In today’s red-hot housing market, buyers are doing everything they can to compete. Waiving contingencies, bidding well over asking price, and in some cases even making an offer on a property sight unseen are all becoming de rigueur.
But what about the humble love letter? Surely, telling a seller why you love the home and want to make it your own can only boost your chances.
Not so fast, says the National Association of Realtors, which advises against them. According to the organization, the notes can lead sellers to run afoul of the Fair Housing Act and can actually endanger a deal.
That doesn’t mean there aren’t alternatives, however. Two Realtors in Chicago shared at a recent National Association of Minority Mortgage Bankers of America (NAMMBA) event that they’re experimenting with a new format that focuses more on the professional side of the deal than the buyer’s characteristics. They said this tactic could be the start of a new chapter for love letters in real estate.
Traditional buyer love letters can seem to be a nice personal touch to help your offer stand out, but real estate professionals warn that they can inadvertently lead a seller to consider information they’re not supposed to take into account as they weigh competing bids.
“If you send something like, ‘When we viewed the home, I just imagined my kids playing in the backyard,’” said Eve Benton, designated managing broker for Exit Strategy Realty in Chicago, “you run the risk of them saying that you selected that buyer based off of familial status, which is a protected class.”
The Fair Housing Act prohibits discriminating against prospective home buyers on the basis of race, color, religion, sex (including sexual orientation and gender identity), disability, familial status and national origin.
Personalized love letters tend to include information about the buyer that falls into at least one of the protected categories, which can leave not only a seller’s agent but also the sellers themselves on the hook for potential violations.
With traditional love letters off the table in many cases, Benton said she wanted to find a way to help her clients’ offers stand out without skirting the law. So, she tried composing a new kind of note that focused instead on the team she works with.
Nicole Wheatly, a community development consultant and Benton’s colleague at Exit Strategy Realty, tried the same tactic.
“I needed to sell the team versus my client,” Wheatly said. “I focus on the mortgage broker that we’re working with, their years of experience, how effective they are, their communication skills etc. etc. I also speak about the attorney and how this attorney will help us ensure this is a fair, legal process.”
Benton added that she will include any information about the strength of her buyer’s finances.
“I am working with a buyer now who, they don’t just have a preapproval, they are approved,” Benton said. “They could close, if the seller is ready, within two weeks.”
Benton and Wheatly said this new love letter format doesn’t seem to be catching on widely yet, but they’ve gotten positive responses so far and said it could be beneficial to everyone if they become more popular.
It helps to make sellers feel more confident that the deal will go through, too, Wheatly said: “I think we’ve done extremely well with selling our team and making them feel comfortable that we’re going to be good to work with.”
Love letters are hardly the only strategy buyers can or should employ to compete in the current housing market. The first step for most is to find an agent who understands the neighborhood where you want to buy and can help shepherd you through a process that will inevitably involve multiple bids and some amount of disappointment along the way.
It’s also a good idea to get a handle on your budget early, prepare to be flexible with your property wish list, and do your research about the area where you’re shopping. You won’t just want to make sure it’s a good lifestyle fit; you’ll also want to know a little bit about other successful transactions there so you can tailor your bid to the prevailing market trends.
You can also work on improving your credit score and growing your down payment fund if you’re not quite ready to start making offers.
It can be risky for buyers to tell sellers too much about themselves in a love letter because they could butt up against the bounds of fair housing. Instead, Benton and Wheatly said, agents can use these letters to promote the strength of the professionals behind the offer. Buyers can also prepare for intense market competition by doing their market research and boosting their financial profiles, all of which can help make their offer more attractive and streamline the path to closing.