Buyer’s Love Letters
October 20, 2020
In this competitive bidding market for real estate, buyers are often looking for a way to make their offer stand out. Some buyers do this by writing a personal message to sellers that may contain information about themselves, why they love the home, or any perceived mutual interests that the buyers notice after viewing the home. These letters are often called a “buyer’s love letter” and are a buyer’s way to try to personally appeal to the seller. While this type of communication might seem harmless, these letters often reveal personal information that could trigger fair housing concerns based on the seller’s selection.
Buyers nor their agents violate any fair housing laws by writing and delivering these letters. However, it could weaken the buyer’s future negotiating position. If a seller knows the buyer is in love with the house, the seller may be less likely to budge on items after the offer is accepted, such as after the home inspection.
The biggest concerns with buyer’s love letters involve the seller. Once a seller is aware of the details about potential buyers, any rejection could be construed as bias that violates fair housing laws. The Fair Housing Act (FHA) prohibits sellers from discriminating against buyers based on the individual’s race, color, religion, sex, disability, familial status, or national origin. An example in which the seller could get in trouble would be if a buyer who is member of a protected class makes an offer of $125,000 but the offer is not accepted, and the potential buyer later finds out that the home sold for $120,000 to another buyer who is not a member of a protected class. This might result in a lawsuit against the seller because it could appear that the higher offer was rejected due to the buyer’s protected class, which is a violation of the FHA. Another danger outside of the FHA is that the buyer may not be truthful so you do not want to base selling your home on information that may or may not be accurate.
Best Practices for Seller's Agent
The best practice is for an agent to not provide buyer’s love letters to the seller. When the listing agreement is signed, the seller’s agent can explain the fair housing concerns to their sellers and that the agent will not transmit any such letters to the seller. If these letters are common in your area, you could even put a stipulation into the listing agreement that letters will not be given to the seller. If a letter is received, the seller’s agent can explain the position to the buyer’s agent. While the buyer’s agent cannot and should not reach out to the seller, there is nothing to prevent the potential buyer from sending the letter directly the seller. Keep in mind that state license law and the Code of Ethics require all written offers to be presented up until closing. While a buyer’s love letter should not contain offer terms, the agent should be on the lookout for anything that could be construed as part of the offer to pass along to seller. Agents should advise sellers to focus on the merits of the offer and the likelihood that the deal will close. If the sellers insist on reading the love letter, advise them to seek legal advice and thoroughly document the process by which they made their decision.