The real estate market is booming, and supply is running out faster than we imagined. The low mortgage rates and the desire for a new home have compelled home buyers to own a property. The problem is that the growing demand for homes has reduced the number of houses on sale, leading to fewer choices and fiercer competition.
The real estate market has witnessed tremendous growth and activity over the last years, especially during the pandemic. In hot markets with significantly low inventory, bidding wars force buyers to try nontraditional ways to get the house they always wanted. One method that is recently gaining popularity is sending love letters to sellers.
Although it’s not really against the law to compose love letters, this practice raises several issues in real estate. In fact, a growing number of realtors are criticizing this seemingly harmless tactic. The Wall Street Journal recently reported that real estate “love letters” are causing concern over racial biases and forcing sellers to violate fair housing rules.
To shed light on the use of love letters in real estate, this article will discuss what it means and its implications for buyers, sellers, and real estate professionals.
Love letters in real estate
The housing market has become so competitive that buyers resort to other means to get their target property. One popular way to stand out from the competition is to compose a “love letter” to the seller.
In real estate terms, a love letter is a personal note that aims to build a special connection with the seller while expressing appreciation of the property. The sender will discuss at least one or many reasons the seller should pick them over other buyers. For letter senders, appealing to the emotions gives your offer a higher chance to stand out and get accepted.
Over time, buyers are becoming more creative in their love letters, especially in a very competitive housing market. Printed or handwritten love letters have transformed into more fancy packages containing photos or a lengthy video that tells the life story of the buyer. Some are even desperate enough to buy letter templates to sound more convincing.
While love letters seem harmless, they actually raise a variety of issues in terms of fair housing. Letters put sellers and real estate agents at higher risk of violating the Fair Housing Act, which states that it’s illegal to discriminate in the rental or sale of housing because of color, race, sex, religion, disability, familial status, and national origin. Sadly, most of these letters contain these types of details.
If you’re going to write a letter to a seller, it should simply state who will live in the house and how they will live in it. But using a love letter to urge the seller to close the deal with you is like putting them in a dangerous position by violating the Fair Housing Act.
Another main purpose of writing love letters is to establish common ground with the seller and divert their attention. Some even reveal their full familial status and religion, which are all protected classes under the Fair Housing Act. Despite its risks, this technique allows them to have full control of the decision-making process and have higher chances of getting picked.
The Fair Housing Act
The Fair Housing Act explicitly restricts sellers from entertaining offers based on the protected characteristics, such as religion, race, and familial status. Since love letters often expose many personal details about buyers, accepting or rejecting them exposes clients and agents to fair housing violations.
Last October 2020, the National Association of Realtors (NAR) published guidance about sending letters by explaining its potential liability to real estate agents. Other real estate associations around the U.S. are also flagging letters because of their legal risks, discriminatory effects, and potential for implicit and unconscious bias.
If you’re planning to sell a home and want to protect yourself from fair housing liability, it’s important to be aware of the best practices related to real estate love letters. The first step is that real estate agents should educate their clients or sellers about the Fair Housing Act and the risks of accepting love letters from buyers.
Inform clients and buyers that agents are not responsible for delivering love letters and that no offer will be accepted based on a love letter. More importantly, remind clients that deciding whether to accept or deny an offer should depend only on a specific set of criteria.
While real estate love letters are slowly falling out of favor in some states, there’s no legislation to make them completely illegal. Still, personal letters are never a part of any real estate transaction in the first place. In the end, sellers and real estate professionals should evaluate their potential buyers based on the price, terms, and merits.