How to Write a Commercial Real Estate Letter of Intent That Sellers Take Seriously
A step-by-step guide for buyers who want to open doors, not close them before they even start.
Picture this: You've found the commercial property. The numbers work. The location is right. You've done your homework. Now comes the part most buyers fumble, putting together a letter of intent that doesn't just announce your interest, but actually commands the seller's attention.
Here's the uncomfortable truth most guides won't tell you: sellers and their brokers see dozens of LOIs. Many of them are vague, generic, or so riddled with one-sided contingencies that they get pushed to the bottom of the pile before anyone even reads page two.
Your LOI is not just a formality. It's your first impression. It tells the seller who you are, whether you're serious, and whether doing business with you is worth their time.
Get it right, and you move to the front of the line. Get it wrong, and you might not even get a callback.
This guide breaks down exactly how to write a commercial real estate letter of intent that sellers and their brokers take seriously, from the components you absolutely cannot skip, to the tone that signals credibility, to the subtle mistakes that quietly kill deals before they start.
Let's get into it.
What Is a Commercial Real Estate Letter of Intent (And Why It Matters More Than You Think)?
A letter of intent, commonly called an LOI, is a 1-3 page document that prospective buyers use to outline the terms of their offer for a property. It covers the basic terms of what they're willing to pay and under what conditions.
Think of it like a first date. You're not proposing marriage. You're simply saying: "Here's who I am, here's what I'm offering, and here's why I think we should keep talking."
A commercial real estate LOI indicates a serious buyer's interest in purchasing an income-generating commercial property. It details all the major points of the real estate purchase, it is not a binding document. Instead, it signifies the buyer is sincerely interested in making a purchase and has plans to negotiate in good faith.
Why does this matter? Because in competitive markets, sellers often use the quality of the LOI itself as a proxy for the quality of the buyer. A sloppy, underprepared LOI suggests a sloppy, underprepared buyer.
LOI vs. Purchase Agreement, Know the Difference
This is one of the most common points of confusion for first-time commercial buyers, so let's clear it up fast.
LOIs are non-binding. This is a major difference between an LOI and a purchase and sale agreement (PSA), the latter of which is a formal contract between the two parties. Because PSAs are legally-binding, they tend to be much more robust and significantly longer, often 20+ pages long with language crafted by both brokers and attorneys.
The LOI gets you to the table. The PSA closes the deal. Your job right now is to write an LOI that earns the right to a PSA conversation.
What Sellers Actually Look For in a Commercial Real Estate LOI
Before you write a single word, you need to understand who's on the other side of this document.
Sellers aren't reading LOIs hoping to find reasons to say yes. They're scanning for reasons to say no. Red flags. Deal risks. Signs that this buyer will waste their time or blow up the deal mid-due-diligence.
Your LOI needs to proactively defuse those concerns.
The Credibility Factor
Sellers want to know: Can this person actually close?
That means your LOI should signal financial readiness. If you have financing pre-approval, say so. If you're buying cash, lead with that. If you've closed similar commercial deals before, mention it briefly and confidently.
A Letter of Intent is a preliminary agreement between two parties, usually a buyer and seller, in a commercial real estate transaction. Think of it as a roadmap that outlines the basic terms of a proposed deal, setting the stage for more formal contracts and negotiations down the line.
Be that roadmap. Give the seller confidence that the road leads somewhere real.
The Clarity Factor
Vague LOIs are a seller's nightmare. When terms are unclear, every ambiguity becomes a negotiation point, and that lengthens and complicates the process. Sellers prefer buyers who are clear, decisive, and organized.
LOIs spell out the general terms of the agreement, which removes any ambiguity that might exist if these conversations were happening by phone or via a handshake agreement. Letters of intent are therefore a highly effective way to communicate intent to the property owner.
Be specific. Be direct. If you're unsure about a term, it's better to address the uncertainty honestly than to leave a blank that breeds suspicion.
The 8 Essential Components of a Strong Commercial Real Estate LOI
Here's where we get into the substance. Every credible commercial LOI should include these eight elements. Skip any of them, and you risk looking unprepared, or worse, creating legal ambiguity down the line.
1. Buyer Identification & Background
Start with who you are. Your LOI should name all parties involved in the transaction, the buyer, the seller, the broker, and any relevant third parties. This clarifies legal and financial responsibility and defines property obligations.
Keep this section brief but professional. If you're purchasing as an LLC or corporate entity, state that clearly. If you're working with a broker, include their details and note who they represent.
What to include:
- Full legal name of buyer (individual or entity)
- Contact information
- Brief background on the buyer's experience or investment profile (optional but powerful)
- Broker information, if applicable
2. Property Description
Don't assume the seller knows exactly which property you're referencing, especially if they own multiple assets.
An LOI should include a detailed description of the property, including addresses, size, and lot boundaries. Address the projected revenue value the commercial property can generate and the operating costs like building management and maintenance.
