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What is a Letter of Intent for Real Estate?

A letter of intent (LOI) for real estate is a document used to outline an agreement between two parties before a purchase or agreement is finalized. It is typically used for larger real estate purchases like commercial properties and is used to outline the basic terms of an agreement, such as purchase price, closing date and other conditions. The document is non-binding and does not include all the details of the purchase agreement.

Advantages of Using a Letter of Intent

The use of a letter of intent for real estate can save time and money in the negotiation process. The document is a good way to start negotiations and can help establish a clear understanding of the terms of an agreement. It also can help prevent misunderstandings and costly disputes in the future. The document is non-binding, so the parties are able to negotiate the terms of the purchase agreement, without being forced to a particular outcome.

What to Include in a Letter of Intent for Real Estate?

The letter of intent should include the basic terms of an agreement such as the purchase price, closing date, and other conditions. It should also include the name and address of the buyer and seller, as well as the property address. The document should also include a description of the property, the amount of the earnest money deposit, and a statement that the buyer is ready, able, and willing to close on the purchase of the property. The following items may also be included in a letter of intent:

• The amount of the down payment
• The type of financing the buyer intends to use
• The contingencies the buyer may require
• The buyer’s right to have the property inspected
• The buyer’s right to obtain title insurance
• The buyer’s right to obtain financing
• The buyer’s right to terminate the contract
• The buyer’s right to inspect the property
• The buyer’s right to have the property appraised
• The buyer’s right to obtain a survey of the property
• The buyer’s obligation to provide proof of insurance
• The buyer’s obligation to pay for closing costs
• The seller’s right to terminate the contract
• The seller’s right to accept or reject a contract
• The seller’s right to make repairs
• The seller’s obligation to provide a deed
• The seller’s obligation to provide warranties
• The seller’s obligation to provide disclosure documents

Sample Letter of Intent for Real Estate

It is important to note that a letter of intent for real estate is not a binding agreement and does not include all the details of the purchase agreement. The following is a sample letter of intent for real estate:

Sample Letter of Intent #1

This letter of intent outlines the basic terms of a potential agreement between John Smith (Buyer) and Jane Doe (Seller). The parties agree to the following terms:

• Purchase Price: $1,000,000
• Closing Date: June 15, 2023
• Down Payment: 20% of purchase price
• Buyer is responsible for closing costs
• Buyer has the right to inspect the property
• Buyer has the right to obtain title insurance
• Seller has the right to accept or reject the contract
• Seller has the right to make repairs
• Seller has the obligation to provide a deed
• Seller has the obligation to provide warranties
• Seller has the obligation to provide disclosure documents

This letter of intent is non-binding and is subject to the terms and conditions of a formal purchase agreement.

Sample Letter of Intent #2

This letter of intent outlines the basic terms of a potential agreement between Bob Jones (Buyer) and Mary Smith (Seller). The parties agree to the following terms:

• Purchase Price: $800,000
• Closing Date: August 31, 2023
• Down Payment: 10% of purchase price
• Buyer is responsible for closing costs
• Buyer has the right to inspect the property
• Buyer has the right to obtain title insurance
• Seller has the right to accept or reject the contract
• Seller has the right to make repairs
• Seller has the obligation to provide a deed
• Seller has the obligation to provide warranties
• Seller has the obligation to provide disclosure documents

This letter of intent is non-binding and is subject to the terms and conditions of a formal purchase agreement.

Sample Letter of Intent #3

This letter of intent outlines the basic terms of a potential agreement between Bill Johnson (Buyer) and Susan Williams (Seller). The parties agree to the following terms:

• Purchase Price: $600,000
• Closing Date: October 15, 2023
• Down Payment: 15% of purchase price
• Buyer is responsible for closing costs
• Buyer has the right to inspect the property
• Buyer has the right to obtain title insurance
• Seller has the right to accept or reject the contract
• Seller has the right to make repairs
• Seller has the obligation to provide a deed
• Seller has the obligation to provide warranties
• Seller has the obligation to provide disclosure documents

This letter of intent is non-binding and is subject to the terms and conditions of a formal purchase agreement.