Many first-time commercial real estate buyers assume that making an offer requires a custom contract drafted by an attorney. They expect a bespoke legal document for a commercial transaction.
However, that is not how commercial real estate operates in practice.
The two primary transaction documents
A commercial acquisition relies on two main documents: the Letter of Intent (LOI) and the Purchase and Sale Agreement (PSA).
The Letter of Intent (LOI): This is a non-binding term sheet that outlines the core deal parameters, including your proposed purchase price, escrow deposit, due diligence timeline, and closing date. It allows both parties to align on the big picture before spending money on legal reviews or property inspections.
The Purchase and Sale Agreement (PSA): This is the binding contract. It specifies the final purchase price, earnest money deposit, due diligence terms, and closing date. Once both parties sign this agreement and your deposit clears, escrow is officially open.
Depending on your relationship with the seller's broker and the motivation of the seller, you can sometimes skip the LOI entirely and submit a PSA directly. This is a strategic decision to make with your broker.
Always use standard contracts
In California, commercial real estate brokers use standard forms published by AirCRE. These contracts are professionally drafted, legally tested, and universally accepted by brokers, sellers, and lenders.
Using standard AirCRE forms provides several key advantages:
Lower Transaction Costs: Attorney review of a standard, widely used document costs significantly less than custom drafting.
Faster Timelines: Because all parties are familiar with the standard clauses, contract negotiations proceed quickly.
Professional Credibility: Submitting a standard AirCRE contract signals to the seller that you are an experienced investor who understands the local market norms.
If you need to customize terms (such as securing seller financing or adjusting the due diligence timeline), you handle these changes through a simple, one-page amendment attached to the standard contract. You do not rewrite the underlying agreement.
How the offer process works in practice
When you find a viable industrial property, work with your broker to draft a standard PSA specifying your price, deposit, due diligence timeline, and target close date. Your broker will submit the contract and manage the signature process.
The real negotiation centers on the length of your due diligence period and your contingencies. Once you enter escrow, your physical inspections and lease reviews will confirm whether the underwriting holds up. If you discover major issues, you can renegotiate the price or exit the transaction with your deposit intact. The standard contract provides the structured framework to manage this process safely.
The Concrete Returns Playbook covers the entire acquisition process from offer to closing, including the specific deal terms I target.
Javi