Write a Letter of Interest for a House

A letter of interest for a house is a personal letter a prospective buyer writes to a seller. When a potential buyer writes a letter of interest, he or she hopes to form a connection with the seller of the house, communicate the love of the home, and stand out from the often numerous other potential buyers. Additionally, a potential buyer may also write a "letter of intent" (LOI), a more formal (but non-binding) letter that indicates the seriousness of their intentions to purchase a house. Such letters can mark the beginning of, or accompany, negotiations between buyer and seller.[1] Both can be important tools when attempting to purchase a house, especially when both parties have decided to forego a realtor.

Steps

Writing a Letter of Interest

  1. Learn when a letter of interest can benefit you. You can use a letter of interest to set yourself apart as a potential buyer for a particular property. In essence, the letter gives you the chance to describe yourself, your family, your situation, and any other aspects you’d like to make a lasting impression on the home’s seller.
    • You can maximize the effectiveness of a letter of interest in particular situations. For example, in a “seller’s market” situation, you can face competition from a crowded market of buyers all seeking the same house. A letter of interest is a tool you can use to make you stick out from the crowd.
    • Letters of interest are less common when both parties involved are using a realtor. If the seller uses a realtor, he or she may want to minimize any part in the selling process, and the seller’s realtor is more likely concerned with which potential buyer can close on the house quickly and for the largest percentage of the asking price.
  2. Form a connection. Learn what you can about the current owners of the house and highlight similarities with your own life in your letter. If both you and the seller work as teachers, you can write something like, "What would be better than to have a teacher taking care of your old house?"[2]
    • If you (or your partner, spouse, or children) attended the same school, work in the same sector, volunteer for the same charity, or share any other significant connections to the owners, be sure to make note of this in your letter.[2]
      Don't sound too formal: I am a 30 year old alumnus of University Xyz with a degree in chemistry.
      Do sound approachable: The U Xyz banner at open house brought back memories — I didn't expect to meet another alumnus out here!
  3. Tell the buyer why you love the home. Clearly express why you love this specific home and neighborhood. Write something along the lines of, "My family and I love the beautiful backyard and look forward to many afternoons relaxing beside the pool."[3]
    • Focus on specific features of the home and neighborhood that you love, such as the sunroom, yard, surrounding walking trails, etc.[3]
    • People are often still attached the houses they’re selling. Use this section to show the seller that you have the proper appreciation for the house. Show the seller that selling to you would leave the house in good hands.
  4. Write emotionally but authentically. An emotional connection between buyer and seller can be crucial to purchasing a home, so don't be afraid to use emotional language. However, honesty and authenticity always go a long way, so avoid coming across as saccharine or desperate. [2][3]
    Don't mention sad stories: ...turned down from several houses . . . looking to escape an awful neighborhood...
    Do tug on heartstrings in an upbeat way: ...kids loved running down the beach . . . couldn't stop smiling when I looked at the view...
    • This also means you shouldn’t exaggerate what you love about the house. The current owner will know the house better than anyone, including the work it needs. Overselling how perfect the house is can easily home across as inauthentic. Don’t be afraid to mention that you’d repaint, finish the basement, etc. This also tells the seller that you’re willing to invest in the upkeep of the house.
  5. Paint a positive picture of yourself. Focus on your strengths, financial stability, and other positive characteristics that would make you the perfect homeowner. Highlight why you would make a great owner.
    Don't brag: ...outstanding work ethic . . . pillar of the community...
    Do mention positive traits: I am community-minded and volunteer at my local school.[3][4][4]
  6. Save the best for last. Reiterate your excitement to purchase the house, as well as your most salient qualities. The closing paragraph of a letter of interest can be the most crucial, and thus it is important to close on a positive note.
    • A closing paragraph might also imagine the future you and your family will enjoy in the home. You might write, "I would be so excited to raise my family here, and would enjoy many years creating memories in this home."
    • Express your sincere appreciation for the owner's time. Include a warm thank you at the end of the letter, such as, "Your consideration is greatly appreciated," or similar wording. [4][3]
  7. Keep the letter short. Outline a few important reasons why you would love to (and should) live in the house, but definitely keep it under a page.
    • Try to avoid including too much detail about your own life story, and avoid complaining about the difficulties you might be experiencing in finding a home.[4][2]

