Example contract?

Question

Im getting into bird dogging for a fellow biggerpockets.com member but I want to get a house under contract with me as well. I am about to purchase a fax machine here to fax off millions offers but!

I have no idea what to do?

First I just fax them a written offer? What does this include? What does it say?

Then I get a fax back saying if its accepted or not or counter offered. Then what do I do? Are the contract and offer different? Any quick examples?

Do I have to communicate with the realtor via phone at all?

Thanks guys! So very much

Sorry for the newb question, I swear Im learning!

Matt H · Answer

Hey,

You're definitely on the right track. If I were you'd I'd try to find something on the SW, SE, or W end. If not then north side. Stay away from central unless it's a condo in like Oliver or right by downtown in a good area. Say away from just east of DT. Anything west of 98st and anything south of 104thave works.

However, that being said just buy anything you can find based on those principles. You could send out tons of little to no money down offers and see what happens. In this market it's very difficult to bargain with people. So don't look for big discounts. It just won't happen. At most you'll get 5% off. Better to try and find a condo, townhouse, or house that would make for a good flip which you might do in a few years after purchase. That would be anything on the S or w side of the city. And I mean almost anything. The reason is because real estate is going up by 5% per month here right now. So it doesn't matter what you buy Andrew. You'll make more than you're mortgage payment in appreciation each month. So if you buy a house for $350,000 on the south side and you're mortgage payment is $1700. It's no big deal, because you're making $17,500 in appreciation. And that's per month. It will slow down in the fall. Down to about 2%. So in those months you'll only be making $7000 per month. In one year you'll have $100k in equity Andrew. So trust me, buy anything you can. And buy it as fast as you possibly can. Like get a contract going within 1 week from reading this message. Because trust me I know people on welfare that were lucky enough to borrow money and buy a house last year in Millwoods that they paid $200k for. Now there house is worth $400k 1 year later. So this guy who's on welfare has a net worth of $200k overnight. My other friend who's only 25 put down $5k to buy a condo for $111,000 just to live in, not thinking anything of it. They starting construction on the condo building and it was completed just this spring. Now that condo is worth $400,000 because it's in a new building on the south side on the top floor with valuted ceilings. So this guy now has a net worth of over $300k.

And on a side note, what floors me about these two guys is - "if they only knew how much power they now have in having a few hundred thousand to work with. Leveraged into buying an apartment either of them would then have the cash flow to retire overnight." (minus the welfare guy that is. I guess he's already retired in some respect. LOL)

And think about it Andrew, like our parents had to work hard 9 to 5 for decades to even amass $100k in net worth. But here we are in a situation where we could literally "get rich" overnight. Like I'm not kidding you one bit. You buy a house, live in it for a few years. Then cash out that equity of anywhere from $100 to $200k above your mortgage, and you go out and buy a 1 or 2 million dollar apartment and retire off the cash flow. All that in like 2 years. Like your friends and family would "freak out" when they see you do that. But little do they realize that, it's not you, it's the market that's making anyone who buys rich right now. Because anyone who buys a property is making five figures per month in appreciation. Because you will not find this opportunity maybe ever again in your whole life. So buy something now, live in it for a few years, rent out some rooms, or the basement to roomates if you have to to pay the mortgage. Then in two years cash out, reinvest in an apartment building and you'll be set for life. You'll be able to retire young and rich. (I'M NOT KIDDING). Compare that to doing road construction for your whole life.

Like even me, I wasn't even thinking of moving. But in talking with this realtor friend of mine, he was saying if you're gonna upgrade your home, do it now, because if you decide to upgrade in say 3 to 5 years, the prices you'll end up paying will be astronomical. So I go out, "half heartedly" looking around with my girlfriend. We find this house that just came on the market. I act fast so when I seen it was a deal, I thought "man their leaving like $200k on the table, and I like this house". So I bought it, offering list price for $640k. A few months later I discover that houses in this area are all selling or have  sold for over a million. One just sold a few doors down for 1.3m another down the street is selling for 1.2m. So I'm thinking if I live here for even a few years this house could be worth like 2m or more. So sh** everyone whos buying Andrew is getting rich!!! So you got to get in on this action! Buy anything you can, but more importantly buy it ASAP!!! For every $100k worth of property you buy you'll be making $5k per month in appreciation. And you're mortgage payment on $100k is only $500 bucks!

