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Real estate "Love letters" Emotional appeal or legal risk?

Real estate “love letters,” meant to sway sellers, can raise fair housing concerns, according to the National Association of Realtors.

In a red hot buyer’s market marked by low inventory, competing offers, all cash offers, waived contingencies, and days on market typically in the single digits, it’s common for potential buyers to pull out all the stops to get a seller’s attention. “Love letters,” as they’ve been colloquially dubbed, are personal letters from prospective buyers to homeowners that spell out why they are the ideal buyer for their home, and make the case for why they should be considered for reasons far beyond their monetary offer. In most circumstances, the letters are heartfelt – the prospective buyer might have a personal connection to the home or neighborhood, or perhaps they are a first-time buyer pledging to maintain the home’s architectural integrity and curb appeal.

Key to Home

In recent years, love letters, also called "offer letters," have evolved and become more sophisticated, with some would-be buyers including photos and videos in addition to personal details in their plea. Even when written with the best intentions, such specifics can raise fair housing concerns and even put the seller in a position where they are violating the law. Familial status, national origin, race, color, disability, sex and religion are classes protected under the federal Fair Housing Act. In Rhode Island, the law also prohibits housing discrimination on the basis of age, sexual orientation, gender identity or expression, marital status, veteran or military status, status as a victim of domestic violence and source of income. While the practice is neither banned nor illegal in Rhode Island just yet, other states are moving in that direction.

Such letters could create a legal liability for buyers, sellers and brokers. As explained by the National Association of Realtors (NAR), potential buyers revealing characteristics and personal information “could then be used, knowingly or through unconscious bias, as an unlawful basis for a seller’s decision to accept or reject an offer.” Last year, the NAR advised their nearly 1.5 million members to discourage their clients from submitting love letters and sellers from accepting any. The NAR also advises real estate agents to not help a buyer-client draft, read or deliver the letter as they might be liable. Some MLS listings specifically say love letters will not be accepted, so be sure to read the fine print. The best way to avoid legal trouble is to neither write (buyer) nor accept (seller) love letters and for sellers to select an offer exclusively based on objective criteria: the offer itself, down payment/financing, contingencies, proposed closing date, etc.

So, how do prospective buyers get their offer to be considered and stand out among the competition?

  • Work with a local realtor who knows the specific market and its players, and who asks the right questions. For example: what is most important to the seller? The financial offer is critical, of course, but other factors including closing date, the deposit, type of loan, and if they will accept any contingencies can play an important role.
  • Get the strongest mortgage preapproval you can secure. Using a local lender who is well known and respected is beneficial and can give the seller a sense of confidence.
  • While VA and FHA loans are great for buyers, sellers may steer away from them. The appraisal process for VA and FHA has more scrutiny and if a seller just wants to get the house sold, these offers may not rise to the top.
  • Be flexible. Many homeowners are currently taking advantage of the feeding frenzy and putting their home on the market without a backup plan. If you can be flexible with the closing date, or perhaps, can rent the home back to the homeowners while they put a plan in place, a seller might find your accommodating disposition best suited for their needs.

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