Have you sold any properties in a heated market where buyers are willing to put down hard money on day one? It feels like you have made it, like all of your planning, choice of location, and management of your property has paid off because qualified buyers are jumping over themselves to win your deal. Like who’s the boss now!
But don’t take your eye off the goal. A non-refundable earnest money deposit seems like a no brainer but often comes with strings, which are actually the contingencies you thought you were not having to deal with. Once you’re playing in that space, you have established your property and yourself in a position of integrity. You worked hard to get there and you’re not going to do anything to lose it. Honoring the commitments you make to the buyer’s Letter of Intent is a big part of that, even if it is not a contractual commitment.
Buyers who put in an offer with hard money up front are not planning to go into your deal blind. It’s not an auction. They’ll require you to let them in the property, to see every unit, and that will start right away.
How do they do this? It takes time to write the Purchase & Sale Agreement. That starts after you, the seller, accept the buyer’s LOI, and it can be drug out. Not because that’s the buyer’s secret plan, but because it just takes time to get a contract in place that works for both parties.
Did the LOI have a time commitment? Often not. When the LOI says the buyer gets to see the units, they’ll do that right away. When the contract process drags on for two or more weeks, you the seller are now more heavily invested. It becomes harder for you to give the buyer a deadline.