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Letter Of Intent To Purchase Real Estate

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    A letter of intent to purchase real estate differs from a letter in interest. A letter of interest essentially says “I’d like to buy your home, are you selling?” A letter of intent says “I want to buy, you want to sell, here are the initial terms”.

    A letter of intent to buy real estate can be used to outline the initial terms to buy a house, undeveloped land, a commercial building or any other property. A letter of intent is a starting point for negotiations, as long as a variation of the sentence “The terms and conditions in this letter do not become binding until a purchase agreement is finalized and signed by both parties” is used.

    A letter of intent does not prohibit the owner from negotiating from someone else unless earnest money changes hands. A letter of intent doesn’t prohibit the owner from selling the property to someone else, whether the other party offers more money, closes sooner or has fewer conditions tied to the deal.

    The letter of intent is a balancing act. Fast closings benefit sellers by relieving them of property tax payments, mortgage payments and utilities for the property. Conversely, a suspiciously short time period could turn off prospective sellers. Too short of a time period to secure financing, unless the property will be purchased in cash, could kill the deal because the buyer can’t get a mortgage approved fast enough.

    A letter of intent to purchase property should have a time limit outlining how long the offer is good. This protects the potential buyer from someone coming back a year or two later expecting to sell the property at the price quoted at the peak of the local real estate market.

    Sample Letter Of Intent To Purchase Real Estate

    Date: 09/01/2014
    To: Property Owner
    From: Intended Buyer
    Re: Residential property located at 1234 Street, City, State Zip Code

    Dear Seller,

    This letter of intent to purchase property is to set forth the terms of our discussion to buy your property. The terms and conditions in this letter do not become binding until a purchase agreement is finalized and signed by both parties.

    The basic terms of the agreement are:

    1. Purchaser: Buyer name
    2. Vendor: Seller name represented by realtor name
    3. Property: 1234 Street, City, State, Zip Code free and clear of all liens, charges and titles at closing except those recorded on the title with the exception of the seller’s mortgage (if any)
    4. Purchase Offer: $517,5171

    The mortgage amounts are listed here:
    Initial deposit
    Any additional deposits or escrow
    Balance

    5. Deposit: Upon execution of the agreement, the purchaser will deposit the amount of (deposit amount), which is fully refundable if conditions are not satisfied or waived in writing by the purchaser. Otherwise, the deposit is to be applied to the purchase price at closing. If the purchaser defaults, the deposit is retained by the vendor.

    6. Conditions Precedent: The purchaser must meet the following conditions within sixty days of the execution and delivery of the agreement.
    There must be a completed inspection of the property and certification of habitability.
    The purchaser must have satisfactory mortgage financing for the property.
    The title search must be completed and the title must be found to be clean.
    Closing will complete within 60 days of the due inspection period.

    7. Within sixty (60) days after full negotiation of this limited binding letter of intent, the buyer and seller shall negotiate a mutually satisfactory contract that will meet the terms set in this letter.

    Sincerely,

    Intended Purchaser’s Name and Signature
    Date

    Purchaser’s Contact Information Here

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