When it comes to the issue of commercial real estate negotiations, one of the first things that you as an interested party (whether your interest lies in leasing of a property or an outright purchase) will be required to do is to write and submit a letter of intent (LOI). A letter of intent goes well beyond simply stating your desire to lease or purchase a commercial property. It is our experience that summarizing all of the terms and conditions in the LOI that will have to be met in order for you to arrive at a deal during the “romance” stage of a negotiation, results in a “win-win” deal. Here is what to include:
- Include all information about the property, including its address, a physical description, its total square footage, and any personal item to be included – for example, it is good idea to have your IT manager and office manager to tell you what they would like to remain for your use. Having to rewire the premise or buy expensive furniture that the tenant before you removed can cost you thousands of dollars.
- It is more than price and dates – the last LOI we negotiated had 96 sections. Buyers and Tenant’s have the strength to win important lease terms (such as renewals, termination options and parking rights) in the current market.
- Provide detailed specifications for your improvements or the condition of the space at the time of closing. This includes asking for certified inspections of the building’s condition, in addition to appraisals of the surrounding environment to rule out any possible issues that could be harmful to people or the integrity of the building.
- Provide realistic deadlines for the landlord or seller to respond, and let them know that you are serious about them meeting it.
- Be sure to add a short statement that the letter of intent is just that, and not a legally binding document. Later properties negotiations will include documents that are legally binding, but the initial letter of intent isn’t and shouldn’t be considered binding.
If you’re a newbie to real estate negotiation tactics and would much rather have your LOI crafted by someone that won’t inadvertently leave out something of importance, contact Cardinal Real Estate Partners for a consultation and to learn about the services they provide to help you close your purchase.