Ive been in many residential transactions where there is 1 party being represented by an agent, and 1 unrepresented. Ive never been part of a successful commercial transaction where there wasn't 2 agents involved. (My commercial deals are typically 5-30 unit buildings, not multiple hundred unit complexes)
Some LOI terms to include
Price, transfer taxes, concessions, contingencies, study period, closing date.
Ive been in many residential transactions where there is 1 party being represented by an agent, and 1 unrepresented. Ive never been part of a successful commercial transaction where there wasn't 2 agents involved. (My commercial deals are typically 5-30 unit buildings, not multiple hundred unit complexes)
Some LOI terms to include
Price, transfer taxes, concessions, contingencies, study period, closing date.
When buying a single-family house, there are typically two agents involved: a seller’s agent and a buyer’s agent. On the other hand, when buying a 200-unit apartment complex, typically only one broker represents both sides. However, when you get to the middle ground, say five to 15 units, it can go either way.
Personally, the way I think about it is if the property is listed on the MLS, then having two agents is usually the standard. Similarly, if the agent or broker primarily operates in the residential space, they are accustomed to having two agents. So, in these cases, having two agents is normal.
Also, the purpose of an LOI is to express your intentions for the deal and how you want to structure it. Therefore, all the items you outlined in your question are things I would include, along with any other factors you consider important.
Keep in mind that LOIs are non-binding. They are simply a way for the broker to get an indication of your intentions.
Apartment building buyers are on average far savvier than SFH buyers, so they may not feel the need to use a broker/agent simply for transacting the property. Apartment brokers typically have to bring value in other ways such as bringing their client deals that aren't on the market.
@Victor Peng I mirror @Russell Brazil. I have never had/known a commercial transaction without representation on all sides.
As the old saying goes, The Judge told the defendant representing himself in court that he had a fool for a client.
Every instance is different, it's per instance. My experience and actions are to keep them as minimalistic as possible, that get's things in process but also affords as much maneuverability throughout the process and negotiations to come, as possible.
A LOI is to initiate a general consensus of intentions, to be followed by exploration of details, to facilitate setting of exact details to transaction. It's really just confirming viability, hence the term letter of INTENT.
It's definitely not a hard fast rule to have buyer representation. There are a lot great comments regarding that. The size of the deal makes a difference.
Larger apartment complexes are typically not advertised outside of the Brokerage webist and lists, so unless you're on their list, you may not know those deals exist. In those cases, the listing brokers are selling to their client list and end up on both sides.
Smaller deals up to 30 or so may show up in Loopnet, Crexi, MLS, local commercial exchanges, etc. making it easier for buyer brokers to help identify properties. If they are in those systems you'll find them online.
Value of a Buyers Broker. The listing broker has a signed listing agreemnt in place representing the Seller's interest, not yours. They have an ethical and licensing duty to be honest and truthful, and they cannot act against their Principal client, who you are not.
Most people think that because a buyer goes direct to the Listing broker they can automatically drop the sales price by the buyer broker's commission. That's not typically how the listing contracts are written. It's good to hire your own representation that is working on your behalf, not the seller's.
Letter of Intent
It's a tool to negotiate formally and in writing. The listing broker cannot tell you what a seller may or may not accept, so verbal is never a good plan. The LOI provides clear written and agreed terms to help prepare the contract.
Sales Price, Due Diligence period, financing terms, Who is paying what fees, what you are requesting for due diligence (leases, financials, maintenance schedules, etc.), Hard or Refundable Earnest money & terms for that, broker representation, title company, attorney info, etc.
