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Key Takeaways:
- Buyer love letters can put sellers at risk of violating fair housing laws.
- Sending photos or videos can create additional risk.
- Listing agents should document all offers received and the seller’s objective reason for accepting an offer.
When the market is competitive, buyers will try everything to bring their A-game in hopes that sellers will accept their offer. In the past, writing their feelings about a home in a personal buyer’s love letter was a tactic used throughout the country.
But those letters have made headlines, with REALTOR® associations across the country discouraging their use in the real estate industry. In July 2021, Oregon became the first state to make buyer love letters illegal, though the ban was later struck down by a federal court in March 2022. The National Association of REALTORS® warns that letters sharing personal details can raise red flags. Often those letters reference protected classes under the Fair Housing Act or state and local fair housing laws, including race, color, religion, sex, disability, familial status or national origin.
Even if it is unintentional, buyer love letters introduced into the transaction put the seller at risk of violating fair housing laws should they decide to accept or reject an offer based on information related to these protected classes.
“The buyer is writing the letter in hopes of enticing the seller to select their offer,” says Alexia Smokler, NAR’s director of fair housing policy and programs. “But if the letter reveals the buyer’s race, religion, national origin or other protected category under fair housing laws, and the seller chooses the offer based on that information, the seller could be violating the law.”
When competition is stiff, buyers do whatever they can to get a leg up. Charlie Lee, NAR’s senior counsel and director of legal affairs, says in a “Window to the Law” video. “Some buyers even go as far as sending sophisticated packages that include photographs and videos.”
Smokler says she is not aware of any federal cases or complaints based on a love letter. “But we tell agents to tread carefully, because as licensed professionals they want to avoid situations that could introduce intentional or unintentional bias into the transaction.”
Gabe Walsh, legal counsel for the Iowa Association of REALTORS®, published a video and an article to let Iowa REALTORS® know about the issue. “Some people think that there is nothing wrong with these letters. They think that buyers are just telling sellers why they love their house. People have been doing this a long time.”
But Walsh is trying to help real estate professionals understand that even if you think there’s nothing wrong, a buyer might become upset or question why someone else got a house for less money after writing a letter.
Tony Poulin, operations manager at Meservier & Associates in Auburn, Maine, has never been a proponent of buyer love letters, mainly because he doesn’t think they make a significant impact on an offer.
“There are so many other details that make every offer unique and different, with multiple pros and cons to each,” says Poulin, who also serves as 2021 president of Mountains to Shore Board of REALTORS® and the Androscoggin Valley Council.
Examples of Love Letter Problems
Smokler says a classic example of what can go wrong in a letter is someone describing their family celebrating Christmas around the fireplace. It sounds harmless, but it reveals religion and familial status. If a seller accepts or rejects the offer based on that information, it goes against the Fair Housing Act.
“Human beings tend to prefer and like people who are similar to them,” Smoker says. “If the buyer is just like you and writes a letter, and you base your choice on that instead of the merits of the offer, you may have a problem.”
Sending photos or videos can make the situation even worse, she adds. “Now you’re making it very apparent who is going to be living in the house, when that should not be a factor in the seller’s decision.”
Tips for Tackling Buyer Letters With Your Clients
- Educate your clients about the fair housing laws and the pitfalls of buyer love letters, Smokler says.
- Inform your clients that you will not deliver buyer love letters, and advise others that no buyer love letters will be accepted as part of the MLS listing, NAR suggests.
- Instead of a letter, suggest your buyers share their credit score with the prequalification letter to help show how qualified they are, says Poulin.
- A non-refundable deposit can go a long way to show a buyer’s skin is in the game, Poulin adds.
- Make a competitive offer without crossing the line. It’s not always about the price, Walsh says. “There are all kinds of things a seller might want, such as to close quickly. If a buyer really wants the house, find out from the listing agent what they are really looking for,” he adds.
- Remind your seller clients that their decision to accept or reject an offer should be based on objective criteria only.
- Listing agents should document all offers received and the seller’s objective reason for accepting an offer, Lee recommends.
Poulin believes love letters will lose popularity once the market evens out or turns into a buyer’s market.
“That’s what I love about our business. It’s always keeping us on our toes,” he says.
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