What’s the Deal with Seller Love Letters?

What's the Deal with Seller Love Letters?

If you’ve been in real estate circles before, you’ve likely heard about “seller love letters.” These letters are meant to add a personal touch to a buyer’s offer. However, they’ve recently been cause for controversy in the real estate industry.

Read on to learn more about why receiving one of these letters may not be such a good thing if you’re on the selling end of the transaction.

What is a seller love letter?

In real estate, a seller love letter is a supplemental document that sometimes gets included with an offer. As the name suggests, it is a letter that is written to the seller from the buyer.

While this letter can take many different forms, depending on who is doing the writing, it is usually fairly personal. It tells the seller a little bit about who the buyer is as a person. Plus, it also reveals why the buyer has chosen to submit an offer on that particular property.

At its core, a seller love letter is generally used to help the buyer’s offer stand out from the crowd. It’s meant to make the offer a little bit more personal. In addition, it is an attempt at fostering an emotional connection between the two parties.

What is the current controversy surrounding these letters?

Recently, seller love letters have come under fire because there’s a chance that they might pose a liability for the listing agent — and for sellers themselves. Put simply, they run the risk of violating the Fair Housing Act because they reveal information about the buyer that could lead to unintentional discrimination.

In October of last year, the National Association of REALTORS® (NAR), released the following statement regarding these documents:

To entice a seller to choose their offer, buyers sometimes write “love letters” to describe the many reasons why the seller should “pick them.” While this may seem harmless, these letters can actually pose fair housing risks because they often contain personal information and reveal characteristics of the buyer, such as race, religion, or familial status, which could then be used, knowingly or through unconscious bias, as an unlawful basis for a seller’s decision to accept or reject an offer.

Consider where a potential buyer writes to the seller that they can picture their children running down the stairs on Christmas morning for years to come in the house. This statement not only reveals the potential buyer’s familial status but also their religion, both of which are protected characteristics under fair housing laws. Using protected characteristics as a basis to accept or reject an offer, as opposed to price and terms, would violate the Fair Housing Act. 

What should agents know about seller love letters?

While the NAR doesn’t specifically prohibit agents from allowing their sellers to consider these documents when making a decision between offers on their home, they do offer some pretty strict guidance, including:

  • The importance of educating clients on Fair Housing laws and the reasons why seller love letters pose a risk
  • Agents should not accept seller love letters as part of an offer
  • They should remind clients that their decision to accept or reject an offer needs to be based on objective criteria
  • They should refuse to help draft such a letter or to help deliver it to the seller
  • In addition, neither the listing agent nor the buyer’s agent should read one of these letters
  • The listing agent should also document the seller’s reasons for choosing a particular offer

Should buyers bother to write a seller love letter?

As the buyer, it can be tempting to do everything in your power to help your offer stand out from the crowd, especially if you live in a hot market. These days, it can seem like every house for sale has multiple offers and it can be tempting to try and get ahead.

From your perspective, there is little harm in submitting a letter, especially if you make an effort to avoid divulging any details prohibited by the Fair Housing Act. However, you should be aware that there is a good chance that the seller won’t read it.

Should sellers read any letters they receive?

Ultimately, each seller has a choice of whether or not they want to accept these letters from potential buyers. That said, if you do decide to accept them, it’s generally not a good idea to weigh them as part of your decision making process.

Instead, you may want to make your decision based off of objective criteria, such as the sale price or any contingencies. Then, once you have made your decision, you can read the letter at the end.

However, unfortunately, even accepting these letters may pose a legal risk. While it’s very unlikely, if a spurned buyer decides to sue you for discrimination, it will likely be hard to prove that the seller love letter did not factor into your decision. In this case, the safest bet is to not accept them at all.

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Tara Mastroeni

Tara Mastroeni is a real estate and personal finance writer. She has a BFA in Media Production from Emerson College. Her work has been published on websites such as Forbes, Business Insider, and The Motley Fool. She has also been featured as a subject matter expert on Innovators with Jane King and the American Trends podcast. Find her at TMRealEstateWriter.com or on Twitter at @TaraMastroeni.