Making first ever offer on flip house and have a cpl questions...

7 Replies

First of all, I am in Washington State. Is there a state specific OFFER that is required or will a general "Letter of Intent" be sufficient prior to drafting the "Purchase Agreement"? I understand that the sale contract is state specific, but what about on the offer end?

This is a little bit ahead of my training program, but the opportunity is pretty solid and the numbers work out very well, so I want to jump in.

Any insight will be GREATLY appreciated!

The NWMLS Purchase and Sale Agreement is the official way to offer in WA, but I like LOIs early on. They are much more personable and you can offer multiple methods of purchase. Often my sellers will choose option B. Then I'll know how to do the PSA.

Congrats on finding a potential opportunity, Bill. Is it a single family or a plex?

Hi @Bill Black ,

I Agree with @Steve Vaughan about the LOI's, as they can really open up alot of options. When I write up my LOI's for offer I will have three options. #1 is all cash at X Price. #2 is a Short term owner carry contract at X Price plus $$5-10K with a decent down and balloon in two-ish years to allow me to re-fi the property. Option #3 is a long term owner carry contract at X Price plus $10-15K.

Doing this automatically opens up the conversation about owner carry, and gives you the opportunity to build your actual contract offer based upon whichever route they would like for financing.

@Mike Sattem

@Steve Vaughan

Hi Guys,

I have only ever seen LOI's in the construction business. Are they much different in the RE business? I have never seen one. Can you point me to a general form to see what it looks like? It doesn't need to be yours specifically, but just something in general. Thanks guys

Pete

Hello @Pete Perez ,

Here is a cut and paste from my last letter, which I close on next week. It's pretty basic, but after alot of tinkering I have found that basic is almost always the best option.

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Hello Mr Dowdy,

It was a pleasure speaking with you on Thursday, and I have prepared my options as outlined below as we had previously discussed. Please take the opportunity to speak with your CPA about your options, and do not hesitate to contact me if you have any questions about these options.

Option #1: All Cash

Sales Price: $95,000 Cash

Terms: Sold As-Is with no repairs.

Option #2: Short Term Owner Carry

Sales Price: $102,500 

Terms: Sold As-Is with no repairs.

$10,000 down with a balloon payment in 2 years.

30 Yr Amortization at 5%

Monthly payment of $493.66

Option #3: Long Term Owner Carry Contract

Sales Price: $110,000

Terms: Sold As-Is with no Repairs

$10,000 down

30 Yr Amortization at 5%

Monthly payment of $533.69

Thank You again for your time,

Mike Sattem

Dry Creek Capital, LLC

Licensed as a Principal Broker in Oregon

@Bill Black I live in Oregon but just put a duplex in Washington State (your side of the mountains) under contract. Given the distance from me and the fact it was an owner occupy and the owner wanted to do a lease back, I created my own letter of intent that modeled the BP one (link below). I might do this more going forward now (non MLS in the current market) as it made the whole process so much clearer and smoother.

The P/S agreement does not have to be a state specific form(s).  I've done both purhasing and selling in both Oregon and Washington with my own contracts. 

@Pete Perez BP LOI template: https://www.biggerpockets.com/forms/intenttopurcha...