Are Letters Of Intent Taken Seriously?
I ve been told, to make money in this business, you have to make a lot of offers.
Do you have to make them all via a contract? Can I submit a letter of intent and then if accepted, put it under contract?
I am interested in a property, but it is listed with a Realtor... and he is new at this too. I was considering giving him a letter of intent with my terms spelled out in lieu of a contract, since my terms are fairly unconventional although I would be offering full price.
Is there a good template / form I could download somewhere to do this?
Would you do this?
Lookiing for commercial property in Atlanta with a return of at least 20% or better. Does anyone know of where to look? Thanks!
Goodman, Didnt you post this in another thread? Just curious.
Redbloodhound,
You heard right, you have to make lots of offers, but you also need to make sure you do you research too. I would not make them all under contract. as you will be writing quite a bit. What market are you trying to target. I think that would make things easier to determine what stratagy you would need to look at using. You will also find that working with a Relator has it's ups and downs, but I think you are on the right track having a few of them to work with. You are just expanding your options. Again, what is your target market. BTW, I only use letters of intent after I determine that I can actually help the people out of a situation, as I am currently working on the Pre-Foreclosure Market.
Quote:
On 2003-12-29 10:27, rebloodhound wrote:
I ve been told, to make money in this business, you have to make a lot of offers.
Do you have to make them all via a contract? Can I submit a letter of intent and then if accepted, put it under contract?
I am interested in a property, but it is listed with a Realtor... and he is new at this too. I was considering giving him a letter of intent with my terms spelled out in lieu of a contract, since my terms are fairly unconventional although I would be offering full price.
Is there a good template / form I could download somewhere to do this?
Would you do this?
Hi rebloodhound,
Letters of Intent are a good tool to use. They eliminate a lot of the jibber-jabber in contracts and simply spell out the main points of interest.
Although Realtors are suppose to present every written offer to the sellers, a letter of intent may not be submitted. There are some loop holes that realtors can get around if you are presenting them with a LOI. The realtors are going to want to you to sign an actual MLS Contract with your offer and earnest money. It never hurts to try and submit one, but it is good to know in advance that Realtors will frown at them.
As for any property that is not listed with a Realtor, use them all day long. Mail them, fax them, email them, or if you want - simply give the seller a verbal offer.
Best of Success!
BAMZ
The only way I submit initial offers is with a letter of intent. It expresses interest, spells out what you are willing to pay and under what terms. And best of all, it only takes a few minutes as opposed to a contract that has taken me an hour to prepare.
Another plus is this, if the offer is accepted, with a contract you are legally bound, but with an LOI if the offer is accetped you can move forward or just turn and walk away. I love 'em.
Yeah, I was thinking since this was with a Realtor, he might not turn it in. I agree though, filling out contracts is a pain in the butt, and if u are making a lots of low offers, it seems like wasted time.
So when you submit one, do you use a standard format? Does anyone have a sample one I could look at and modify for my own use? I guess Im over complicating it... After looking at legal contracts with their clauses and paragraphs and "legalese".
Just a quick letter in MS Word spelling out the high points of your offer and the property address, your name, and there name is all that is probably needed... does that sound about right?
Thanks for all your input guys... when i close my first one, u will all know about it
If you are working with a Realtor, either the Realtor representing a seller or your own buyers agent, find out how they work before you have a house in front of you.
Many agents will gladly work with a verbal offer if they know you fairly well, and know you have proof of funds or are pre-approved. Just don't pussy foot around. If you make an verbal offer (or a letter of intent offer) and it is accepted. Get it in writing very quickly before the seller gets a better offer and throws yours away.
When working FSBO, I usually just talk the offer out with the seller and outline what we are talking about on a paper - not necessarily a letter of intent as that may scare away some of my sellers. Once we have every point agreed upon, I write out a contract for all to sign.
Most contracts are basic forms that you just fill in the blanks - they only take about 5 to 10 minutes to fill out. If you are starting your entire contract from scratch then yes it will take a while to fill out.
I would suggest purchasing a basic contract and converting it to what every word processing program you use. Then customize it for all of your buying and selling situations, then you just have to go in and chage the numbers and addresses & names, print it out and sign it.
To purchase a good group of contracts for every situation on disc go to ****Must Reach Freshman Investor status before posting URL's*** Or see your local title company for a free copy of a basic contract in your area. Retype and customize for your own use.
[addsig]
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Ugh, im so peeved i could shoot someone. GOD. I emailed my realtor and he called me and said he WOULD NOT submit a letter of intent, nor a verbal offer. He said he can only submit a contract.
And get this... i intend on getting this house under contract and assigning the contract over to a rehabber i know who can close within 1 to 3 days after clear title. I wanted to put as my contingency, "approval of my partner within 2 days".
