‘Love Letters’ to House Sellers May Be a Thing of the Past
By Bill Primavera
By Bill PrimaveraI will soon be listing a home for sale for a couple who is moving out of state to be close to their children.
They thought that they had found their ideal retirement home in that location, but informed me that they had lost out in a bidding process because of a “love letter” sent by another buyer.
“We even included an escalation clause in the offer, but still lost out,” the wife told me.
An escalation clause states that if a competing offer is made on the property, the bid will automatically increase by a certain amount of money to surpass the new offer.
However, the seller told my clients that she was influenced by a personal letter received by a competing bidder that “touched her.”
Such love letters may soon be a thing of the past. A new law in Oregon states that house hunters are prohibited from submitting a love letter to try to convince sellers to accept their offers. Oregon Gov. Kate Brown signed a bill into law that says sellers’ agents must reject such communications from buyers to sellers that contain information outside of the traditional offer. Oregon is the first state to make such letters illegal in a real estate transaction.
The use of love letters by buyers has become a common tactic to help make a buyer’s offer stand out. Buyers may write to sellers about how much they love the home, how they can envision their family living there or how they’ll spend the holidays.
But the National Association of Realtors (NAR) has been warning its members to be aware of the potential risks involving love letters.
“While this may seem harmless, these letters can actually pose fair housing risks because they often contain personal information and reveal characteristics of the buyer, such as race, religion or familial status, which could then be used, knowingly or through unconscious bias, as an unlawful basis for a seller’s decision to accept or reject an offer,” NAR recently warned on its Fair Housing Corner blog.
Further, the NAR released a statement in response to Oregon’s action banning the letters outright.
“Although we are not aware of instances in which these letters have led to lawsuits or legal action elsewhere in the country, we continue to stress that all parties in a real estate transaction should consider only legitimate, non-discriminatory criteria when making business decisions,” the statement read. “Failing to do so, could also leave Realtors® in a compromised position. We also recommend that our members explain potential pitfalls to their clients while stressing the importance of sticking to objective criteria in order to adhere to federal and state Fair Housing laws.”
However, in today’s market, the practice of using love letters has remained popular as buyers face fierce competition for housing and have been desperate to make their offer stand out. Bidding wars are not uncommon.
These letters may seem harmless on the surface. But when a letter comes in, if it describes the family situation or circumstances, whatever that may be, or indicates or gives a clue to a religious or any other protected class, there’s always the risk that a seller could be accused of making a decision based upon inappropriate factors.
NAR’s Fair Housing Corner blog offers the best practices to help protect real estate agents and their clients from fair housing liability stemming from love letters.
Realtors are advised to educate their clients about the fair housing laws and the pitfalls of buyer love letters. Further, we are advised to refuse delivering such buyer love letters to clients and they not be accepted as part of the MLS listing.
We are also advised to remind our clients that their decision to accept or reject an offer should be based on objective criteria only.
And finally, we are advised to document all offers received and the seller’s objective reason for accepting an offer.
I have personally experienced a love letter situation only once, and it was a somewhat off-putting situation. The buyer prospects, a same-sex couple, assumed the sellers’ orientation (which the sellers resented), actually sending a letter stating that “we obviously have so much in common in all our preferences, including that we both own MINI-Cooper cars.”
And then they made a really lousy offer.
Bill Primavera, while a publicist and journalist, is also a realtor associated with William Raveis Real Estate and founder of Primavera Public Relations, Inc. (www.PrimaveraPR.com). To engage the services of The Home Guru to market your home for sale, call 914-522-2076.
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