Posted by Tony-VA on July 21, 2002 at 21:26:42:
This is a re-post from a similar string of posts a few days back. The original url will lead you to input by several others. Hope it helps.
When making high volumes of offers, you simply cannot and do not want to provide each realtor with Earnest Money up front.
This is why the Letter of Intent can be such a valuable tool. It is sort of a screening process to see if you and the seller are in the ballpark. The Letter of intent can suggest an Earnest Money Deposit.
I have had good luck with getting both my Agent and the Seller’s agents to work with me via Letter of Intent. Realtor’s seem to like it because it does not require such formal follow-up as a contract does (although most often it gets the same treatment from what I can tell).
These Letters are usually one page and you can email them in bulk to your realtor who can fax/present them to the listing agents. Then you address only those who call your agent for more information.
My letter is similar to Steve Cook’s and states emphatically that the Letter of Intent is Non-Binding on both parties but that if the general terms are agreeable to the Seller, we will present a formal contract.
This way you only put up Earnest money on the deals that show promise to actually close.
Bronchick for example uses a promissory note for the Earnest Money deposit that is payable (if I recall correctly) after he inspects the property etc.
Take a look at Steve’s website. Go to products and then at the bottom you will find some free forms.
Steve’s website address is www.flippinghomes.com