Real Estate Investing – What is a Letter of Intent?

The Letter of Intent or (LOI) is typically used to define a offer from a real estate investor to a seller/home owner, it could also be sent from the investor to real estate broker agent/broker. Most of the times it is used to open communications and express your interest in an investment property or business opportunity. An LOI can come in many different forms. But they will all contain some sort of communication stating a proposal to enter into a contract in the future for an exchange of goods and services. This letter would be a weak relation of a sensibly exchanged and recognized proposal or agreement before you have a formal contract in place. A LOI should serve at least one of these three functions:

1. This is a non-binding declaration of the future objective of two parties, the real estate investor and the seller/homeowner/real estate agent, what you would call a ‘comfort letter’.
2. This is an interim contract containing its own terms and conditions, which will lead the connection between two parties until an official written contract is created.
3. This is a concluding agreement which, despite their taking no prescribed implementation is judged to have the combined terms of a formal written contract on which two parties intend to go into agreement on.

Your Letter of Intent should contain the following:

• The Scope of the offer should be clearly identified.
• The matters that you want to resolve during a specific contract period before and after the main agreement should be part of the description.
• A Letter of Intent is prepared for elasticity growth, and should only serve as a temporary contract, incomplete in lieu of the main agreement, and that neither party intends to be bound by the main agreement until the written manuscript is implemented by each of them.
• However, it is possible for the both parties to unintentionally surrender such requirements if their behavior denies this or a acceptance deadline is not adhered to.
• Clearly write out offer terms, property description, and your contact information.
• Have terms spelled out of what to do in case of failure to uphold terms on either parties’ obligations.

Topics: Real Estate, Letter of Intent

Work cited: Josh Cantwell (https://reiclub.com/articles/real-estate-investing-letter-of-intent-tip)

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