Appraisers, Brokers & Counselors of Real Estate

Letter of Intent (LOI)

Downloadable sample LOI Letter of Intent form

A Letter of Intent or LOI is a document outlining an agreement between two or more parties before the agreement is finalized. Such agreement may be an Asset Purchase Agreement, as with a bulk REO or Note package portfolio purchase. The LOI specifies the price points and the 3 point distribution for the REO packages. LOI's should be notarized and on Buyer's (or Buyer's Mandate) Company Letter Head. The LOI must be specific to the criteria of each transaction and must have the name, address, land line, cell phone and signature of the buyer as well as the contact information for proof up. Buyers must be ready, willing and financially able to consummate the transaction when the LOI is submitted. Proof of Funds (POF) and NCND are required with every LOI. LOI's with soft proof will elicit tape snapshot in 1 to 7 days and a hard proof elicits full tape.

Buyers may provide a soft LOI made out to "To Whom It May Concern" or "Seller of Record", initially letting us know what product they want first. The LOI should include an investor's product profile, which includes all geographic regions, purchase quantity, pricing that is of interest to buyer, type of properties  and desired rehab level (zero to light, light to medium or major rehab). We will then deliver our client's LOI directly to the private seller, seller's mandates, our platform trading partner and/or clearing houses to fill the order.

The following price points for orders, should be followed on the LOI:

• Less than 100M @ 50+
• 100M to 250M @ 45-50
• 250M to 500M @ 40-45
• 500M to 1B @ 36-40
• 1B to 3B @ 33-36
• 3B to 5B @ 30-33
• Over 5B @ -30

All prices are PP (Purchase Price) and subject to change without notice.

The purpose of an LOI may be:

• To clarify the key points of a complex transaction for the convenience of the parties.
• To declare officially that the parties are currently negotiating.
• To provide safeguards in case a deal collapses during negotiation.

Acceptable POF include: Cash in an escrow account blocked for investments, Irrevocable Bank Letter of Credit that is either revolving or has an expiration date that extends 5 days past the projected closing date, Non-Contingent Line of Credit and a Certified Letter from Bank/Financial Institution with full Bank/Financial Institution responsibility signed by a bank official (President, VP or Senior Management) stating that "client has cash funds immediately available to be used for purchase of client's choice." All funds must be in clean, cleared US Dollars.

Some sellers require that buyers sign the LOI and POF and either fax or email them to the Proofing Escrow Company and to the Seller, in order to recieve MFA/NCND and LOA/Tape. Usually there can be no simultaneous closings, however EXIT STRATEGIES are available where required.

Please click on the above Letter of Intent link for a printable sample LOI. You may use this format on your company's letter head. Thank you.

Sincerely, Dylan E. F. Williams, President & CEO of ABC Real Estate Services, Inc and Managing Member of ABC REO's, LLC.