Requiring Seller to Cease Marketing After Signed LOI?

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Requiring Seller to Cease Marketing After Signed LOI?

Kim Hopkins
Investor · Member since 2018 · 259 posts · 74 votes

Hello!

I was considering adding to our LOI template a requirement that the seller cease marketing the property, including on any real estate websites (broker website, CREXI, Loopnet, etc) once the LOI is signed.

I've never done this before, but I was wondering if anyone else has and if it sounds reasonable? I don't want offers coming in while we're trying to negotiate a contract. 

Thank you,
Kim

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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
2y

If I were selling a property and a buyer wanted that provision, Id do so only with large non-refundable deposit.

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  • Charles Carillo
    Rental Property Investor · North Palm Beach, FL · Member since 2018 · 2k+ posts · 1k+ votes
    2y

    @Kim Hopkins

    We have a non-shop/non-solicitation clause in one of our LOIs. Not legally binding though.

    3Reply
  • Kim Hopkins
    OP
    Investor · Member since 2018 · 259 posts · 74 votes
    2y

    Thanks @Charles Carillo I had something similar so just added a sentence to remove it from the listing and other websites! 

    0Reply
  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    2y

    It's reasonable to try to get that cooperation. When I want to lock in certain terms I use language such as the following.

    ... The terms and conditions of the Contract shall be subject to the approval of Purchaser and Seller, provided however that neither Purchaser nor Seller shall have any right to object to the inclusion in the Contract of any term contained in this Letter; and provided further that neither Purchaser nor Seller shall have any right to insist that any term be included in the Contract that contradicts any term contained in this Letter. Seller agrees that it will not negotiate with any other party for the sale of the Subject Property for a period, the duration of which shall be the longer of (i) thirty (30) days from the date of execution of this Letter by Purchaser, (ii) the review period, and (iii) for so long as Purchaser and Seller are engaged in good faith negotiations concerning the Contract.

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  • Ronald RohdePro Member
    Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
    2y

    Yeah, we see it all the time, but realistically, you've got to move quickly to get it under contract. 7 days after execution, what if they take 3 days to take it offline? they will have other offers if its priced right

    1Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    2y

    If I were selling a property and a buyer wanted that provision, Id do so only with large non-refundable deposit.

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group546 Reviews
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    4Reply
  • Ronald RohdePro Member
    Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
    2y
    Quote from @Russell Brazil:

    If I were selling a property and a buyer wanted that provision, Id do so only with large non-refundable deposit.


     So definitely not happening in this market

    1Reply
  • Kim Hopkins
    OP
    Investor · Member since 2018 · 259 posts · 74 votes
    2y

    Yeah, I agree. But what is the point of the LOI then. Have you seen it actually happen where a buyer gets rejected for another offer after an LOI is already signed? That's got to be bad real estate karma...

    0Reply
  • Ronald RohdePro Member
    Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
    2y
    Quote from @Kim Hopkins:

    Yeah, I agree. But what is the point of the LOI then. Have you seen it actually happen where a buyer gets rejected for another offer after an LOI is already signed? That's got to be bad real estate karma...


    You work in good faith with a single LOI, but if the seller is negotiating another offer, it is what it is, whoever goes under contract first wins.

    I don't think its THAT bad in terms of RE karma. If we don't go under contract in a week, by day 5 or 6, I'm shopping alternate buyers...

    1Reply
  • Justin Hammerle
    Realtor · Providence, RI · Member since 2022 · 404 posts · 262 votes
    2y

    @Kim Hopkins; I would be more concerned about alienating sellers here rather than adding an extra layer of protection.

    2Reply
  • John M.
    Investor · Fairfax, VA · Member since 2015 · 1k+ posts · 796 votes
    2y

    As a seller I would never agree or take the time to take down advertising, stop conversations etc. Buyers can be a flaky bunch and can pull out at anytime. You have to act in good faith and be quick on the paperwork.  Come in strong with your financials, be buttoned up, and most of all be responsive and you will be fine.  

    2Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    2y

    @Kim Hopkins

    I agree with Russell on this one, only if you were putting a very large non refundable deposit would I agree to no longer market the asset

    Especially under a LOI which is typically non binding.

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    1Reply
  • Kristi KandelPro Member
    Developer · Fort Myers Beach, FL · Member since 2018 · 383 posts · 195 votes
    2y
    Quote from @Kim Hopkins:

    Hello!

    I was considering adding to our LOI template a requirement that the seller cease marketing the property, including on any real estate websites (broker website, CREXI, Loopnet, etc) once the LOI is signed.

    I've never done this before, but I was wondering if anyone else has and if it sounds reasonable? I don't want offers coming in while we're trying to negotiate a contract. 

    Thank you,
    Kim


    The LOI is non-binding so you can request it but if I were the seller I wouldn't stop marketing it until the PSA (binding) was executed.

    1Reply
  • John M.
    Investor · Fairfax, VA · Member since 2015 · 1k+ posts · 796 votes
    2y

    Always be Marketing is my motto!  Even after the contract is signed.  Building your database of people interested in your property is key to back filling it quickly when your tenant suddenly stops paying. 

    2Reply
  • Michael K GallagherBusiness Member
    Real Estate Agent · Columbus OH · Member since 2018 · 1k+ posts · 1k+ votes
    2y
    Quote from @Kim Hopkins:

    Hello!

    I was considering adding to our LOI template a requirement that the seller cease marketing the property, including on any real estate websites (broker website, CREXI, Loopnet, etc) once the LOI is signed.

    I've never done this before, but I was wondering if anyone else has and if it sounds reasonable? I don't want offers coming in while we're trying to negotiate a contract. 

    Thank you,
    Kim


    I'm sure this is asset specific so not sure what specifically you are going after, and if its a purchase or a lease, but I do a fair bit of tenant rep for retail spaces all over the country, and I can say with pretty high certainty that if I added this to an LOI I'd probably get laughed at.

    But in a tenant or lease situation, there are often multiple LOI's competing, and we've even come in and snatched properties away from other users who are into the lease negotiation phase because we can offer either speed or better terms to "take 1st position".

    I say all that for the idea that in my experience the whole LOI-lease phase is never done until its signed, and so I could never see a LL or broker agreeing to pull the space off marketing at the signed LOI phase.

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    1Reply
  • Kim Hopkins
    OP
    Investor · Member since 2018 · 259 posts · 74 votes
    2y

    FYI, we put this in the LOI and they signed without issue. I think a good broker will respect that a signed LOI means the offer should not be shopped provided all parties reasonably work diligently and quickly to arrive at a signed agreement. We're in contract now so all good. Thanks all!

    0Reply
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