Letter of Intent

[Pixelized]

State: PA

Objective
Looking to purchase a small apartment building (4 units) that is not on the market. The owner sold the sister building this time last year and I believe the person would like to sell the other building.

Considering buying the building directly with the owner (no realtor) and hiring legal council for the transaction.

Letter of Intent
I'm preparing a letter of intent to inquire on the interest of selling and to share two options of selling (which includes the bid price, dates, money installments). The letter clearly states that the letter is for intent and is not binding - the actual offer will be presented as binding. No check with intent letter.

The two options are
1) Sell owner to buyer and we have our own legal reps - or -
2) Sell owner to seller using realtors.

Questions
I'm looking for:
a) any recommendations and thoughts
b) resources for sample letters
c) type of tone to be used in the letter
d) is it just better to throw a full fledged offer?


TIA

-pixelized

 

[HomeGuru]

Just send a letter of intent to inquire if he is interested in selling and if so would he entertain an offer.

 

[Pixelized]

Home Guru,

Are you suggesting a light letter asking the owner if offers will be entertained? No details etc? Do you have an example so I understand your thought?

Interest:
To add a little information, about two months ago I had a realtor contact the owners asking if there was an interest in selling. The owner had their realtor contract my realtor and said yes, the owner was interested in selling. About three days later the owner changed their mind.

History:
The sister building that sold last year was sold 'Out-of-Network,' in that both the realtor and buyer were not registered 'Trend' realtors.

Based on the histories of these buildings (there are apx. 5 more on the same stretch of land), it appears the owner may have over paid some years back (purchased in '93). The owner did make money on the sale, though maybe not as much as was anticipated.



Given these two bits of information, it would appear the owner wants to sell. It would also appear that the owner may have a preference for a private sale for a higher net value (thus working with private parties and avoiding realestate fees) ~ especially when the sale numbers were not as high as desired.

-pixelized.

 

[HomeGuru]

OK, now the story changes.
Since both parties have Realtors disreguard my first response to you.
All letters of intent and offers must go through the Realtors.

 

[Pixelized]

The property is not for sale ~ not on the market.

Don't think realtors are issue.

My Side:
I do not have an exclusive relationship with any one realtor. Tried that for a year-and-a-half. I'm working with a select few, and each realtor knows that they are one of a few. If a realtor brings me the lead, then I work with that realtor. If I ask for the assistance of a realtor, then I work with that realtor.

Few months ago I requested one of the realtors to start communication. The seller flipped the lead to their realtor...then the seller changed their mind. (Figure that if a realtor contacted them, it would be in the sellers best interest to work with a realtor since commission is already in the game. BUT, if this could be sold w/o commission, the net is higher to the seller ~ and maybe one of the reasons the seller changed their mind. It looks as though the owner paid too much for the buildings in 93).

Seller Side:
Don't think the seller has a realtor for the property. If so, then it would be the sellers responsibility to have the realtor contact me - in which case I'd bring in a realtor for representation.



Side Question
Found a realtor recently I started to like, and who has knowledge in the apartment side of business. However, I was put off when I learned that the agency wants to charge $195.00 at closing to the buyer (on top of the 3%-6%). They said that is how they work, however those charges I find bogus. What is the trend on this?

-pixelized.

 

[HomeGuru]

First you state that the owner has a Realtor then next you state you don't think Seller has a Realtor.
I'm getting a bit tired of going back and forth like this.

Extra fees that a Realtor charges are a rip off when said fees are for work that a Realtor generally used to do in the scope of services for the normal commission.

 

[Pixelized]

Realtor Explained

This can be a bit confusing and I appreciate you patience in understanding.

5/2001: Building #1 Sold. Sold with a realtor (but out of network so possibly a person with a realtors license, but not a realtor by profession).

1/2002: I had a realtor contact the owner about selling. Owner had their realtor contact our realtor. (yet, it is possible that the owner wanted realto to speak to realtor...given that this building is not up for sale, there would not be a contract with a realtor if the builder were to be sold).

2/2002: Have a letter of inquiry to send to owner.

-pixelized.

 

[HomeGuru]

Re: Realtor Explained

This can be a bit confusing and I appreciate you patience in understanding.

**A: it is only confusing because you made it confusing by not providing the correct facts.
********

5/2001: Building #1 Sold. Sold with a realtor (but out of network so possibly a person with a realtors license, but not a realtor by profession).

**A: Bldg 1 is not relevant to your post and what does "out of network" mean?
There is no such thing as a Realtor's license although there could be a licensed Realtor. A real estate license is issued by the State of PA. A licensed real estate agent or broker could be a Realtor or Realtor-Associate but they do not have to be. Membership if the indivdual would be in the National Association of Realtors, the State Association of Realtors and the local Board of Realtors. The Realtor name is a trademark name of the Association and is not a license.
*************

1/2002: I had a realtor contact the owner about selling. Owner had their realtor contact our realtor. (yet, it is possible that the owner wanted realto to speak to realtor...given that this building is not up for sale, there would not be a contract with a realtor if the builder were to be sold).

**A: there could in fact be a contract if the building were sold. There is no contract now but there could be in the future. If the owner desires to list the property for sale, then there would be a listing contract.
If the owner wanted to sell by owner with no Realtor, your Realtor would turn in an offer and if accepted the
owner would sign a contract agreeing to pay your Realtor a sales commission.
***********

2/2002: Have a letter of inquiry to send to owner.

-pixelized.

**A: in my opinion, you need a Realtor. Good luck to you.