What is a common practice prior to creating a final commercial purchase contract?

Using Letters of Intent (LOIs) is a common practice prior to creating a final commercial purchase contract because these documents outline preliminary terms and negotiations between parties. An LOI serves as a way to establish a mutual understanding of the important aspects of the transaction such as purchase price, terms, contingencies, and timelines. It acts as a framework for more detailed negotiations and can help clarify intentions before moving on to the formal and legally binding purchase contract.

This approach allows both buyers and sellers to express their interests without the immediate commitment that comes with a final contract. It can facilitate smoother negotiations and can often help identify potential issues early on. Thus, employing Letters of Intent can be a strategic step in preparing for a successful commercial real estate transaction.