The offer
Make the Offer: LOI First, Negotiate Smart
The offer is where your analysis becomes leverage. Lead with a letter of intent, price from your numbers, and know how to move terms when price will not budge.
The LOI comes before the PSA
A letter of intent is a short, mostly non-binding document that lays out your price and key terms before anyone spends money on a full purchase and sale agreement. It lets you and the seller agree on the shape of the deal cheaply, before lawyers get involved. Send it even when you are not certain, an offer on the table is what starts the negotiation.
The two terms most buyers leave on the table
Beyond price, two LOI terms protect you and are often under-negotiated: the earnest money (keep it reasonable and refundable within the due diligence period) and the length of the due diligence period itself (long enough to verify everything without pressure). These are the terms that let you walk or renegotiate later without losing your deposit.
Price from your analysis, not your instinct
Offer the number your normalized underwriting supports, and be ready to show the work. An offer anchored to a rebuilt NOI and a stress test is far harder for a seller to dismiss than a round number that feels right.
When the price will not move, restructure the terms
If the seller will not come down on price, change the structure instead. Seller financing at a below-market rate, a seller carry in second position behind a bank loan, or a standby note can all improve your actual return at the same headline price. Sometimes the best deal is the seller's price on your terms.
Put it to work
When you enter your own offer structure, the underwriter models it exactly as written and opens a negotiation playbook around it. Underwrite a deal free.
Questions
What is the difference between an LOI and a PSA?
A letter of intent is a short, largely non-binding outline of price and key terms used to reach agreement cheaply. The purchase and sale agreement is the binding contract that follows, drafted by attorneys once the LOI terms are agreed.
What if the seller will not lower the price?
Restructure the terms. Seller financing, a below-market carry, or a standby second can raise your real return at the same price. Model the exact structure before you propose it so you know it clears your targets.
Related guides
Part of the RVP Underwriter guide library: practical guides to underwriting and buying income property. Browse all guides, or read the complete free guide with a full worked example.