Writing a Formal Letter of Intent

  1. Learn how a letter of intent (LOI) can benefit you. A letter of intent is completely different from a letter of interest. However, the two are sometimes confused. While letters of interest attempt to set you apart from other buyers in the market, you can think of a letter of intent more like a pre-contract on the house. It sets a basis for the details of the transaction around the house and acts as a starting point for negotiations. This allows the buyer and seller to make sets of offers and counteroffers before committing to a final contract.[5]
    • One of the most important aspects of an LOI is that it isn’t binding, meaning either party can walk away at any point in the process.[5]
    • Like letters of interests, letters of intent aren’t common when realtors are involved in the process. Realtors usually hash out the details on behalf of their clients with the implicit knowledge that nothing is binding until a final contract is agreed to and signed.
  2. Differentiate an LOI from a contingent offer. You should also be aware of contingent offers and how they differ from LOIs. A contingent offers constitutes a very real offer on the house, but one for which contingencies must be met by the seller.[6] If the seller accepts the contingent offer, he or she will have the specified amount of time to complete the work, inspection, or other contingent action before finalizing the house’s sale.[6]
    • You can include contingent items in your letter of intent, but the scope of an LOI is larger and less official than an actual contingent offer. You shouldn’t make any offer on the home—contingent or otherwise—until both parties have agreed upon all of the specifics of an LOI.
  3. Address your letter to the seller. Use the seller’s full personal or company name, main address, and contact information, and date the letter.
  4. Indicate that you are interested in buying the house. Include the property address and any details about what will be included in the purchase, including furnishings, land, or other items.
    • Formal language is most common. You can write, "This letter describes the intent of (your name) to purchase the real estate located at (location) owned by (seller's name)." [1] Ensure that the name and address of each party, as well as that of the property, are included.[5]
    • You may choose to begin this sentence in a semi-formal manner, such as, "I, (your name name), am writing this letter to declare my interest to buy.."
  5. List the price you would be willing to offer in the second sentence. Use a phrase such as "The proposed purchase price is...," or, "The purchase price proposed is," or similar wording.[7][1] Remember that as a basis for negotiation, the seller can choose to counter at a higher percentage of the full asking price than what you offer here.[5]
    • The offer should also indicate that the purchase price will be paid to the seller at the closing of the deal, when a binding Purchase Agreement is signed.[1][7]
    • If you are proposing to rent or lease, indicate whether you are proposing a weekly, monthly, yearly, or multi-year rent, and in what installments the rent will be made (e.g., every month, every year, etc.). Also include any pro-rated portions of rent if the home is to be inhabited in the middle of a month.
  6. Propose a deposit if applicable. To show that you’re serious about the intent to purchase the house (contingent upon good faith negotiations), you can choose to offer a deposit in your LOI. Rather than actually exchanging hands, this deposit is typically held in escrow for the duration of negotiations. Ensure that you clearly spell out the term under which the deposit will be returned to you, such as by a certain date or if no agreement on the house can be reached.
    • This amount may be approximately one to three percent of the purchase price. When a final agreement is signed, the money typically goes toward the down payment.[8][9]
  7. Outline the finance period. Indicate the expected period of time you will require to secure the necessary funds. While you do not have to include any specific banking information, you should include the soonest you can expect to secure financing, as well as the soonest date you might be willing to close on the sale.
    • You can include other dates in this section, such as a date on which the negotiations automatically void. This can help push a buyer into making a decision more quickly if you place an expiration date in the LOI.
    • If you are represented by a broker, you can also clarify how the broker's fees will be paid.[10][11][1]
  8. Suggest a “due diligence” period. If you would like to take additional time to inspect the home, review property tax records, examine building permits, or anything else, you can also suggest a period for you to perform your due diligence on the house.[5][10] Use this period to discover anything about the house on which your eventual offer might be contingent.
    • Be specific about the nature of your inspection: an independent tour, for example, or investigation of tax or other records.
    • You may also specify what types of information or disclosures you will require during an inspection.[10]
  9. Close with a paragraph indicating that the letter of interest is not legally binding. Make sure this clause is carefully worded and explicitly clarifies that neither party is legally bound to the letter of intent.[12][7]
    • Make sure there is a clause that states explicitly that "this letter does not bind the buyer or seller to any offer, financial or otherwise," or use similar wording that clearly communicates that neither the buyer nor seller is legally bound to the letter of intent and may walk away at any time.[11]
    • A seller who is both a novice to the selling process and working without a realtor can interpret such as clause as a lack of seriousness about the property, but you don’t want to risk leaving the letter of intent otherwise worded in such a way that a court could find a legal, enforceable document.
  10. Sign and date the letter. Use a formal sign-off, such as "Sincerely," or similar wording. The letter should also include phrasing such as "Agreed to and Accepted by," or similar wording, followed by the signatures of both the buyer and seller.[13]

Sample Letters of Intent

Doc:Template Letter of Interest for House,Letter of Interest for House

Tips

  • When making an offer in a letter of interest, it's a good strategy to offer a lower price than you are prepared to pay so that you can negotiate more effectively with a buyer’s counteroffer.
  • Realtors are trained professionals who can negotiate all of these details on your behalf while implicitly understanding non-binding negotiations. Always consider working with a realtor to avoid any unforeseen legal difficulty in the home-negotiation process.

Sources and Citations

  1. ↑ 1.0 1.1 1.2 1.3 1.4 http://www.usattorneylegalservices.com/intent-letter.html
  2. ↑ 2.0 2.1 2.2 2.3 http://time.com/money/2885345/home-buying-bidding-war-write-letter-to-seller-win-the-house/
  3. ↑ 3.0 3.1 3.2 3.3 3.4 http://juliemarshallsrednicki.realtytimes.com/advicefromagents1/item/27905-how-to-write-a-winning-home-buyer-purchase-offer-letter
  4. ↑ 4.0 4.1 4.2 4.3 http://www.realtor.com/advice/top-10-tips-how-to-write-a-home-buyers-offer-letter-to-a-seller/
  5. ↑ 5.0 5.1 5.2 5.3 5.4 http://homeguides.sfgate.com/letter-intent-real-estate-49223.html
  6. ↑ 6.0 6.1 http://www.realtor.com/advice/contingency-agreement/
  7. ↑ 7.0 7.1 7.2 http://www.remaxactionforms.com/uploads/5/1/9/1/5191072/ltrintnt.pdf
  8. ↑ http://www.investopedia.com/terms/e/earnest-money.asp
  9. ↑ http://www.realtor.com/advice/understanding-the-earnest-money-deposit-2/
  10. ↑ 10.0 10.1 10.2 http://apartmentvestors.com/blog/real-estate-investing-writing-letter-intent
  11. ↑ 11.0 11.1 http://real-estate-law.freeadvice.com/real-estate-law/real-estate-law/letters-of-intent-residential-real-estate-purchase.htm
  12. ↑ http://www.internationallawoffice.com/newsletters/detail.aspx?g=355359fa-53aa-4850-93fc-2dfb19108f41
  13. ↑ https://www.extension.iastate.edu/agdm/wholefarm/html/c5-86.html
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