I've used cover letters in the past, but recently re-read an article by Jim Whitelaw on this forum that talked about using a Letter of Intent. I think an LOI would be stronger and better for lawyers to understand.
Below is an example of what i've put in a cover letter, but you need to make it unique to your situation. To make a letter of intent, just write "Letter of Intent" at the top and you and the seller sign at the bottom. In the middle you put text like below.
The challenge as I see it:
-Your property doesn't have much equity when we look at the sale prices of similar houses in the area.
-You may have to come out of pocket if you sell with a realtor and pay your mortgage penalty.
-You've already been trying to sell the house for many months.
The proposed solution is summarized as follows:
-I will buy the house and take over the existing mortgage and payments.
-I will take over all house related bills including taxes, insurance, and utilities.
-I will pay out the first mortgage on or before the maturity date (August 22, 2013). When timing is appropriate I will then re-sell or re-finance the property. The existing mortgage will then be closed.
-Title will remain in your name until the existing mortgage is closed.
-Since the house is in a slow market, my offer is conditional on me finding a suitable Rent to Own tenant. I will need your cooperation for some showings. While my offer is conditional, you can continue to advertise your house for sale and try to find a buyer.