He said he wouldnt/couldnt submit that contingency, because its not serious, and that it wasnt in the best interest of the seller to take it off the market for 2 days and then have me walk out if my partner doesnt like it.
He said also, that i had to attach ernest money, even though im offering to close in 3 freakin days. I said bullsh*t. Show me where it says i have to have ernest money. He said there has to be consideration. I said the consideration is when i give him 79000 bucks at closing. He also said that they cant do a 3 party contract... He doesnt understand assigning a contract...
You know, i was trying to stay loyal with this guy because he has done a lot of footwork, comps, emailed me listings, etc... If they are all this way then I know why investors prefer to deal with banks and FSBOS. I dont think he should be deciding whats best for the seller. If they dont freakin like my contract or my offer, they dont have to freakin take it.
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The Letter of Intent was first used by Brokers who could not deliver a property in fee simple. Soo They would gather letters of intent.
For example, the other day I am out in Simi Valley looking at all the burnt up houses. I wish to sell them my new container houses cause they do not burn. Everybody wants to buy. Why? Because they are so cheap. But I am not finalized on all my costings. Mostly paper costs, Building permits etc. etc.
So I do not want to take deposit checks because then I am committed to the absolute price. So they give me a Letter of Intent.
"I am willing to pay the sum of $125,000 to Properties Unlimited an LLP, upon completion of the 1200 sq. ft. house made from combinations of several steel containers. Said dwelling to be erected on Lot 6, of Tr 120397 in the County of Los Angeles, State of California. Signed, Joe and Jill future householders. Accepted by Lucius Foster General Partner of Properties Unlimited.
Thats it, several of the more legal minded persons wanted to hand me a $10 bill. I dont know if I was being insulted or tipped.
Lucius
<IMG SRC="images/forum/smilies/icon_cool.gif"> <IMG SRC="images/forum/smilies/icon_cool.gif"> [ Edited by Lufos on Date 12/29/2003 ]
Would any of you guys have a sample LOI...if so please forward to my email address in the profile. Thanks in advance!
So is my realtor out to lunch or what?
I'm not sure, but isn't the Letter of Intent considered a legitiment offer, and if so, isn't the realtor obligated to submit and and all offers? You could also add a clause to the LOI and specify the upon acceptance of the offer, you will execute a formal contract and proof of funds/earnest money within 48 hours. Good luck!
Hi Rebloodhound,
Looking at this from a third party position, If I were a realtor, I would probably not submit a LOI because there is nothing binding you the buyer to my seller. I would also feel pretty confident that if I was turned into the local Association of Realtors or OBRE, that I would come out on top. Simply stating that I was working in my clients (sellers) best interest.
As I said in the previous post above, I know that realtors frown on LOI in advance, therefor I do not submit LOI to MLS listed properties. If I want the property bad enough, I will simply fill out the MLS contract and give some earnest money to either the agent or my attorney. But for any property that is not listed on MLS, I still submit LOI's all of the time! In fact, I just sent another one out today!
As for your "Realtor Friend", I hope that through all of his leg work that you have learned some things about the local market, etc. If you dont feel that you are a good team, I would venture to say that there are 100+ other realtors in yoru area who would be interested in working with you. If your Realtor doesnt perform for you, it is completely up to you to let them go!
Best of Success!
BAMZ
[ Edited by BAMZ on Date 12/30/2003 ]
EOJones:
You've got one when you signed up for my Free Mktg Tips emails. Look for LOI.doc on the www.MyDocsOnline.com account for ME: Derrick_Ali
Happy Investing!
Derrick
In many areas, the only time a RE agreement is considered a contract is when some form of value is exchanged for some property.
When dealing with REA, they may have their different practices. I have delt with both types.
I have some copies of just laymens letters I use. If you would like copies emailed to you, PM or email me and I will send you a copy.
From a realtors mouth:
As much as a realtor may not like it - an offer is anything that you submit. Realtors are very for form, paperwork and "me" Happy. They like to have thing on their forms that their MLS or Association prints up. Everything else is not "official" to them. But as long as it is an agreement between BUYER and SELLER then it is valid and legitimate. If the realtor faiels to submit it report them to the oversight group for your area. Where I live it is a real estate commission. The commission will start investigating the realtor and their broker. Neither want to get involved in that process. Something I would do is go to the county, find out the sellers name and submit your LOI directly. PERFECTLY legal. Same thing with a contract. LEGAL and BINDING as long as the seller and buyer agree - the realtors wants fall behind those of the seller and the buyer.
well what do you thnk about him refusing to submit a written contract with a contingency of
"approval by partner withing 2 days of contract signing"
And what about him demanding ernest money?
