Friday, August 16th, 2019 August16th2019

Sell for More Trivia: Offer to Purchase vs. Letter of Intent

Published on August 16th, 2019

Sell for More Trivia is a weekly blog series that playfully presents a trivia question about commercial real estate.

 

The biggest difference between an Offer to Purchase and a Letter of Intent is:

An Offer to Purchase is legally binding

A Letter of Intent isn’t.

If a buyer and seller both sign an Offer to Purchase, they’ve entered into a legally binding document.

If the same buyer and seller both sign a Letter of Intent, all they’ve done is agree on a few major deal terms and agree to continue the negotiation.  But that agreement is important because now they both know it’s worth it engage an attorney to hammer out the rest of the details.  The buyer and seller will then sign a legally binding document.  That binding document may be an off-the-shelf Offer to Purchase or a more customized Purchase & Sale Agreement.

The key takeaway, today, is one document binds the buyer and seller together in a legal contract – and the other is a non-binding agreement that gives both parties reassurance that they aren’t wasting time because there isn’t a meeting of the minds on the major deal terms (price, closing date, contingencies).

Both documents have their place depending on the situation.

 


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About Beau Beach, CCIM

Beau is a tenacious Commercial Real Estate Broker, author and adoring father of four. His clients appreciate his no-nonsense demeanor and his legendary work ethic.

Beau leads Beachwood which is a commercial real estate broker for sellers in the Nashville, Milwaukee, South Florida and Chicago markets.

He’s the author of the books The 3 Reasons: Why Most Commercial Properties Don’t Sell and True Wealth: What Every Seller Should Know About 1031 Exchanges.

Beau can be reached at 800-721-3287, click to schedule a call or Beau@ProwessIRES.com