About to make offer on MHP, should I do LOI or contract?

[Tim Rainey]

So I am getting close to hopefully making an offer on a mobile home park, my first.  Its the original owner, an older gentleman.

So assuming we come to terms, would the next step be an LOI or contacting a real estate attorney for a contract? I want to move quickly if and when we initiate this, so anything I am trying to have a plan in place and have anything ready that I can when the time comes.

Thanks,

Tim

[Jack Martin]

@Tim Rainey generally, a LOI is a non-binding agreement that spells out the basic terms through which you are prepared to purchase the property. The detail behind those terms and other lessor items are addressed in the PSA that follows, once the buyer and seller are in agreement on the basic terms.

Commonly, the terms of a LOI are the address and general description of the property, the purchase price, the down payment (if a loan will be used), seller finance terms (if any), the title and escrow company, the earnest deposit amount, the due diligence period, the closing period, any extension that are allowed (paid for or not), language to address the POHs (if any), commissions, 1031 exchange (if any), timing for delivery of the PSA upon agreement by both parties, and expiration of the LOI.

We also like to include a "good faith" term wherein buyer and seller essentially agree to work exclusively and with diligent efforts until such time a PSA has been signed and escrow is open. The seller agrees not to market the property or to consider any other offers during that period of time. In this way, the buyer can be comfortable that they are not wasting their time and money on attorney fees, only to have the property sold to another party. That is usually the only binding term in the LOI.

All the best,

Jack