Check out BAMZ' post. I think it pretty much sums up the situation. Now, personally, I think it is a crock! But, I don't write the rules and it sounds like the LOI is not recognized as a valid offer in the RE community. Try looking around and see if you can find a RE that is more receptive to your methods...Cant hurt to try. Good luck
Submit the LOI directly to the seller. Your realtor may just be new and learning as he goes just like you. I'm a new realtor, although I'd submit the offer... I would like to work with investors in my area because I plan on doing that myself eventually when I can afford it.
Chase
Realtors know what the seller needs and wants. I am buying a condo that is a REO from a large bank. If I want to buy it I have to use the standard form with the banks addendums and that is that. End of discussion. I have bought from RTC, FBI, HUD, VA, and many mortgage companies and banks and they all have a format. Realtors hate it but must do as told cause there are 100 other Realtors trying to get that vendors business. If you are so stubborn that you can not play by the rules then you should not play. The agent may be wrong in this case and you may want to talk to office manager or Broker but earnest money is needed by the seller or at least a check made out to the title company
Good LUCK and HAPPY HOLIDAYS
Hope this helps some
Ted Jr
[ Edited by rebloodhound on Date 12/31/2003 ]
Quote:
On 2003-12-30 13:33, rebloodhound wrote:
well what do you thnk about him refusing to submit a written contract with a contingency of
"approval by partner withing 2 days of contract signing"
If I had a property listed and the agent broght me a contract with this crap in it I would fire them on the spot!
The seller is going to say that your partner needs to look at the property before you write the offer.
How about submitting to the Realtor an "Offer to Purchase" that outlines your terms and conditions and include the language parties agree to sign a '"Standard Real Estate Contract" in XX number of days of acceptance. And include with the offer no cash but offer to give them a deposit upon signing of the contract. This has worked for me in the recent past, and hope this is useful to you. Two of the five I submitted to Realtors was accepted and on one I received a call from the Listing Agent to say they accepted a higher all cash offer.
Quote:
On 2003-12-29 10:27, rebloodhound wrote:
I ve been told, to make money in this business, you have to make a lot of offers.
Do you have to make them all via a contract? Can I submit a letter of intent and then if accepted, put it under contract?
I am interested in a property, but it is listed with a Realtor... and he is new at this too. I was considering giving him a letter of intent with my terms spelled out in lieu of a contract, since my terms are fairly unconventional although I would be offering full price.
Is there a good template / form I could download somewhere to do this?
Would you do this?
a realestate agent is required to present a contract to the seller but not a loi. the contract is binding the loi is not. ggod luck. kenmax
Hey,
I know this doesn't help but...
You should have talked to your agent IN DETAIL about how you were going to structure your offers BEFORE you started working with them. This would avoid a lot of headaches.
I do not know of any agents that will submit an offer with the "Approval of Partner Clause". This is the weaselest of weasel clauses and everyone knows it. You can do this with FSBO, but it is nearly impossible with Agents.
As far as using a non-standard RE contract with an Agent, you are swimming upstream again. They want to see that contract. A way around it is to create a one page contract (on your PC). This contract states the adress of the house, the price, the terms, etc AND the last clause states that upon acceptence the standard contract will be completed (but incorporating the abover terms).
You can change the contract in about a minute.
Bruce, i understand what u are saying. The whole idea, is that my investor cannot look at every house that i attempt to get under contract... but he will look at a house once i get it under contract. Basically i want to find a good deal for him to rehab, get it under contract, and assign it over to him. So obviously he is busy rehabbing and im birddoggin, he cant get out to look at each and every house or he wouldnt need me.
Either way you go, you will need some clause included that could get you out in case your invester does not want the property. If you make an offer, you can resend up to the time in which the offer is accepted Then you are bound to comply with that offer (Clause Inclusive).
Clauses does work, you may have to be creative in the wording, however, I have several properties to prove it. Seeing is beliving. I am speaking what I know from experience, not from what I think or what someone told me.
Hey,
I think I understand what you are trying to do, but I don't know if it will really work. Here is why:
1) You are trying to BIRDDOG using an agent. I don' t think you really add much to the relationship. The agent could do most, if not all, the work you would do and NOT add an additional fees (your birddog fees).
2) You will be dealing with agents and they DO NOT want to see "funny" clauses. The only ones who will accept these clauses are either new or foolish. They are doing a great disservice to their client (the seller) if they accept these contracts.
With the rare exception, I have purchased all of my houses using agents and I when I sell, I always use agents. If my agent brought me a contract that had one of these weasel clauses in it, I would fire them on the spot.
I think it would be better for you (on several levels) to concentrate on FSBO.