What to include:
- Full property address
- APN (Assessor's Parcel Number), if available
- Square footage, lot size, building type
- Current use and zoning classification
3. Proposed Purchase Price
This is the number everyone's been waiting for. State it clearly, without hedging.
A confident purchase price signals a buyer who has done their homework. A vague price range signals someone who hasn't committed, and sellers hate uncertainty.
What to include:
- Specific purchase price in both numerals and words
- Basis for the price (e.g., price per square foot, cap rate, etc.), this shows analytical rigor
- Any seller credits or concessions you're requesting
4. Financing Terms
The commercial property LOI should clearly include financial terms, including whether the purchase is contingent on financing from a financial institution, or whether it is an all-cash offer.
Sellers love cash offers. But if you're financing, be specific and show strength:
What to include:
- Cash vs. financed purchase
- If financed: lender name or type (conventional, SBA, bridge), loan amount, and status of pre-approval
- Earnest money deposit amount and how it will be held in escrow
5. Due Diligence Period
This is the window of time you're requesting to inspect the property, review financials, and verify conditions before committing to a binding agreement.
Sellers are sensitive about this period. A very long due diligence window signals hesitation. A very short one signals you might rush and back out later. The sweet spot is typically 30–45 days for most commercial transactions.
What to include:
- Requested due diligence period (in calendar days)
- What you intend to inspect (physical inspection, environmental review, lease review, etc.)
- What triggers the start of the period (LOI execution, for example)
6. Contingencies
Contingencies protect you. But too many of them, or contingencies that are overly broad, make sellers nervous. Think of contingencies like a prenuptial agreement: necessary, but you don't want to spend the whole dinner talking about it.
A well-constructed letter of intent does more than just mark the beginning of a real estate transaction, it sets the tone for everything that follows.
Include necessary contingencies (financing, inspection, title review), but frame them as standard protections rather than escape hatches.
Common contingencies to include:
- Financing contingency (if applicable)
- Satisfactory property inspection
- Clear and marketable title
- Review and approval of existing leases (for income-producing properties)
- Environmental assessment results
7. Closing Timeline
Give the seller a realistic, clear timeline from LOI execution to closing. A well-defined timeline communicates seriousness and organizational competence.
Typical commercial closings run 60–90 days after the PSA is executed, but this varies by deal complexity.
What to include:
- Proposed closing date or timeframe from PSA execution
- Key milestones (end of due diligence, financing commitment deadline, etc.)
8. Exclusivity / Standstill Agreement
This is one of the most overlooked components, and one of the most important for the seller.
Following the execution of the letter of intent, the seller shall not engage in negotiations for the sale of the property with any other party unless the buyer and seller agree in writing to terminate the LOI, or fail to sign a purchase agreement by the stated date.
Including a standstill/exclusivity clause shows mutual commitment. It tells the seller: "While you take this off the market for us, we're taking this seriously in return."
Typically request 30–60 days of exclusivity following LOI execution.
How to Write Each Section, Step-by-Step With Examples
Now that you know what to include, let's talk about how to write it in a way that actually resonates.
The Opening Paragraph That Sets the Tone
Start your LOI with an introductory paragraph that provides a general summary of the reason for the letter, like the exchange of a piece of property. This section should declare the overall goal of this non-binding agreement.
Weak opening (don't do this):
"This letter is to express our interest in the property at 4500 Commerce Drive."
Technically correct. Emotionally flat. Forgettable.
Strong opening (do this instead):
"On behalf of [Buyer Entity], we are pleased to submit this Letter of Intent to acquire the commercial property located at 4500 Commerce Drive, Dallas, TX 75201. We have completed a thorough review of the available offering materials and believe this property aligns strategically with our investment criteria. We are prepared to move expeditiously toward a Purchase and Sale Agreement under the following terms."
See the difference? The second version communicates preparation, confidence, and momentum. The seller reads that and thinks: "This is a buyer who's done their homework."
Structuring Your Financial Terms Clearly
Never bury the price. Sellers are busy. Put it front and center, clearly formatted.
"Purchase Price: Three Million Two Hundred Fifty Thousand Dollars ($3,250,000), all cash, not subject to financing contingency. A 2% earnest money deposit ($65,000) will be delivered to [Escrow Company] within 3 business days of mutual LOI execution."
Clean. Specific. Confident. That's what moves deals forward.
Writing Contingencies Without Spooking the Seller
The framing matters enormously here. Instead of:
"Buyer reserves the right to cancel for any reason during a 60-day inspection period..."
Try:
"Buyer requests a 30-day due diligence period to conduct standard physical inspections, title review, and financial audit of the property. Buyer intends to proceed to PSA following satisfactory completion of due diligence."
The intention to proceed is stated. You're signaling forward motion, not a backdoor.
5 LOI Mistakes That Make Sellers Walk Away
Even smart buyers make these errors. Here's what to avoid:
1. Being Vague About Your Financing If you say "buyer intends to obtain financing," that tells a seller nothing. Be specific about your lender, loan status, and timeline. Ambiguity here reads as unpreparedness.
