CHAPTER 19 Developing Your Off our Offer
After narrowing down your search and engaging in a back and forth with the owner, the next step is to form and submit an official offer. For this, you either submit a letter of intent (LOI) or a purchase-sale agreement (PSA). It depends on who you ask and on the situation, as to which one you should send a letter or a fully detailed sale agreement. The LOI is designed to inform the property owner that you are a serious buyer and ready to make a deal at the price and terms that you put in the letter. Of course, there is still a lot of room for negotiations. The PSA is a final document that each party would sign to create the finalized deal and contract. It has the finished legal clauses and any needed detailed explanations of the terms of the deal. Most of the time, brokers won’t think it is worth the effort to draft these details unless they think a deal can be struck immediately, because this is a long document. Using an LOI is how you test the waters. It opens up serious back and forth and shows your interest in the property. This can be a time-saver in most situations and it is what I recommend you start with. However, I’ll go over both types of these opening offers in this chapter since the PSA can be used in specific situations.
LETTER OF INTENT (L F INTENT (LOI)
This is a non-binding proposal made in good faith that lays out the buyer’s first wants and goals with the purchase terms. It is simply a one- or two-page document in which you make an offer 113
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