Offer To Purchase A Business

Be an Unreasonable Buyer

When buying a business always start with an Offer to Purchase and a Letter of Intent. Brokers will want you to sign an Offer to Purchase with earnest money down. You don't have to do this to start the ball rolling. Keep in mind, the Letter of Intent is not as binding and as an unreasonable buyer, you want to be flexible. The letter of intent basically establishes price and terms so you can start serious due diligence. Of course, if it's in your best interest to do an Offer to Purchase, immediately by all means, proceed. With your contingencies in place, the Offer to Purchase or the Letter of Intent will give you an out, based on your approval.

Offer

You want to bind the Seller to the deal as much as possible. Prior to signing the letter of intent, you, the buyer, should clearly think through the terms of the deal. Pay close attention to the language used in the document. You should write the letter of intent and then fax it to your attorney just to have him read it. You don't let him try to make a 20 page contract out of my letter of intent. You want his legal advice only. Use the Letter of Intent as a leverage tool to be able to go back and re-negotiate different parts of the deal.

Offer To Purchase A Business

Let's say the lease didn't go together like you and the Seller agreed upon. The landlord has nothing to gain by subleasing. A lot of times they will try to increase the amount on a new lease for their gain. This will give you an opportunity to lower the price or get better terms. Remember, you are not emotionally involved in the business yet- Right? You can learn the unreasonable ways to buy a business without using any of your own money and a sample Letter of Intent in my book Who Wants To Be The Boss? Your Letter of Intent must include contingencies with "subject to clauses"; subject to accountant or attorney review and approval, subject to lease assignment, subject to state or federal license transfers, etc. Your "subject to" possibilities are limitless.

Of course the business broker will try to get you to eliminate most of these "subject to's" because they get in the way of an easy sale. But be sure to include enough outs to limit your liability. You will want 2 to 3 weeks to review the books and financial records. The Seller must agree not to look at any other offers doing this time. You will find that most business brokers will want you to lift your contingencies in around 5 days under normal circumstances. Remember, you are not operating under the norm, so go for the longer period, even if you only get 2 weeks. You might need this extra time to put your financing together. Your no money down strategies sometimes takes a little longer.

Once While studying the profit and loss statements, I discovered that the Seller's accountant had listed the 41/2 years remaining on the lease as a liability! His accountant had actually left this liability on the statements for people to see. Of course if he thinks it's a liability, who am I to argue. You can be assured that most Sellers will consider a good lease as an asset, unless you are planning to relocate the business. The point is, look for unreasonable strategies that will help you put the deal together on your terms. Don't just assume because an attorney or an accountant put together the paper work that it is accurate.

Offer To Purchase A Business

Dave Meholovitch is a author, consultant, trainer and speaker. And who assists people with starting or buying a business. To see other offers and services, visit his web site at [http://www.secrets-of-owning-a-business.com]

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The Purchase Offer - Three Important Clauses

Many home buyers, and even some investors, seem to approach a real estate purchase offer as just an opening of negotiations. It can be this, of course, but it is also a legally binding contract the moment the seller signs it. You don't get to change the terms after that, or back out of the deal. That is, unless you have the right language in the offer to begin with.

Purchase Offer Clauses To Protect You

Offer

1. Inspections

The Purchase Offer - Three Important Clauses

This is perhaps one of the more important clauses in a purchase offer, and is common. But make sure you get the wording right. Ask for help if necessary, but the point is to make it possible to cancel the offer if any inspections show problems you don't want to deal with. Such a clause might read something like this; "This offer is contingent on the buyer's approval of the results of a termite inspection and general home inspection; said inspections to be done at buyer's expense within one week."

A seller or agent may want to limit your option to back out of the deal to findings of "structural damage," or something similar, but stick to the more general "approval of the results" kind of language. You don't want to be bound by the contract if an inspector finds some non-structural problem, like electrical problems or drainage issues in the yard. This clause lets you have inspections done. If anything too negative is found, you can refuse to "approve" of the results. This means you can get your deposit back, or you can renegotiate a lower price based on what you find.

2. Assignment

This is a clause for real estate investors. You may need to bring in a partner, for example, even if you didn't initially plan on it. A partner may want to be part of the contract, of course, and he can be if you have the right to assign the contract as a clause in your purchase offer. This usually means putting "and/or assigns" after your name on the offer, but ask the real estate agent or a lawyer what language is used locally.

