Writing a letter to a seller for a house you are interested in is one of the best ways to approach the owner. It is a more personal approach when it comes to expressing your interest in buying a home. This offer letter can also mark the beginning of the negotiations between you and the seller and so before you do that, you must first know what are the things that you can negotiate in your letter to further convince the seller that you are interested to buy their house.
Letter of Intent – What is it all About?
If the house you are interested in has everything you need then you must write a letter stating your intention of purchasing it. Although you might not confirm a solid offer yet, your letter of intent will help you secure a chance to get this property.
What is a Letter of Intent?
A letter of intent is a document written that outlines the basic agreement between the buyer and the seller with the terms of potential transaction or purchase. This means that the two parties can settle an agreement or terms while there is a continuous negotiation on the other terms and details of the said transaction. This is done before the actual signing of the purchase agreement.
What Should be Included in the Letter of Intent?
First of all, there are two parties involved in this letter. The buyer, who is the first one to initiate the offer letter of intent and potential new owner of the house or property and the seller, who is the current owner of the house. Your letter should be addressed to the seller since you have an interest in purchasing their property.
You must include a detailed description of the property or what it is that you are trying to purchase. Include also any agreements on what will be included or excluded in the said transaction between the buyer and seller will be negotiating.
Include terms (any terms) that you and the seller have agreed upon as well as the price or any adjustments made. If the seller has agreed to sell and being exclusive to you alone (meaning they will not sell to other parties interested) then this should also be included in your letter.
Any conditions that the parties have decided on must be included as well. If the agreement is final then it should be written and signed by both parties. The agreement decided upon by both parties should be explicitly stated if its a binding or non-binding. Always keep in mind to not leave this open for a court to determine. You must also include when the negotiations started and when it will or has ended as well as the state laws that will govern it.
The Four Types of Letters of Intent
Writing a letter of intent doesn’t stop with one letter alone. In fact, there are four types of letters that you can write. Here’s what you need to know:
- Purchase of a business – this letter is used when the seller of a business and an interested buyer has agreed on a business purchase of agreement to complete the deal.
- Purchase of a real estate – is used when a buyer is interested to buy a property or house. This is also one of the most common letters used in buying a property.
- Purchase of general property – this is used when the buy is interested in buying a personal property like jewelry, cars, etc.
- Other transactions – if there is a potential transaction between two parties with regards to the purchasing of goods or services, this offer letter must be written.
What Can Be Negotiated in Your Letter?
Any buyer who is interested in a house must know what they want. A buyer with a keen eye for details can negotiate what needs to be repaired in the house in case they do find some major repairs that need fixing. They can negotiate with the seller for a lower price if they have an intent to fix the property on their own but if they want the seller to fix it before buying then they should enter an agreement.
If you really want to negotiate the price for a house that you are eyeing then you must research the property through and through. In case the seller allows you to visit then it’s best to not miss a detail. Know also the asking price of similar properties around the area and present yourself as an attractive buyer. Being an attractive buyer means that you can offer a cash-only basis or offer an amount right then and there for the seller to think about. Be a good communicator when you are talking to the seller. Make sure also to imply that you have an interest in other properties but have “found the property to be more interesting than others”. Have a feel on how flexible the seller is too especially when you are offering something lower than what the original selling price is and don’t forget to ask for certain items to be included in the sale.
The Pros and Cons
Writing a letter of intent is easy but the contents of your letter are what really matters. If you are interested in a property but want to take time and see if it fits your needs and finances then a non-binding letter of intent fits the bill. This gives you the freedom to check out other properties that could be more pocket-friendly in case the seller turns down your offer. A letter of intent is usually the best way to alert the owner that you are interested in making a purchase.
On the downside, a letter of intent can be time-consuming especially if you are interested in a few houses or properties. Why? Because you have to include the details of each house you are interested in on different letters of intent. Not only the details but the price itself. This means you (or a real estate attorney if you have one) have to make a draft of each letter and if your letter moves forward, you will be obligated to write another one of the same intent only longer and more detailed. It can be expensive on your part and can take a lot of time just writing it down.
Any buyer with genuine interest to purchase a property must go through legalities. And the good news is, you are not the only one in this predicament. If your intentions of purchasing a property are good then writing an offer letter of intent is the best and most formal way to start a negotiation. If you have the time and money then why not do it, right? After all, this is for your own good as well and buying a property must be done legally, at all times to protect your own interests too.
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