And the trend has continued on appreciation into 2007, so buy anything you can Andrew immediately. In just 1 year you'll have made $100k at least, and the longer you live in it the more and more it will continue to go up. Eventually you can cash out your $100 or $200k and invest that in a 1m or 2m dollar apartment building and retire. You might be only a few years away from that happening.

Also I should mention that if you're gonna buy something in this market its' better to actually "buy something" and not play around. Like this just is not the market to speculate in. It's the market to "actually buy". That being said, an experienced realtor will be your best bet in finding something and actually buying it. Because then you can deal with real contracts, and not letters of intent.

But one day if you want to speculate on properties here's a template you can use. You should clean it up a bit before you send it, so that it's all formated properly.

==================================

LETTER OF INTENT TO PURCHASE

Date: 	April 22, 2007

To: 	XXXXX XXXXXX

From: 	XXXXX XXXXXX,
	XXXXX XXXXXX Inc.

Re: 	residential property located at: XXXXX XXXXXX

The following sets out the basic terms upon which we would be prepared to purchase the Property. The terms are not comprehensive and we expect that additional terms [including reasonable warranties and representation,] will be incorporated into a formal agreement (the “Agreement”) to be negotiated. The basic terms are as follows:

1. Purchaser:		XXXXX XXXXXX Inc or it’s nominee

2. Vendor:	Current owner of the Property represented by realtor: XXXXX XXXXXX

3. Property:	XXXXX XXXXXX XXXXX XXXXXX , free and clear of all liens, charges and encumbrances at Closing, except: [e.g. those recorded on title to the Property as at the date hereof, with the exception of the Vendor’s mortgage(s)].

4. Purchase Offer:	$300,000.00 
			
		$225,000.00 	New first mortgage (or possible option of assumption and or with 			increase 	of existing first to 75%)

$50,000 	Second mortgage (carried by vendor for 5 years interest only 			at 8%)

$10,000.00	Initial Deposit	
		$5,000.00	Additional Deposit following condition removal
		$10,000.00	Balance

5. Deposit:	Upon execution of the Agreement, the Purchaser will deposit the amount of $10,000.00 which will be fully refundable if the Conditions Precedent are not satisfied or waived in writing by the Purchaser. Otherwise, the Deposit will be applied to the Purchase Price at Closing. If the Purchaser defaults at closing, the Deposit will be retained by the Vendor as it’s sole remedy.

6. Conditions Precedent: 	The obligation of the Purchaser to purchase the Property will be subject to satisfaction or written waiver by the Purchaser of the following conditions within 60 days after execution and delivery of the Agreement.

Review and approval of the documentation concerning the property;

Completion of satisfactory physical and environmental inspections of the Property; including suite inspections.

Completion of satisfactory due diligence search and examinations;

Satisfactory review of the title of the Property;

Satisfactory first mortgage financing being arranged for the purchase of the Property;

Satisfactory second mortgage being provided by the Vendor for the purchase of the Property;

7. Additional Items: 	This letter of intent hereby states the major terms of the agreement that the Purchaser would be prepared to move forward with. This letter of intent is in no way a legally binding agreement between the Purchaser and the Vendor.

Sincerely,

XXXXX XXXXXX

_____________________________________

The above terms are accepted this ___________ Day of _______________, 2007

_____________________________________

XXXXX XXXXXX
President
XXXXX XXXXXX Inc.

Phone: (780)
Cell: (780) 
Fax: (
Email: