Lesson 05 · 13 min read
Tours, Offers, and the LOI
Tour with purpose, structure an offer that wins without overpaying, and write the buyer-side LOI for NNN and industrial deals.
A tour shows you what the listing package hides. An offer decides whether your client gets the deal at a price the underwrite supports.
Key terms. A letter of intent (LOI) is a short list of proposed business terms, usually non-binding except for a few clauses such as confidentiality and exclusivity. Earnest money is the deposit that shows the buyer is serious. A deposit goes hard when it can no longer be refunded for diligence reasons. A no-shop clause bars the seller from negotiating with others for a set period. The LOI leads to the purchase and sale agreement (PSA), the binding contract.
This lesson builds on the walk-away price from Lesson 4 and the deals screened in Lesson 3. Course 12 covers drafting the LOI in depth. This lesson adds the buyer-rep angle.
This is education, not legal advice. Confirm legal and tax points with your broker of record, a Florida attorney and the client's CPA. Every number in the examples is invented for teaching.
Tour with purpose
Before you walk a building, finish the screen and the underwrite. Know the normalized net operating income (NOI), the price at your client's target return, and the three facts that could kill the deal. The tour then confirms or breaks them. Bring the buy box, the listing package, a laser measure, a camera and the property tour checklist. Do not talk to tenants unless the seller allows it.
| Look at | Single-tenant NNN | Industrial (small-bay flex, warehouse, IOS) |
|---|---|---|
| Access and visibility | Curb cuts, medians, left-turn access, signage, drive-thru queue | Truck routes, turning room, gate, highway access |
| Roof and structure | Age, patches, ponding; who owns the repair under the lease | Age, ponding, penetrations; slab cracks and joints |
| Site | Parking count, paving, drainage, pad boundaries | Yard surface, fencing, drainage, outside storage area |
| Building systems | Visible HVAC, utilities | Clear height to the lowest obstruction, dock and grade doors, panel nameplates, sprinkler type |
| Use and warning signs | Open and busy? Fuel, dry-clean or auto-service neighbors | Use versus zoning; stained slab, drums, floor drains |
Clear height and truck court are hard to change. Power and dock doors can often be added. Photograph every nameplate. For retail, medical office and land, add co-tenancy and parking, medical build-out and ADA, and access, utilities and survey pins. An out-of-state client still needs someone independent on site.
Questions for the listing agent: Why is the owner selling? How will offers be handled? What matters besides price? Which reports exist (survey, Phase I, roof), and how old are they? Any tenant, CAM or code disputes?
Follow-up notes. Within 24 hours, send your client a one-page note with photos, three positives, three concerns, open questions and any change to the underwrite. Rerun the NOI through the deal analyzer or, for industrial, the industrial deal analyzer.
Read the seller's process before you price
Course 22 teaches sellers to choose a pricing method and to launch. Read that launch from the buyer's side.
| Seller's process | What it usually means | Your move |
|---|---|---|
| Priced listing, no deadline | Seller tests the market | Underwrite first and bid to your number |
| Call for offers by a date | Seller expects several bids | Submit your best terms by the date |
| Best and final round | You are in the top group | Improve terms first, price last |
| One-on-one, off-market | No competition yet | Move fast on terms, hold your price |
Bid at ask when your walk-away price is at or above ask. Bid below when the underwrite says ask fails. Bid above ask only when your walk-away is above ask and the seller's process rewards it. Never bid above your walk-away.
Sellers value more than price:
| Seller values | What you can offer | Your cost |
|---|---|---|
| Certainty | Lender term sheet, engaged attorney | Prep time |
| Speed | Shorter diligence, earlier closing | Less time for findings |
| Deposit | Larger, earlier hard date | Cash at risk sooner |
| No financing contingency | Only if funds are real | Deposit at risk |
The LOI from the buyer's side
The LOI is usually one to two pages. It fixes the business terms so the PSA does not reopen them.
| Term | What to put in writing |
|---|---|
| Buyer and property | Buying entity or "assignee"; parcel ID. Identify the entity early, since Florida foreign-ownership rules turn on who owns and controls it |
| Price | A dollar figure and what it includes |
| Deposit | Amount, holder, due date, refundable until when |
| Hard date | The day the deposit goes hard, often diligence expiration |
| Diligence period | Days from the effective date, long enough for the Phase I, survey and property condition work |
| Financing | Contingency days, loan terms, right to terminate; or none |
| Closing date | Days after diligence expires, with any extension right |
| Assignment | Right to assign to an affiliate, a new entity, or a qualified intermediary (QI) |
| 1031 cooperation | Seller cooperates at no cost or liability to the seller |
| Exclusivity | No-shop period, tied to PSA timing |
| Prorations and costs | Who pays deed stamps, title and survey; rent, tax and CAM prorations |
| Seller deliverables | Leases, estoppels, SNDAs, rent roll, T-12, CAM reconciliations |
| Confidentiality | Mutual and limited |
| Brokerage | Who pays each broker |
On brokerage, keep your fee in your buyer agreement and state only who pays each broker in the LOI. The fee terms, the Lien Act limits on a buyer's broker and the notice you may give the closing agent are in Lesson 1. The LOI checklist turns the table into a working list.
Sample LOI (a): NNN, 1031 buyer.
[Date]. Re: [Property address]. Buyer, [Buyer LLC] or its assignee, proposes to buy the property for $[price]. Deposit: $[amount] with [title company], refundable through diligence, hard on day [30]. Diligence: [30] days from the effective date. Financing: [30]-day contingency; lender term sheet attached. Closing: [30] days after diligence expires. Buyer may assign to an affiliate or a QI. Seller will cooperate with Buyer's 1031 exchange at no cost or liability to Seller. Seller delivers the lease, amendments, guaranty, estoppel and three years of tax and insurance bills. Seller will not market or negotiate with others for [21] days. Confidentiality is mutual. Otherwise non-binding. [Agent name] | MaxLife Commercial, a division of MaxLife Realty LLC | [phone] | [email]
Sample LOI (b): industrial owner-user, SBA 504.
[Date]. Re: [Property address]. [Operating company] or its real estate affiliate proposes to buy the building for $[price]. Deposit: $[amount] with [title company], refundable through diligence, hard on day [45]. Diligence: [45] days. Financing: contingent on SBA 504 approval within [75] days. Seller gives access for the appraisal, Phase I environmental site assessment (ESA) and survey. Closing: [90] days from the effective date. Seller delivers leases and estoppels for tenants outside Buyer's space. Buyer wants [30] days of seller rent-back. Exclusivity: [30] days. Otherwise non-binding. [Agent name] | MaxLife Commercial, a division of MaxLife Realty LLC | [phone] | [email]
SBA 504 usually takes longer than a conventional loan and suits owner-users, not pure investors (Lesson 7 covers the loan families and timelines; Course 11 covers SBA 504 and 7(a) loans). Get the lender's written requirements before you write any date.
Earnest money: who holds it and what happens in a dispute
The deposit goes to an escrow agent and is credited to the price at closing. Under the Florida Realtors Commercial Contract, a buyer default lets the seller keep the deposit as liquidated damages or seek specific performance. Check the current revision. Size is negotiated; 1 to 5 percent is common market practice that varies. Notice protects the deposit: under that form, missing the written diligence notice can be treated as accepting the property as is.
Illustrative: on Palmetto Ridge's $2,500,000 NNN pad (see the worked example below), 1, 2 and 3 percent are $25,000, $50,000 and $75,000.
| Holder | What you must do |
|---|---|
| Title company | Confirm receipt in writing. Calendar the hard date |
| Attorney escrow | Same. A neutral third party is safer for your client |
| Your brokerage | Deposit into your escrow account by the end of the third business day after receipt (FAC Rule 61J2-14.010) |
If a title company or attorney holds funds, the contract must name that holder, and your broker must request written verification of receipt within 10 business days after each deposit is due (FAC Rule 61J2-14.008).
In a dispute, the Commercial Contract lets the escrow agent hold funds until the parties agree or a court or arbitrator decides, or file an interpleader. If your broker holds funds and gets conflicting demands, FAC Rule 61J2-10.032 requires notice to the Florida Real Estate Commission within 15 business days and a settlement procedure within 30 business days. F.S. 475.25(1)(d) allows an escrow disbursement order, arbitration, court action or mediation. Never release funds on your own.
Closing taxes and fees, including who customarily pays deed and mortgage stamps, are in Lesson 7. Get the title agent's estimate, and verify wire instructions by phone.
Competing offers without overpaying
Compare offers on the seller's terms. A higher price with a long contingency can be worth less than a lower price that closes. Your tool is the walk-away price from Lesson 4. Write it down before you bid and move it only for changed facts, such as a longer lease term. Course 12 covers the counter-offer dance and BATNAs and walkaway points.
Levers other than price:
- NNN: shorter diligence, a larger deposit that goes hard earlier, lender term sheet attached, clean 1031 language, flexible closing date.
- Industrial: seller rent-back for an operating seller, estoppels only from major tenants, an early Phase I, a seller credit for roof or dock findings instead of a lower price.
A Florida Realtors escalation addendum exists. Use it only with your broker's approval, a cap and proof of the competing offer. Do not pay in advance for upside the client can verify in diligence.
Negotiating the LOI
(a) Situation: the seller counters at the asking price
"[Listing agent name], thanks for the quick reply. [Client name] built the offer on normalized NOI, and it is at the top of what the property supports. I have no room on price. I do have room on terms. Would the seller rather have a shorter diligence period or a larger deposit that goes hard sooner? Tell me which and I will take it to [Client name] today."
(b) Situation: the seller wants a shorter diligence period than the building needs
"I understand the seller wants certainty. A Phase I, an ALTA survey and a property condition report take weeks. I can do 30 days if the seller delivers leases, the T-12 and existing reports within three days of signing. We order title and survey on day one, and the deposit goes hard on day 30."
(c) Situation: the seller wants a hard deposit at signing
"A hard deposit at signing puts [Client name] at risk before seeing the leases and reports. I can raise the deposit to $[amount], hard on [date], the day diligence ends. If the seller wants part sooner, I can release $[amount] on [date] once the leases and title commitment arrive on time."
From LOI to contract
Once the seller signs, move at once.
| When | Action |
|---|---|
| Day 0 | Send the signed LOI to the client's attorney and the title company |
| Days 1 to 3 | Confirm who drafts the PSA. Line up lender, QI (1031 buyers) and consultants |
| Days 4 to 14 | Negotiate and sign the PSA. Check that every LOI term survived |
| Days 14 to 21 | Exclusivity ends. Do not let it lapse unsigned |
Who drafts varies. Many straightforward deals use the Florida Realtors Commercial Contract (CC-6 as released in March 2025; confirm the current revision) with an additional terms block. Complex deals often use attorney-drafted agreements. For a 1031 buyer, watch the clock in the 1031 timeline calculator and Course 21. Lesson 6 covers the PSA and diligence management.
Ethics and honesty
| Do | Do not |
|---|---|
| Share only what your client authorizes | Reveal the walk-away price, 1031 dates or backup property |
| State true capacity with a term sheet or proof of funds | Say "cash" when the plan is a loan |
| Disclose any interest you or your firm holds, in writing | Invent competing offers |
| Present every offer to your client promptly | Sit on a counter |
Your relationship, single agent or transaction broker, sets how much confidentiality you owe your client. State it in the written agreement (Lesson 1). Misrepresentation can carry licensing consequences, so ask your broker of record before you shade a fact.
A worked example (illustrative NNN pad, invented numbers)
Assumptions (invented, not market data and not MaxLife results): Palmetto Ridge Holdings LLC, the fictional 1031 buyer from Lessons 1, 2 and 7, is pursuing a 3,900 SF absolute NNN pad in Seminole County with a corporate guaranty, listed at $2,600,000 with base rent of $152,500. Its buy box (Lesson 2) requires at least a 6.00% cap on buyer NOI. The seller wants to close in about 60 days. The seller's cap on ask is $152,500 ÷ $2,600,000 = 5.87%.
| Line | Amount | Arithmetic |
|---|---|---|
| Seller rent | $152,500 | Given |
| Owner administration | -$1,525 | 1% x $152,500 |
| Paving and site reserve | -$975 | 3,900 SF x $0.25 (the tenant carries roof and structure) |
| Buyer NOI | $150,000 | $152,500 - $1,525 - $975 |
| Buyer cap on ask | 5.77% | $150,000 ÷ $2,600,000 |
| Walk-away price | $2,500,000 | $150,000 ÷ 0.06 |
Three offers are on the table, and the seller invites one best and final round.
| Term | A: Bayview Capital | B: Palmetto Ridge, first offer | C: Sable Point Partners | Palmetto Ridge, best and final |
|---|---|---|---|---|
| Price | $2,440,000 | $2,425,000 | $2,560,000 | $2,500,000 |
| Deposit | $100,000, hard day 21 | $50,000, refundable to day 45 | $25,000, refundable to day 60 | $75,000, hard day 30 |
| Diligence | 21 days | 45 days | 60 days | 30 days |
| Financing | None (cash) | 45-day contingency | 60-day contingency | 30 days, term sheet attached |
| Closing | Day 45 | Day 75 | Day 120 | Day 60 |
Offer C has the top price but the smallest deposit, the longest contingency and a day-120 close, well outside what the seller wants. Offer A is cash, fast and certain. Palmetto Ridge's first offer is slow and low.
The response:
- Price: $2,500,000, which is $100,000 under ask ($100,000 ÷ $2,600,000 = 3.8%) and $60,000 over Offer A. Buyer cap: $150,000 ÷ $2,500,000 = 6.00%, exactly the target. Headroom: $2,500,000 - $2,500,000 = $0, so this is the last price move.
- Terms: diligence cut from 45 to 30 days, deposit up to $75,000 (3.0% of price, $75,000 ÷ $2,500,000) and hard at day 30, closing at day 60, term sheet attached, 1031 cooperation at no cost to the seller.
- Honesty: the financing contingency stays, because the client needs the loan. The term sheet and faster dates offset that risk. Offer A's certainty may still win, and that is acceptable.
- No chasing: matching Offer C at $2,560,000 gives $150,000 ÷ $2,560,000 = 5.86%, under the 6.00% floor. If the seller insists, Palmetto Ridge walks.
In this example the seller accepts the best and final offer. That $2,500,000 contract is the one Lesson 7 follows to closing.
Key takeaways
- Finish the screen and underwrite before the tour.
- Read the seller's process, then choose price and terms.
- The LOI fixes business terms so the PSA does not reopen them.
- Know who holds the deposit, verify receipt, calendar the hard date, and never release disputed funds on your own.
- Set a written walk-away price before bidding. Improve terms before price and do not chase.
- Never misrepresent capacity or intentions, or disclose the client's position without authority.
- Move fast after signing, because exclusivity is a clock.
Next: Lesson 6 covers the purchase and sale agreement and managing due diligence.