In the current red-hot seller's market, bidding wars are the norm. To get their offer noticed, some buyers resort to writing letters to the owners, waxing poetic about the property being their dream home.
As an investor, you might think it's charming to receive one of these so-called buyer love letters. But before you open one and get wrapped up in the heartfelt emotions of people who really want to live in your home, here are some things to consider.
Heartwarming, but a liability for sellers
The National Association of Realtors (NAR) has warned its members that while these letters can certainly tug at heartstrings, they could also be a liability for their clients. Should a seller make a decision after being swayed by a love letter -- which often contains demographic information about the hopeful buyer -- it could put them in violation of the Fair Housing Act.
The Federal Fair Housing Act is part of the Civil Rights Act of 1968, which prohibits discrimination in selling or leasing residential property based on race, color, religion, sex, national origin, physical and mental handicap, and familial status.
How investors can protect themselves
While buyers can't be prevented from sending letters, property investors can control how they respond to receiving them.
"As an attorney, I advise and encourage sellers to use a Realtor when selling their home and to never accept 'buyer’s love letters,''' says Michael Fourte, JD, MBA, CIPS and broker/owner of Fourte International Realty in Verona, New Jersey. Should a seller receive a letter that refers to the buyer's status as a member of any one of the protected classes under the Fair Housing Act, he says it could land the seller in hot water with a discrimination suit.
Fourte cites an example of a buyer writing a letter expressing excitement about celebrating Christmas in their new home. Charming as this story might be, it reveals the buyer's religious background. If the seller makes a decision based on this type of personal plea as opposed to their offer or purchase terms, the seller will be in violation of housing laws.
Fourte explains: "As a real estate broker, I always encourage my agents to explicitly state in their listings that all correspondence must be through Realtors and that personal letters to the seller will not be accepted. This not only protects our seller, but it also levels the playing field for buyers."
The Fair Housing Act does stipulate that in some instances, exemptions are made for owner-occupied buildings with up to four units, as well as single-family homes listed as for sale by owner (FSBO). However, sellers and landlords may not discriminate against buyers or tenants based on race, as this is prohibited by the Civil Rights Act of 1866.
Even with this exemption, there are many states with strict laws prohibiting discrimination that all investors and landlords should uphold. For example, the New Jersey Law Against Discrimination ACT (NJLAD) makes it unlawful to discriminate against a buyer's sexual orientation and gender identity. Additionally, under an executive order from President Biden, the Department of Housing and Urban Development (HUD) has announced that it will take measures to broaden the Federal Fair Housing Act to "prevent and combat" discrimination in housing against buyers or renters because of their sexual orientation or gender identity.
No love lost for buyer love letters
It's one thing to return a letter unopened, but in the digital age, email is often the method of correspondence. Suffice it to say, it would be difficult for a seller to prove that a letter was not received.
Fourte says it's in the seller's best interests to inform the buyer that a decision either has not or will not be made based on any personal information that might unfairly influence the seller's decision.