A real estate offer letter is an essential part of the making an offer for a house because it provides proof that you are more qualified than other buyers, and it establishes your credibility so you will take priority over a potential blind read. This type of formal letter spells out in detail (thus providing clarity) your proposed agreement with the seller for purchasing their property. With this document, at no point can either party claim they were not aware of certain things or didn’t agree to a contingency mentioned somewhere in the document.
Importance of a Real Estate Offer Letter in the Buying Process
A real estate offer letter is an important document that outlines a prospective buyer’s intent to buy property. If you’re looking to make the best impression possible, a real estate offer letter is an excellent way to do it. It gives you the opportunity to connect with your seller and present yourself as a serious buyer who’s going to take good care of their property.
Follow these steps when writing an offer letter:
- Include a cover letter
- Make sure the offer is in writing and includes an acceptance date
- State the purchase amount, closing costs, and any other conditions of the offer
- Provide information about your credit score or loan approval letter as proof that you are able to afford the home
- Include any additional fees with your offer such as inspection or appraisal fees
- Indicate if you would like to include seller-paid closing costs in your offer
What the Real Estate Offer Letter Should Include?
An offer letter should incorporate:
- A brief introduction about who’s making the offer.
- The home address or property number.
- The price range of your desired purchase.
- What type of mortgage (if any) the buyer is looking for
- What is the timeframe of the closing date.
- A description of what you will include in the sale (i.e., house with land vs. condo unit)
- All the commitments being made by both parties in order to protect everyone involved, like terms for any contingencies such as inspections or appraisal, terms regarding repairs, etc.
The offer letter should consist of the date, property description, terms and approval of the owner. The letter also needs to include the reduced amount, prevailing rental rates for similar properties in the neighbourhood and justification for that amount. Add-ons such as furniture or appliances are also negotiable. The endorsement needs to be notarized beforehand. If you’re planning on paying in cash, attach a signed copy of your bank account statement verifying your ownership of funds needed for down payment and closing costs; if you’re borrowing money from someone else, provide copies of all related agreements; lastly include a seller disclosure form which has been duly signed by both parties before proceeding with this transaction.”
What to Avoid When Writing the Real Estate Offer Letter?
There are some things you should avoid when making an offer on a house, like desperation or politics in your letter of intent. This could cause undue stress for both parties involved and may lead to negotiations going south quickly. A real estate offer letter should also not include proposed changes and remodeling plans because they can drastically change the property price and may not actually be feasible. There are also certain risks associated with making a real estate offer too personal.
When writing the letter, avoid pulling any punches on something you have already compromised. Introducing more negotiations via the offer letter could open Pandora’s box and cause all sorts of drama to ensue. I recommend only sending an exhaustive list of what you are willing to do in your final offer those things for which there is wiggle room in a contract so that it can essentially become a legally binding contract when it arrives at its destination, say “yes” or “no”, and closed this negotiation wholeheartedly, honorably, yet decisively.
The offer letter is the final step in the process of buying a house, and it’s an important one. You should take some time to think about what you want your offer to say before writing it down on paper or typing up a digital version. Make sure that this document reflects all your considerations for purchasing the property. So that there are no surprises later on. If you would like help drafting your offer letter from start to finish, we can set up a consultation with our team at Better Estimate Real Estate Agents today! Reach out if you need more information–we’re happy to answer any questions and provide guidance as needed.
