Homebuyer’s “love letters” can be a source of prejudice. (But they often work.)
Several years ago Kristine Chadwick and her family were trying to buy a house in Eugene, Oregon. The market was competitive, so her agent suggested that she write a letter to the seller, describing her husband, three children, two dogs and a cat, and why she wanted to raise her family in the house. Hers wasn’t the highest bid ever, but she got the house anyway.
The letter worked.
“It was really important for the salesperson who was going to be there to raise a family,” Chadwick, an executive at an education consulting company, said in a telephone interview. “She wanted a family who would love the house as they love the house. We wanted a place to finish raising our children happily [then two teenagers and an 8-year-old]. “
Notes like Chadwick’s, often referred to as real estate ‘love letters’, have become even more popular in recent times as the residential housing market sizzles across the country and more homes for sale attract multiples. offers.
But such letters could also open the door to discrimination. If the seller reads a letter or sees a photo that reveals the race, sex, religion or ethnicity of the potential buyer and the seller rejects the offer out of bias, it could violate federal or state laws on fair housing, especially if the contender offers the highest offer.
With that in mind, Oregon recently became the first state to ban realtors from forwarding such letters from buyers to sellers, starting next year. In doing so, the state heeded the pleas of real estate agents who feared that the transmission of such missives would trap them in a violation of housing law.
But such accusations are devilishly difficult to prove, fair housing experts say, and little to no lawsuits have been filed using love letters as a yardstick for a case. In addition, the new law can do more to protect real estate agents than home buyers.
Real estate trading groups in states such as California and Washington have also acknowledged the problem that Oregon’s love letters law seeks to address, but no similar bill has been introduced in another. State this year, according to the National Conference of State Legislatures and the National Association. real estate agents. However, many states discourage this practice.
The Colorado Real Estate Division, for example, warns agents in real estate courts that they are required to follow that they should keep their clients away from writing or considering love letters. However, the state is not banning them, according to Eric Turner, deputy director of the division.
“In general, it’s frowned upon,” Turner said in a telephone interview. “If a seller is looking at multiple offers, it should really be about the terms they are offering. If in a letter they identify with each other, it could be a protected class. This could potentially turn sour for the seller who may or may not intentionally use this information on a protected class.
“The focus should be on the offer to purchase and what is in it. “
The National Association of Realtors, an industry advocacy group, has briefed officers on the risks of love letters, said Bryan Greene, vice president of policy advocacy, and issued guidance to against them. “There is a risk from a fair housing perspective. It can be small from a law enforcement perspective; I did not see any litigation involved. Beyond the risk, there is just a question of ethics [of] whether the use of these letters can perpetuate segregation.
Oregon State Representative Mark Meek, a Democrat and himself a real estate broker, said agents from the Oregon chapter of the Realtors Group approached him about their concerns, which has leads to the bill. But he said he was not aware of any fair housing related cases
“I am a listing agent, I receive offers from my clients. All of a sudden, these images light up in my face, them and their children, them and their dogs. And a letter explaining why we love the house, [we want to] ask the children to walk to school, the church is just down the street, ”he said in a telephone interview. “We probably shouldn’t allow these images because sellers can make decisions based on who is in them.”
He said the wording of the letters becomes tricky if they contain “red” words “that would graze the border of violating fair housing laws”. An example, he said, would be a reference to the advisability of having a church nearby. Prior to Oregon law, he said, agents had a professional responsibility to pass any communication from the potential buyer to the seller.
“When it came to these letters, we had to pass them on as well, we had no latitude,” he said.
He said there have been situations where there were three offers, for the full asking price, and a seller chooses a lower price offer. “I asked why, and they said they really wanted to see these kids walk to school. With hindsight, these implicit biases really weigh heavily. “
Reducing interpersonal communication between buyer and seller could help alleviate home ownership disparities between people of color and white residents, he said. According to the American Community Survey in 2019, 72% of white residents were homeowners, compared to 42% of black residents, 61% of Asian residents, and 48% of Hispanic residents.
The unspoken but poorly kept secret is that letters work.
Oregon real estate broker Bobby Stevens, who helped Chadwick and his family with their home buying love letter, said he used the letters to “try to give my clients an additional advantage “. He said a shortage of properties recently sent most buyers into bidding wars with multiple bids on each property, many of which are well above asking price. The letters, he said, “put a face to the buyer and perhaps help influence sellers.”
But the new Oregon law will move him away from this practice. Stevens said he fully understands the potential for discrimination and would simply say his buyers love the home and meet the financial qualifications “not in a personal way.”
In the Oregon legislature, what little opposition there was came from Republicans who disapproved of government interference in the housing market.
State Senator Lynn Findley, a Republican, one of 11 senators who voted no, said in an email that “Discrimination of any kind is never acceptable and should not be tolerated never”.
However, he said he voted against the bill because in “an open dialogue between buyers and sellers, communication is important in such an important decision for either side. I don’t see this as an issue for the state legislature to get involved. ”
Richard Stanley, a Los Angeles real estate agent, said he had not seen a seller “blatantly” discriminate against a potential buyer who wrote a letter, but he had seen the letters backfire.
Stanley said he had a salesperson who was “very astute on the Internet” and researched the six or seven offers he received from potential buyers, some of whom wrote love letters. One of them was a local family whose letter said they couldn’t wait to see their children playing in the yard.
“He researched everyone, including a family that lived around the corner, that was a tenant and had lots of kids, a big brood. He walked past the house and was appalled at the way they kept the [outside] from home, ”Stanley said. “He was dismayed at the thought that he would give it to a family of five or six children and that they would ride this house hard. Fortunately, their offer was lower than the highest paying offer he received. “
An internet search for real estate love letters found dozens of sample letters that buyers can copy to express affection for a home and praise family attributes. A recently sold home in a desirable area of Northern Virginia inspired this letter from buyers:
“We visited your beautiful home yesterday and fell in love with what we saw. The house is a perfect fit, and we can’t wait to enjoy the lovely screened porch and cook. We have lots of family reunions and love to entertain friends, and your home has so many great qualities.
The letter went on to explain how the daughter of the potential buyers had just been accepted into an accelerated program with the county school system. Their bid was also the highest. They have the house.
Charlotte, NC Agent Leigh Thomas Brown said that sometimes buyers will try to use the letters as an “emotional stick”, and she should remind sellers that this is a financial transaction and not of seduction. She discourages letters, “but sometimes buyers drop letters off at home. As real estate agents, we must follow this line on ethical considerations, ”she said in a telephone interview.
Stanley, the California real estate agent, said banning the letters would help get personalities out of a process that really should be a numbers game.
“Anything that brings the rules of the game closer and simplifies the process is better for everyone,” he said. “It’s a business transaction, it shouldn’t be a beauty pageant.”