Ideal LOI Duration

searcher profile

August 22, 2022

by a searcher from Florida State University in Denver, CO, USA

What is a reasonable LOI exclusivity duration? This is my first acquisition so I will need more time to line up professional services. I don't want to run out of time but also want to be fair to the seller.

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commentor profile
Reply by a professional
from University of Minnesota in Minneapolis, MN, USA
I'm with the people saying###-###-#### days. Be aware that some hard-sell brokers (the same goofballs that want you to use their form PAs to close the deal and require earnest money) may push you very hard for a shorter window, and you will want to weigh your options in such a case very carefully. I've seen brokers say###-###-#### days or you lose the deposit, exclusivity, or both. I've seen this even on deals up into the 7 figures, typically by small-time brokers who treat these bigger deals the same way as their much smaller transactions. Some brokers will walk from you rather than modify these terms, so be prepared for that.

The trick, especially as a first-time searcher in such a situation, is convincing a difficult broker that you are, in fact, very serious about this transaction, you are a great buyer candidate, and you will not be wasting time during that LOI period - and then back up that promise with your actions and start working diligently toward Closing.
commentor profile
Reply by an intermediary
from Royal Melbourne Institute of Technology in Sydney NSW, Australia
The short answer is that it depends. I have seen DD take a week, and I have seen it take 5 months (with Covid issues). As per Jason's comment, 60-90 days would typically be reasonable. If the seller is not willing to offer you an exclusive period then they are not dealing in good faith, and I would walk. If that is how they are playing the game at that point, they will likely be a disaster with other stuff too. We typically represent sellers and we tell our clients that if they are not willing to offer exclusivity, we will not represent them as it reflects poorly on us, and erodes trust in the deal.
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