By: Neil Goradia
Letters to home sellers from buyers may seem innocent enough, however, they pose a very real legal threat. As a real estate professional, you must steer your clients clear of using love letters during the buying and selling process.
Here are some resources to get you started. Use these to educate yourself and to provide more context for your clients.
- Housing Discrimination Under the Fair Housing Act
- National Association of REALTORS®: Love Letters or Liability Letters
- Article: How to Handle Buyer Love Letters
Why Buyers Write Love Letters to Home Sellers
In a competitive market like the one we’ve seen since the onslaught of the pandemic, homebuyers find themselves up against multiple bids and sometimes losing out on the homes they want to buy. They started looking for ways to stand out to the seller. One way was to write letters to sellers to convince the seller to pick them. Yes, the market is shifting, but in some locations, competition remains high, and love letters are still enticing for buyers.
Essentially, a buyer will include a letter with their offer hoping to increase their chances of buying the property. The letter may tell the seller why they love the property and how they would treat the home. The buyer might also provide details of their family, and sometimes even photos to improve the chances of their offer being accepted.
I would be surprised if you have not come across a love letter from a buyer. I am a real estate professional in Denver, CO and in my market, these love letters to home sellers from buyers have become increasingly popular over the last 5-7 years. Certainly, as the Denver real estate market heated up and buyers looked for new and unique ways to have their offers accepted, letters to sellers from buyers became more popular.
At first, a cute and thought-provoking love letter from the buyer to the seller seemed innocent enough to me. When an associate of mine first talked to me about having buyers write letters to sellers I thought it was a great way to stand out from the crowd.
Did you think so too?
While I never really pushed buyers to write letters to home sellers to try to convince them to sell their house to them, I didn’t necessarily think of it as a practice to avoid, either. That is, until I had a conversation with my lawyer friend.
“The danger of presenting a letter to a seller from a buyer is that it exposes the seller to potential legal action based on the Fair Housing Act. I understand the thought behind these letters however, as an attorney I think buyers should refrain, and sellers certainly not read them.” said Steve B, an attorney and member of Denver Home Solutions.
The Danger of Letters to Home Sellers From Buyers
Letters to home sellers from buyers present a huge legal risk for the seller. The risk of these simple heartfelt letters from buyers enticing sellers to choose their offer stems from the Fair Housing Act, which is designed to eliminate discrimination. As a love letter provides personal information about the buyer it could easily sway a seller’s decision.
The National Association of REALTORS® gives an example of a family around a Christmas tree. This simple photo can convey religion, the size of the family, race and several other factors about the people in the photo. Consciously or subconsciously, people might use this information to decide whether to pick the buyer. Even if the seller believes themselves to be completely unbiased, a photo and a heartfelt note make it difficult to be objective.
How Agents Should Treat Love Letters to Sellers
If you have a buyer that asks about writing a letter to the seller, you can simply explain the situation. You can also provide them with links to resources, so the buyer understands that you are advising against love letters from an informed place with their best interest in mind.
If you are an agent representing a buyer:
- Get ahead of the game and let buyers know about love letters and the danger they pose in a casual conversation.
- Make it clear that love letters could cause legal issues and that you’re looking out for their best interest. Provide resources and information on the Fair Housing Act and site examples if you have them.
- Don’t help buyers write love letters.
If you are representing a seller:
- Do not accept any love letters from the buyer’s agent and refer them to the Fair Housing Act.
- Teach your seller to treat the sale of their home as a business transaction. Objectify the entire process, and have them pick an offer based on time to close, down payments, earnest money and the sales price.
If you have a buyer or seller that insists on sending or receiving letters, advise them to seek legal counsel and document what you did. Sellers of homes are the ones that are most open to legal consequences, so be doubly sure to document your advice and involvement in the process.
Banning Love Letters was Deemed Unconstitutional. What Now?
A judge in Oregon recently ruled that a ban on love letters is unconstitutional, but that doesn’t change the fact that love letters pose a liability issue to sellers. One might argue that not accepting them could open you up to a lawsuit. After all, love letters are not illegal. So how should we proceed?
If you are representing a buyer:
- Coach your buyer to focus on the house and its features.
- Ask that the buyer not include any personal details covered by the Fair Housing Act, such as race, color, religion or sex. Full list here.
If you are representing a seller:
Suggest they document their criteria for selling before they receive any offers. This can be a quick and easy task. For example, they could write an email stating that they will choose an offer based on the amount, the time to close and the earnest money. They could even document if they were willing to wait for multiple offers. As long as they follow the documented procedure and the procedure doesn’t include any breaches of the Fair Housing Act, they should be ok.
All of these extra steps might seem like a hassle. Still, they are completely necessary to ensure you and your clients are protected and not in potential violation of fair housing regulations.
I would love to hear what you all think about love letters from sellers to buyers. Are you seeing them in your area? Do you have similar concerns? Where do you think this will go next?
It may be a good practice to have the Sellers say in the listing agreement they will not accept so-called Love Letters. This way there is documentation from the beginning period of the listing as to whether the Sellers will look at them. Selling and buying a home is an emotional business for the buyer and the seller a lot of the time. The only thing either of them should be thinking about is terms, price and closing date. Also, think in terms of our Code of Ethics. Under Article 10, it could be a possible violation as well as a Fair Housing Violation under Federal Law and often the Fair Housing Laws in your state and in your locality.
Good article and good advice with one glaring exception in my opinion. “If you are representing a seller: Do not accept any love letters from the buyer’s agent and refer them to the Fair Housing Act.” This seems like bad advice. I’m not an attorney, but I do not believe we (brokers/agents) can unilaterally decide to not present a letter that is given to us to deliver to the seller. It is my understanding that we have the legal obligation to deliver all offers (in their entirety) to our client unless otherwise instructed by our client. This statement could lead some Realtors to believe we have that right (and I’m pretty sure we don’t.). The better advice would be to discuss the possibility of “love letters” with your seller beforehand, counsel against them, and receive permission to decline them. I also would not “refer” another agent to the Fair Housing Act, it seems like a quick way to start off a transaction on a bad foot. Also, (as I understand it) Buyer’s agents are required to present their client’s offer in their entirety so they may be just fulling their obligation even if they are not in agreement with including a letter.
Fair housing – LOL. I’ll tell you what fair housing is, fair housing allowing.a seller to sell their house to anybody they choose! If a buyer wants to write a letter than let them! Who do we think we are? Furthermore, your use of “love” letter and “cute” are condescending toward buyers who are conscientiously and sincerely trying to communicate to a seller.
Great thoughts! Thank you.