Do many people use LOI before they go into writing up a formal contract?
A RE agent told me she got lots of those from investors simply didn't want to waste time unless there is a "tentative" agreement based on a LOI.
Example here:
http://www.oceanwaverealty.com/Real%20Estate%20Forms/ftlaud/Letter-of-Intent.pdf
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Ha! No need for "name-calling"... In fact, I happen to be working with a law firm that handles probates... and many of these are short sales as well. While it's not exactly a LOI that we use it is a "Highest/Best" form with a deadline date. Basically the same way many REOs are done. Works great for us, creates multiple offers for the Admin of the Estate to choose from.
right...for probate. Send one to a lender and see what happens.
An LOI is commonly used in commercial transactions. Anyone using it for residential short sales is an amateur.
The few agents I spoke to said they get it from all cash investors all the time.
They all come with proof of fund and most times it's investors from out of town, making a cash offer on a property they never even saw, they write up a LOI with proof of funds and many of them commit in the LOI with at least a 50% deposit and if the listing agent think there is a chance then their instructions would be for the listing agent to write up a contract for them (thus giving them full commission). Some of them have a side letter indicating should they get the property they would hire the agent to do the rental and property management.
Almost all of these are short sale or REO homes.
+1 Joseph Alfe