A recent decision by an Oregon Federal Judge ruled that banning real estate love letters is unconstitutional. What are these secrets of the real estate trade and should you write a love letter if you really want a property in a hot real estate market?
Table of Contents
- What is a Real Estate Love Letter?
- Is Writing or Accepting a Real Estate Love Letter a Good Idea?
- Is a Real Estate Love Letter Legal?
- The Fair Housing Act
- NAR’s Position on Real Estate Love Letters
- What Should You Write in a Real Estate Love Letter?
- Are Real Estate Love Letters Effective?
- Real Estate Love Letter Resources
What is a Real Estate Love Letter?
A real estate love letter, or personal letter, is a communication from a potential buyer to the seller, where the buyer attempts to set themselves apart from competing bids in order to have their offer accepted.
The idea is to add a sense of personality, with the intent of building an emotional connection to the seller. The letter serves to humanize the real estate transaction with a passionate appeal that usually details why the property should be sold to the love letter writer.
In essence, the communication seeks to persuade the seller that the prospective buyer is most deserving of not only being offered the home, but worthy of living in it and of being a responsible steward going forward.
This type of outreach makes the most sense when bidding on historic homes or homes that have deep emotional connections to the home seller, such as a home that has been in a family for multiple generations or one that has special acreage.
Is Writing or Accepting a Real Estate Love Letter a Good Idea?
In a seller’s market it may be extremely difficult for certain buyers to have their offers accepted, or in many cases, even acknowledged. As discouraged buyers’ offers are rejected time and time again, house after house, they may turn to more creative (AKA desperate) strategies to improve their chances that the next offer will be accepted.
The options, in a situation such as this, are to outbid the highest bidder or to appeal to the heart of the seller with a love letter, especially if there are two bidders with an equivalent offer price.
Overbidding is rarely an acceptable option, inasmuch as it may put a buyer into financial straits later down the road, or the bank may not approve the mortgage, if the property’s appraisal comes in lower than the amount that the bank will loan.
On the other hand, a real estate love letter costs you nothing but time and commitment to write the most heartfelt appeal in order to win over the seller. Remember, in many cases the seller may not be interested in the additional profit that a counteroffer may bring, but may place value on other nonmonetary factors.
When a Love Letter is Most Suitable
Oftentimes, knowing that a home you have cherished all of your life will be sold to a loving, caring family with a promise to look after it, is all that a seller may desire. It is surprising how emotional selling a family home can be, and a love letter to the seller can be just the right approach to tip the balance in your favor.
Is a Real Estate Love Letter Legal?
There has been a surge in the use of love letters in recent years, as the real estate market became heated and homes commanded multiple offers inviting frenzied bidding wars.
As a result, the use of love letters has come under scrutiny by the National Association of Realtors (NAR) and various state legislatures, as they consider love letters to be a form of potential discrimination.
Although the act of writing a letter to improve your chances of having your offer accepted appears harmless on the surface, these letters actually raise valid concerns regarding fair housing violations and discrimination.
In truth, these letters could open real estate professionals and their sellers to potential liability, if a buyer or potential buyer can trace the seller’s decision to fair housing violations from a love letter.
The issue with love letters is when a writer/buyer introduces personal information, which can lead to a seller learning details about the potential buyer which can lead to accepting or rejecting an offer based on illegal forms of discrimination.
For example, if a seller receives several offers and one of the potential buyers includes a letter extolling how wonderful it would be to celebrate Christmas in the Great Room, a potential bias (favorable or unfavorable) has been introduced.
The seller may or may not choose this buyer due to religious bias (knowingly or not), as it has been revealed that the buyer celebrates Christmas, and can be assumed to be Christian. Although it may seem overzealous, any details on potential buyers prior to a seller’s decision should not be revealed less they violate The Fair Housing Act.
In 2021, the Oregon State Legislature passed legislation banning real estate love letters. The ruling went further stating that it would be illegal for a seller’s agent to pass a love letter along to a client in the state of Oregon.
