- "Love" letters may work for buyers, but the photos and buyer details included in them may create fair housing concerns for listing agents and sellers, according to attorney Jon Goodman.
- He advised listing agents to convince sellers not to accept the letters for that reason and because such letters are not necessarily reliable.
They’re called buyer letters, cover letters or simply “love” letters.
They’re the missives put together by hopeful buyers to try to convince sellers to pick their offer, often providing details on the buyers and gushing about how much they love the home and how happy they would be there.
The letter may come with an adorable drawing of the home from their kid or a lovely family photo.
There’s a reason buyers and their agents use these letters — they often work and may be especially crucial in bidding wars.
But should sellers and their agents accept them? That’s another story.
A buyer is a visible member of a historically oppressed minority. He made a $145,000 offer on a home. The offer was rejected. Through public records, the buyer later found out that the home sold for $110,000.
“If we had had his life experiences, we might have perceived what he perceived” — that his offer was rejected because he was a member of this minority, in violation of the Fair Housing Act, Goodman told those attending his “Frenzied Market Issues in Residential Real Estate” session at the conference.
The Fair Housing Act prohibits discrimination based on an individual’s race, color, religion, sex, disability, familial status or national origin.
To win this type of case, it would be really helpful to be able to show that listing brokers and agents don’t know anything about a buyer other than what’s in the offer, according to Goodman.
“Love letters change all of that,” he said.
Buyer ‘yes,’ seller ‘no’
For instance, buyer love letters may admire a home’s historical significance and promise to keep up the landscaping.
That’s perfectly OK because the law doesn’t prohibit discrimination against people who like history or gardening, Goodman said.
But a lot of letters his firm sees include pictures of the buyers, sometimes with their kids.
That means if the buyers are members of any or multiple protected classes, that will likely be visible to the seller.
“That creates some fair housing concerns for me,” Goodman said.
He can’t suggest that buyers not use the letters because “my clients all tell me love letters work” — but he doesn’t think sellers should see them.
That doesn’t mean listing agents should make a unilateral decision to keep the letters from their clients, he said.
It means that listing agents should include in their listing agreements that they will not pass on the letters, according to Goodman.
If the current agreement doesn’t include that stipulation, listing agents should talk to the sellers and try to add it after the fact, perhaps by showing them materials advising them against seeing the letters.
If the sellers still insist that they receive the letters, “talk to a lawyer that’s licensed in your state,” Goodman said.
He advised buyer’s agents to encourage their buyers to make their “highest and best” offers along with any letters.
One more reason for sellers not to accept them: While buyer love letters may tug at the heart strings, that doesn’t mean they’re actually telling the truth, according to Goodman.
He described a situation in which buyers extolled the virtues of a home and promised to keep it as-is, prompting the sellers to accept their offer.
The buyers tore the house down two months after buying it, Goodman said.
“Sellers shouldn’t be relying on [love letters]. In a perfect world, [they] wouldn’t make a difference,” he said.
One conference attendee noted that sellers very often Google the buyers and look them up on Facebook.
To that, Goodman said, “Remember all this is a risk management technique. There’s nothing you can do to prevent that.”