Real Talk Ep 7: What is Real Estate Love Letter?
Hey, it’s Dustin with the Davidson group here with episode #7 of Real Talk. Today, we’re going to be talking about multiple offer situations, so if you are a seller or looking to become a seller, the challenges are, you’re going to run into a multiple offer situation. And what we’re going to focus on is something to avoid, or be very mindful of, whenever you receive those multiple offers.
But first, let us define “love letter” in this industry. What is a Love letter? This is a letter that the buyer writes to the seller about why they love the home and why they want or hope that the seller would choose them for that home. What often happens with these letters though is they include things that would, if chosen, based on those inclusions, put the sellers at risk for violation of Fair Housing.
Jumping into the actual content, there are a handful of things that you should be mindful of, and it’s very important to have a professional help guide you through that process. But when you are selling your home in today’s market, you should expect multiple offers.
National Association of Realtors article. It talks about love letters, of course. It says: “The problem with these letters…
The problem is that these letters often innocently include personal information that reveals a prohibited basis for discrimination, including race, color, religion, national origin, sex, familial status, and disability.”
Here’s an example. I and my wife are trying to buy a home. We’ve been looking at homes for a couple of months now. We’ve been beating out by so many different offers and we absolutely love this home. We’re only approved for so much, we’re willing to waive a lot of different things which could be a concern for you as a buyer anyway, but to give yourself an edge, do you think I want to write the sellers a letter? So, it could go something like this: “Hi Mr. and Mrs. Smith, my name is Dustin, and my wife Tia and I are very excited about the opportunity to purchase your home. Our family is excited to move into this home and we can see our little kids growing into this home and making it our forever home. We hope that the fireplace brings enjoyment to us and those cold winters and we can see our stockings hanging from the mantle. The backyard is going to be great for entertaining with our large gatherings as a family on and on and on and on.
You’re selling yourself to the home and why you love it and hopefully, your goal is to hit an emotional note with the sellers of something that they may have enjoyed at home. Using a protected class, like family or familial status. The issue with this is if you as a seller resonate with this letter, sometimes a company, a picture or video, or some sort of personal memorabilia to really showcase who the people are that are purchasing your home or attempting to purchase your home. You get drawn emotionally. It’s not just about the dollars. It’s not just about the terms and conditions that may make their offer good, but now you want them to win because they wrote you a letter and you like them. Whenever you put those things out there and you as a seller select based on one of those protected classes…
You are potentially opening yourselves up to a fair housing lawsuit. The other thing is with is the agent that’s representing you? They’re also opening themselves up. The buyers’ agent for making sure that that letter is delivered is opening themselves up. Really the only person who’s not opening themselves up to a potential lawsuit here is the buyer themselves, and that could be determined, I guess based off the course of action and who would be filing the lawsuit.
So just FYI, a piece of warning.
When you’re looking at things that you will accept or things that you won’t accept, I hope that I’m sitting across the table with you and we’re having that conversation about what that looks like and things we will accept and things we will not accept. But if you are going about it yourself or, hopefully using a professional, maybe another professional.
Let them know upfront. “Hey, I’m not going to accept a love letter or a letter from the buyers, so do not receive those. Don’t accept those from the buyers’ agent.” That will potentially save you in the long run.
He knows that as a buyer when you present those, you’re basically showing your cards: “Hey, here’s the max I can go.” Now, they’re good in a sense, right? In this competitive market, but you have to know those things going into it and what you’re looking at. Another thing that you need to be mindful of whenever you’re looking at these multiple offer situations is when someone waives all of their contingencies. One: you have to vet, and make sure that they can make the purchase and not have a contingency that’s in play. But you really, really need to have your due diligence taken care of. And as a buyer, you know if you’re waving things like inspections… you’re buying the house as-is and you may not know of issues that are underlying and furthermore the seller may not know of issues that are underlying. Sometimes it’s necessary. Sometimes you feel it’s in your best interest, but those are things to be mindful of whenever you’re dealing with multiple offers in this. In this crazy inventory.
Really want to wrap the focus back around to love letters.
Great idea, you know it’s a tool and a tactic that is being utilized in our industry across the nation right now and they’re getting into homes. These buyers are getting into homes, but the recourse and the backfall based on the reason they’re getting into these homes is something that would concern. They’ve been around for a long time, you know? I’ve been in the industry for over three years now, and I remember talking about love letters within my first couple of weeks of being in real estate, something not to be abused at the time, but it was something that could definitely help edge you into a position, especially if you’re running an offer that was a little bit lower… I know, right? Writing offers that are lower? That’s a time that we do not ever see anymore, but anyway.
This is just information that comes out, you know, as our market changes and as we see these changes coming across, we’re going to keep up to date with the information. We’re going to make sure that we’re keeping ourselves in front of those things to ensure that you as a seller protected and don’t come into violation of a Fair Housing issue and then potentially be out hundreds of thousands of dollars because of that and litigation lawsuits. And then maybe issues selling your home in the future. Anyways, this is Dustin here with the Davidson Group episode #7 wrapped up. I’m really enjoying these. Obviously coming out on Tuesdays. I hope you’re finding them
good as well. If you got a question about anything Real Estate related or if there’s a specific topic that you would like to talk about during these Real Talk segments, just drop a comment down below or send me a private message and we can either discuss online or I can present the content here.
Talk to you soon.