With such a clause in the offer you can sell your "position" to another investor as well. This means that if you have trouble with financing or otherwise can't close the deal yourself, you can assign the contract to some other investor, who will hopefully pay you a nice fee (if you bought a good deal). Sellers will often accept this clause if you explain that it means you can bring in a partner or otherwise be sure that the sale will go through. In other words, sell it as something that assures the seller this sale will close.

3. Financing

What's one of the most common reasons that a real estate purchase doesn't close? Trouble with financing. You may have been prequalified, or even preapproved for a mortgage loan, but this doesn't mean the bank has agreed to a particular loan. Since you spoke to a lender, interest rates may have gone up, rules may have changed, or something negative may have been found on your credit report.

What happens then? Well, if you can't close the deal, you lose the deposit you handed over with the purchase offer. That is, unless you made the offer contingent on getting a loan. The usual language is something like this; "This offer is contingent on the buyer obtaining a firm commitment for suitable financing within ten days." If such general language isn't acceptable to the seller, specify what "suitable" means in terms of interest rate and loan fees or points, but make it something you can live with.

There are many other routine clauses that need to be in your offer. They specify things like when the sale will close and who pays for what. Ask the real estate agent or an attorney about those. But don't forget to also include one or more of the above three clauses as necessary, whether the seller or agent like them or not. A seller has the right to say no to your offer in any case. But you have the right to put any protective clauses you want in a purchase offer.

The Purchase Offer - Three Important Clauses

Copyright Steve Gillman. To see a photo of the house we bought for ,500, get a free ebook on how to buy Cheap Homes, and a Free Real Estate Investing Course, visit: http://www.HousesUnderFiftyThousand.com

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How To Fill Out An 'Offer To Purchase' Real Estate Form

Before you can buy the house of your dreams, there's one very important document that you need to make and submit to a home seller. It is the offer to purchase real estate or purchase offer which usually serves as the sales contract between the buyer and the seller. Without this and the signature of both parties involved, the transaction cannot be considered legal.

A standard purchase offer form may be used in all states in the U.S. However, you can always make your own offer containing the special conditions appropriate to your needs. You just need to include all the required details to push through with the deal. It is truly essential that you fully understand the contents of a purchase offer before filling it out and submitting it to the home seller.

Offer

In making your offer to purchase the property, be sure to consider several vital factors like your financial capability, the condition of the home you want to buy and the prevailing market status. Your financial resources play an important role in determining how much down payment you can provide, what type of financing you will use and your ability to shoulder the closing costs.

How To Fill Out An 'Offer To Purchase' Real Estate Form

Below are some of the basic information that you need to provide in a real estate purchase offer form.

Full names of the buyer and the seller. Of course, this has to be identified to make the agreement enforceable.

Address and legal description of the property.
The price you are willing to pay for the house.

Terms of payment and the down payment amount. This specifies how you will finance the purchase of the property if it's through a mortgage loan or other options. It would also benefit the seller if you provide information as to your pre-approval or pre-qualification for a real estate mortgage loan.
The amount and form of your earnest money deposit. This serves as a proof that you are serious in purchasing the property. It can either in be in the form of a check payable to a third party who is responsible for placing the amount in a trust account until the completion of the sale. The deposit can be credited in full towards the purchase price.

Expected date of transferring title and possession of the property.

Responsibilities of the seller in terms of a clear title transfer and deed type.

Information as to which personal properties are included in the sale.
Time frame for acceptance of your offer. This stipulates the amount of time you are giving the seller to accept your purchase offer after which it will expire.

Provisions for a final home inspection before closing.
Requirements that may be specific to your state or location are also included in the form.
Special clauses or what are known as contingencies that need to be met to close the transaction are written above the signature block. These serve as protection for the buyer should problems arise along the way. Some of these contingencies include terms on who will pay the closing costs, the date the owner of the property should move out, the date of transferring title and possession, financing terms as well as home inspection.

As always, never fail to do your research to be able to achieve a smooth and successful transaction process.

How To Fill Out An 'Offer To Purchase' Real Estate Form

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