’s driver’s license and a photo of them with their Labrador Retriever (just kidding on that one, but you get the point!)”.
My LOI: “Upon acceptance of this LOI, Buyer will provide Seller with a list of property info needed and Seller will deliver those items within 5 days.
Their LOI has good points but the seller will be exhausted after reading it. And, that broker is telling the Seller that their client is going to be very demanding. I see this all the time.
My LOI covers the same info but is refreshingly simple to a seller that is under a lot of stress to make a decision. It shows that my client will be easy to work with, is ready to buy and that the detailed property info list is a necessary step AFTER terms 1-5 above are established.
My client wins the deal! The Art of the LOI.