A real estate love letter is what a prospective homebuyer might write to a home seller to tell the seller how much they love the home. The buyer, by writing a love letter, hopes to get an edge in having their offer accepted. Real estate love letters are used primarily when there's competition for a home.
Real estate is often emotional
Real estate, especially when someone's selling their primary residence, can be an emotional transaction. Sellers who regard this transaction as bittersweet often feel comforted in knowing they're selling to people who will love the home as much as they did. Love letters add that personal touch many people value.
The love letter, always a topic of debate among agents regarding whether it's necessary, is now about to be banned. Writing one or using one to make a decision could be construed as a racist or discriminatory act.
Two debates on love letters
The long-standing debate on the topic of a love letter is whether it does any good or if it's just a waste of time. From what I've observed as a real estate writer and agent is there's about a 50-50 divide on the topic. Some sellers are swayed by them, and others look only at the numbers and overall deal.
There's a new, perhaps more important debate on the table about the practice of submitting a love letter with the offer: Is the practice breaking the law by violating the Fair Housing Act?
Are love letters racist or potentially discriminatory?
In a few words: They can be. Most people who write love letters are writing about how they'll use the home and the reasons they love it. And most sellers are looking for reassurance the home they cared for and loved will continue to be cared for and loved.
But there could be another side to these letters. Real estate agents can't answer buyer questions having to do with what the neighbors are like, for example. This could be viewed as asking what the racial makeup of the neighborhood is, which is irrelevant for one, and a tactic used in the past to steer minorities away from certain neighborhoods.
Some people might be getting around this restriction by saying certain things in the love letter to indicate their race or religion. Such information could bias a seller, and if that's the reason the buyer was selected, the law has just been broken.
What the NAR says
So that discrimination and favortism doesn't happen in the homebuying process, the National Association of Realtors (NAR) no longer supports the love letter. These letters could open real estate agents and their clients to Fair Housing Act violations.
Here's an example the NAR gives of the type of thing that isn't allowed: "A potential buyer writes to the seller that they can picture their children running down the stairs on Christmas morning for years to come." This statement reveals religion and familial status, both protected classes under the Fair Housing Act. A seller cannot choose a buyer based on those characteristics; they can base the decision only on price and terms.
The Millionacres bottom line
The NAR is against the practice of writing love letters. And while the NAR cannot dictate whether a buyer wants to write one, an agent can refuse to attach one to the offer. Agents should always document the reasons the seller chose the offer in case the buyer does submit such a letter on their own to a seller.