However, in May of 2022, a Federal Judge found the ban on real estate love letters to be unconstitutional after a lawsuit that deemed such a ban to be a violation of the First Amendment.
The attorney who represented the parties opposing the ban, argued that:
“Buyers who maybe can’t compete on things like how much cash they can offer [as a down payment], – it gives them a chance to compete because they can explain why they love the house.”
According to the Pew Charitable Trusts, a global nongovernmental policy organization, love letter Fair Housing violations are difficult to prove. Few, if any, lawsuits have been filed using love letters as the criteria for a case. Pew Charitable Trusts quoted Bryan Greene, Vice President of Policy Advocacy for NAR, who further clarified the legal risk of real estate love letters:
“There is risk from a fair housing perspective. It may be small from an enforcement perspective; I’ve not seen any litigation involved. Beyond risk, there’s just an ethics issue [of] whether use of these letters can perpetuate segregation.”
For now, real estate love letters are legal in all 50 states.
The Fair Housing Act
Still yet, sellers and their agents need to be mindful that decisions on who wins the bid on a property steer clear of violating the Fair Housing Act, a law which has been in practice in the United States since 1968.
The Fair Housing Act protects people from discrimination when they are renting or buying a home, getting a mortgage, seeking housing assistance, or engaging in other housing-related activities. The Act prohibits discrimination of any kind based on protected classes of:
- National Origin
- Sex (including gender identity and sexual orientation)
- Familial Status
The only exclusions to the Fair Housing Act are:
- Owner-occupied buildings with no more than four units
- Single family houses sold or rented by the owner without the use of an agent
- Housing operated by religious organizations and private clubs that limit occupancy to members only
NAR’s Position on Love Letters
The National Association of Realtors has outlined criteria for its realtors on love letters and the position that they should take with clients:
- Educate your clients about the Fair Housing Laws and the pitfalls of buyer love letters.
- 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.
- Remind your clients that their decision to accept or reject an offer should be based on objective criteria only.
- If your client insists on drafting a buyer love letter, do not help your client draft or deliver it.
- Avoid reading any love letter drafted or received by your client.
- Document all offers received and the seller’s objective reasons for accepting an offer.
What Should You Write in a Love Letter?
Putting aside the legal risks of a home seller accepting a love letter, how should prospective buyers approach a love letter if they decide to take this route?
Keeping in mind that a poorly written love letter can backfire, it is important to know the key elements of a winning missive, while making sure to seal the deal. Be aware that it is solely within the seller’s right to accept or refuse real estate love letters so, make sure your seller is amenable to the practice upfront, or your unwanted love letter submission may work to your disadvantage.
In short, the best real estate love letters, like the romantic kind, come from the heart and should be handwritten, while containing these traits:
- Do not add personal details or photographs
- Keep it short
- Do not mention remodeling plans
- Stay upbeat and positive
We also recommend taking the approach that all competing offers are equal and the love letter can serve as one additional intangible of how you are objectively preferable to other buyers. That said, we would put yourself in the seller’s shoes and address their likely emotional concerns of parting with a cherished home:
- Acknowledge that they have many offers to choose from and that you look forward to planting roots in the home, neighborhood and town
- Express genuinely what you love about the home and property in its “as is” state
- State, without revealing personal information, that the home is an ideal fit and that you look forward to taking great care of it
In other words, give them assurance that you represent stability, continuity and respect for the home.
Are Real Estate Love Letters Effective?
Our unscientific conclusion is that, yes, Real Estate Love Letters are effective, due to the fact there is so much controversy and interest in their legality and overall fairness with respect to the Fair Housing Act. On the other hand, if they did not work, no one would care if they were part of an offer!
Real Estate Love Letter Resources
- NAR: Love Letters
- NAR: Fair Housing Act
- Fair Housing Act – HUD
- Love Letter Templates
- Dear Seller Book on Amazon
- NAR: How to Navigate Multiple Offers
- How to Choose a Home Contractor and Avoid Scams
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