Don’t Fall in Love with Love Letters
It’s a hot market and there are multiple offers on properties, so what can your buyer do to make their offer stand out? Should your buyer submit a so-called “love letter” to the seller with personal information in order to make their offer more compelling? The seller wants as much information as possible before deciding which offer to accept, so should the seller consider love letters from buyers? And what policy should a broker have regarding love letters?
Recently, love letters have become a more common practice. In a love letter the buyer may include that they can picture their children playing in the backyard; or write the house is perfect because it is so close to a church, synagogue or mosque; or say that she and her wife can see themselves relaxing in the family room.
Although love letters seem harmless on the surface, it almost is inevitable that such love letters will include personal information that will allow the seller to determine if the buyer is in a class that is protected under the Fair Housing Act (FHA) or the New Jersey Law Against Discrimination (LAD). While the seller may not consciously discriminate against any potential buyer based upon such information, there always is the possibility that this information may affect the seller’s decision not to sell the property to a particular buyer. Of course, once the buyer has invested the emotional energy needed to provide a compelling love letter, the buyer has a vested interest in that home. It’s possible that if the buyer’s offer is not accepted, they may feel the seller was discriminating against them because of their protected status, and therefore file a discrimination complaint against the seller. The buyer would undoubtedly include the broker in the complaint.
Under the FHA, it is unlawful to discriminate in the sale or leasing of dwellings based on race, color, religion, sex, familiar status, national origin or disability. However, the FHA generally does not apply to single-family houses that are sold or rented by an owner who does not own more than three singlefamily houses, does not reside in the house and was not the most recent resident prior to the sale. However, the FHA does apply if such an owner retains a real estate broker.
The LAD protects more groups against discrimination. It prohibits landlords, sellers and real estate licensees from discriminating against people based upon race, creed, color, national origin, ancestry, marital status, civil union status, domestic partnership status, familial status, pregnancy or breastfeeding, sex, gender identity or affection, affectional or sexual orientation, disability, liability for service in the Armed Forces of the United States, nationality or source of lawful income used for a rental or mortgage payment. However, the LAD has the same exception as the FHA for a single-family house that is sold or rented by an owner, except that the LAD’s exception only is for an owner who does not own more than two single-family houses.
As a result of this potential for discrimination that could arise from love letters, the National Association of Realtors ® has provided the following best practices to protect you and your clients from fair housing liability:
1. Educate your clients about the fair housing laws and the pitfalls of buyer love letters.
2. Inform your clients that you will not deliver buyer love letters and advise others that no buyer love letters will be accepted as part of the MLS listing.
3. Remind your clients that their decision to accept or reject an offer should be based on objective criteria only.
4. If your client insists on drafting a buyer love letter, do not help your client draft or deliver it.
5. Avoid reading any love letters drafted or received by your client.
6. Document all offers received and the seller’s objective reason for accepting an offer.
It therefore is strongly recommended that brokers develop an officewide policy that they will not accept buyers’ love letters on behalf of a seller and that they will advise sellers not to consider love letters. A candid discussion should be held with sellers during the listing presentation and buyers when you begin working with them so that they know you will not accept or participate in drafting love letters because of the potential for discrimination that could result from a love letter.