No Love Letters

No Love Letters

What’s a Love Letter? It’s an emotional appeal that Buyers sometimes make in the form of a letter accompanying their offer to purchase. Here’s an example:

Dear Sellers,

Our names are Diana and Tom Swan. We’ve been married five years now and have one son, Richard, who is 3 1/2 years old. We also have another baby who will join our family in December. We realize our offer may not be as high as other offers, however our first son has some social and behavioral issue so we are hoping to buy our home so we are close to a specialized facility. We hope that you will select us as the next homeowners to raise a family in your home.

(from: Colorado Real Estate Commission)

Why do Buyers do this? Brokers encouraged it. Years ago, when the market began heating up with multiple offers for individual homes, they saw this as a way to give their Buyer a leg up on the competition.

What’s wrong with it? Buyer “Love Letters” can reveal information which identifies a person as a member of a protected class (Fair Housing) and can put seller and the seller’s broker in danger of legal and regulatory action. By potentially identifying protected class status of prospective buyers, it creates a doubt whether that offer is chosen or not chosen based on protected class status, a violation of law.

The Protected Classes (Federal): Race, Religion, Color, Disability, Sex, Familial Status, National Origin, and (State): Sexual Orientation (including Transgender Status), Marital Status, Creed, Ancestry.

Possible violations in our example: 1) Familial status (they have children) 2) Marital status, 3) Disability/Handicap, 4) Highest and best (letter urges seller to select buyers not based on highest/best offer, but based on other considerations that may violate fair housing).

Best Practices regarding Love Letters: Avoid unnecessary risks by focusing on a solid offer instead of an emotional appeal; give your Broker permission NOT to present “Love Letters.”

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