A real estate letter of interest may be sent to home owners in a neighborhood by someone who wants to buy property but has trouble finding listings. A letter of interest will be thrown out by 90% of the recipients, but it could generate sellers who haven’t yet put the house on the market, are facing possible foreclosure or who simply would sell if a really good offer were made.
Real estate letter of interest are sometimes used by real estate agents themselves to drum up business. In these cases, they are not actually interested in buying the home but selling it to others. These real estate letter of interest can be ignored if you aren’t ready and eager to sell the property.
In some cases, letter of interest are used to ask to lease or rent property, but this is far less common than letters of interest used to solicit home purchases.
A real estate letter of interest can be seen as the first offer for a property. Ideally in the first paragraph, and at least by the second paragraph, the offer for the property should be given. This may be a price determined by comparable sales or a lowball offer to entice someone facing foreclosure to sell before the bank auction takes it for even less. The offer should come in the form of “prepared to pay” or “the buyer’s offer is”.
The letter of interest should include the statement that the letter does not bind the buyer or seller to any offer. This gives the potential buyer an out if inspection of the property reveals major problems, or if the interested parties financing falls through. It also gives everyone room, legally and emotionally, to negotiate the terms.
A letter of interest is not a formal contract to buy a property. If the home owner says no to the offer or simply throws it out, the negotiation is over. If the home owner sends a letter back with a different price or conditions, the terms in the original letter of interest are null and void.
Real estate letter of interest should include a deposit or earnest money, to show that you are serious about buying the home. If the person initially enters negotiations and then refuses the earnest money, the deal is off.
Example Real Estate Letter Of Interest
I, (your name), am writing to declare my interest to buy your home at 1234 House Street, City, State.
I am prepared to pay $150,000 for the house. This offer is for the house in its current condition, all outbuildings and the land on which it sits.
I am offering a deposit of $5,000 as earnest money. I would like to make the deposit in two weeks time from your acceptance of this offer.
I would like to inspect the property next week. I will bring an independent inspector to review the property.
I am qualified for a mortgage and would pay you the full amount for the house as soon as the mortgage closes.
If these terms are agreeable, I would like to sign a purchase agreement for the property on the first of next month.
This letter does not bind either the buyer or the seller to any offer, financial or otherwise.
Interested Party Signature
Interested Party’s Contact Information