OfflineI believe that Letters of Intent are a complete waste of time because they are NOT a binding contract. I believe that they are used because the potential buyer is afraid to outright present the seller with a contract. It's like a pre-test to see if they is any wiggle room in the price. Why use them? I prefer to use a real estate pruchase contract to smoke out a serious buyer.
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Who uses them, typically?
Rina
"Obstacles can slow you down, but they can only stop you with your permission." Dean Graziosi (BARM pg 101)
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"For I know the plans I have for you," declares the Lord, "plans to prosper you and not to harm you, plans to give you hope and a future." Jeremiah 29:11
I'm NOT a huge fan either, however where i live most banks(REO) want an offer done on "letters of intent"
YOUR HERO, SULLY
Letters of intent are good for sending out mass offers and not having to have a bunch of earnest money checks tieing up your cash. Also it protects you incase several accept.....what if you made several real contract offers and 2 or more were accepted....oooops!
I used to use them, but found that I only got a response from like every 50 sent out.
and a binding contract can be on a napkin!
Hazco Investments LLC
D
I have seen them used when presenting more than one option in an offer. For example you may offer $90,000 cash, or $120,000 seller finance for 5 years with $20,000 down. This way you can test the water and see what the seller is most interested in doing.
I like the idea of sending multiple options on a property. What does a "Letter Of Intent" look like. Is there a standard form or just a letter?
Al
"NOW GO FIND A DEAL"
I've been making what I call multiple offers, with my realtor writing up more than one option for the seller, within the same purchase agreement. She said it's confusing to the other agents. (But it seemed to have worked to my benefit in at least one deal this year.) Maybe a letter of intent is a better way to go?
Letter of intent. I'll have to look that up.
Also, like Al asked, would you have a copy of what one looks like?
Thanks again,
Rina
"Obstacles can slow you down, but they can only stop you with your permission." Dean Graziosi (BARM pg 101)
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"For I know the plans I have for you," declares the Lord, "plans to prosper you and not to harm you, plans to give you hope and a future." Jeremiah 29:11
A letter of intent is just that...a letter stating your intent to buy the persons property. There is no standard form, its just your terms briefly writen in a letter. then at the end you say if you are interested contact me at 555-5555 and we drawl up a contract.
These can be used also to find seller that are not listed anywhere. Just find distressed houses and send them all a letter. This is what I used to do. I sent out ALLOT of letters until I got a call back. Typically 1% call you. I just got tired of it.
But you can use them on houses on the market too...like I said above you can send out a flood of offers on "letters of intent"
Hazco Investments LLC
D
So this kind of throws an offer out there without making the seller feel like it's something OFFICIAL they have to decide yes or no on right away. Right? A little more casual and comfortable. I can see where they would have their place.
Thanks again,
Rina
"Obstacles can slow you down, but they can only stop you with your permission." Dean Graziosi (BARM pg 101)
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"For I know the plans I have for you," declares the Lord, "plans to prosper you and not to harm you, plans to give you hope and a future." Jeremiah 29:11
Letters of Intent is an easy way to contact expired listings or fsbo that have sat a while. You can send the info and who ever is motivated may respond. It's like throwing out a fishing line and see who bites. It is a way to save your agent from writing multiple offers and running all over to present the offer to the listing agent. I've seen where it has been successful with some investors and not with others.
I have received letter of intent when I sell properties and for me I would not give much more than a second thought at a letter of intent. If I want to sell I want to sell. I take my approach with seller of homes. They should be given the courtesy to know that they are going to sell. Also, investors generally do not like the letter of intent because you cannot hold a seller to anything. I would hate it if I put out a letter, expected the result then tried finalizing the offer to only find out they signed an actual contract with another investor. I side with Cfuller on this.