2. Overloading With Contingencies Overloading the LOI with legal jargon can confuse the other party and stall the deal. Three or four well-framed contingencies are fine. Eleven contingencies that feel like a contract draft will have sellers reaching for their phone to call another buyer.
3. Skipping the Standstill Clause Without an exclusivity request, you leave yourself exposed. Sellers can continue marketing the property while you're doing due diligence. Always request exclusivity.
4. Using Generic Templates Without Customization Using boilerplate LOIs without customizing them for the specific transaction is one of the most common mistakes buyers make. Sellers can spot a copy-paste job immediately. Personalize your LOI to the specific property and situation.
5. Missing a Clear Expiration Date Always include a deadline for the seller to respond. Something like: "This LOI expires if not countersigned by [Date]." This creates appropriate urgency without being aggressive, and it protects your time.
LOI Tone & Professionalism, The Underrated Deal-Maker
Your LOI is also a piece of writing. And writing has tone.
A confident, professional, and clear LOI communicates that you're the kind of buyer sellers want to work with, organized, decisive, and easy to deal with. A stilted, overly-legal LOI feels adversarial. A casual, breezy LOI feels unserious.
The details of an LOI are always presented in letter format and not in bullet points, as is the case with term sheets.
Write in full, professional sentences. Avoid all caps, excessive hedging, or aggressive legal language. Treat it like a business letter written by someone who knows exactly what they want and knows how to ask for it politely.
Think of the tone you'd use if you were making an offer on behalf of a respected company, because you are.
Sample Commercial Real Estate LOI (Annotated Template)
[Date]
[Seller Name or Seller's Broker] [Property Address]
Re: Letter of Intent, Proposed Acquisition of [Property Address]
Dear [Seller/Broker Name],
[Opening, State purpose, signal preparation] On behalf of [Buyer Entity Name], a [state] limited liability company, we are pleased to submit this non-binding Letter of Intent ("LOI") to acquire the commercial property located at [Full Property Address], APN [######] (the "Property"). Having reviewed the available offering materials, we believe the Property represents a compelling opportunity consistent with our acquisition criteria, and we are prepared to move forward under the following proposed terms.
[Parties Involved]
- Buyer: [Full Legal Entity Name], [State of Formation]
- Seller: [Full Legal Name of Seller]
- Buyer's Broker: [Name, Firm, License #]
[Property Description] The Property consists of approximately [X,XXX] square feet of [property type, retail, office, industrial] located at [address], currently [occupied/vacant], zoned [zoning classification].
[Purchase Price & Financing] Purchase Price: [$ Amount in words] ($X,XXX,XXX) Financing: [Cash / Conventional loan through [Lender] with pre-approval letter available upon request] Earnest Money Deposit: [X]% of purchase price ($XX,XXX) to be delivered to escrow within [X] business days of mutual execution.
[Due Diligence Period] Buyer requests a [30/45]-day due diligence period commencing upon mutual execution of this LOI, during which Buyer will conduct physical inspection, title review, lease audit, and environmental assessment.
[Contingencies] This LOI is subject to the following:
- Satisfactory completion of Buyer's physical inspection
- Clear and marketable title
- [Financing approval, if applicable]
- Review and approval of all existing leases and rent rolls
[Closing Timeline] Buyer proposes to close within [60–90] days of PSA execution.
[Exclusivity] Upon mutual execution of this LOI, Seller agrees not to solicit or negotiate with other parties for a period of [30/45] days.
[Expiration] This LOI shall expire if not countersigned by Seller by [Date, Time, Timezone].
[Non-Binding Disclaimer] This LOI is non-binding and intended solely to facilitate negotiation of a formal Purchase and Sale Agreement. The parties shall not be legally bound until a definitive PSA is fully executed.
Respectfully submitted,
[Buyer's Signature Block] [Name, Title, Entity, Email, Phone]
When to Involve a Real Estate Attorney
You can absolutely write a first-draft LOI yourself using this guide. But there are situations where you really should involve legal counsel before sending:
- Complex deals: multi-tenant buildings, ground leases, environmental concerns
- High-value acquisitions: when the stakes are high, a few hundred dollars in legal review is worth it
- Unusual contingencies: if you're requesting something non-standard, get it worded properly
- Seller-favorable markets: when competition is fierce and you need every word to land correctly
A poorly written LOI can weaken your negotiating power. It's safer to involve professionals to ensure your LOI is not just a letter of intent, but a blueprint for a successful deal.
Think of an attorney not as an expense, but as deal insurance.
Wrapping It Up: Your LOI Is Your First Handshake
Here's the big idea, distilled: your commercial real estate LOI is not a bureaucratic formality. It's a communication tool. It tells a seller whether you're the kind of buyer they want to spend the next 60–90 days working with.
Write it with care. Be specific about your numbers. Signal your credibility early. Protect yourself with contingencies, but don't let those contingencies make you look like you're already planning an exit.
A great LOI doesn't just say "I want to buy your property." It says: "I've done my homework, I know what I'm doing, and I'm ready to move."
That's the LOI that gets a seller to pick up the phone.
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