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What is a Seller's Love Letter and Should You Write One?

Picture this: You're standing in your living room watching the sky light up with every shade of pink and orange as it perfectly reflect its image onto the lake in front of you like a mirror. All is still and quiet, except for the occasional call of a loon to another. The smell of coffee fills your warm, cozy home. You slowly inhale a deep, cleansing breath, and a smile creeps slowly across your face as you contemplate how there isn't another place you'd rather be in this moment. A strong sense of wellbeing overcomes you as you sit down at your home office to prepare for a day of work ahead, feeling more alive and motivated than ever before.

This depiction is the very reason why something odd is happening in New Hampshire. We are running out of houses to sell! The global pandemic has allowed a major portion of the population to work from home, and a lot of home buyers realized they'd rather have an office view of a personal beach on the lake, than a concrete wall and the noises of the cities. As a result, the demand for houses in the area greatly increased, and sellers chose to sell, even sellers who never planned on being sellers!

Since there was so much competition in the market, buyers began thinking that their offers weren't enough if the seller had 5 other offers at the same time. In a seemingly harmless attempt to make their offers stand out, buyers started writing what are called "love letters," to the sellers which adds a personal, emotional, and sentimental aspect to their financial offer in an attempt to win over the seller's heart.

Although this seems like a practical and reasonable and approach to making your offer appear more enticing, it may actually be illegal, and may put every party involved with the transaction at risk for violating the Fair Housing Act.

The below excerpt is from an article titled, "Love Letters or Liability Letters?" from the National Association of Realtors Website. Click here to view their full article.

"Buyer love letters are a tactic used by some buyers in an attempt to stand out to a seller, especially in hot markets with low inventory and bidding wars.  Seemingly harmless, these letters actually raise fair housing concerns, and could open real estate professionals and their clients to fair housing violations.... because they often contain personal information and reveal characteristics of the buyer, such as race, religion, or familial status, which could then be used, knowingly or through unconscious bias, as an unlawful basis for a seller’s decision to accept or reject an offer.

Consider where a potential buyer writes to the seller that they can picture their children running down the stairs on Christmas morning for years to come in the house. This statement not only reveals the potential buyer’s familial status, but also their religion, both of which are protected characteristics under fair housing laws.  Using protected characteristics as a basis to accept or reject an offer, as opposed to price and terms, would violate the Fair Housing Act."

No one wants to put buyers, sellers, or agents and their firms in a position that may be construed as violating this act. So how should buyers proceed in the current competitive market?

Remember - an offer is composed of price AND terms. Offers should be presented based on those facts - and leave the emotions and situations out of it. Way back when Dragnet was a popular TV series, Sgt Joe Friday's famous line was "Just the Facts, Ma'am". Offers need to convey the facts - just the facts. 

Here are some top tips on how to ethically and legally craft the best offer possible:

  1. Present and have a very firm financial commitment in the form of a lender pre-approval letter (as opposed to a pre-qualification letter). With a cash buyer, have a proof of funds letter. Add these to the actual offer to show the sellers that the buyers are financially able to complete the purchase. 
  2. Consider the following aspects when it comes to your terms: When can you close? How much of a deposit can you put down? What inspections do you need and how quickly can they be completed? Do you have a house to sell? Do you have a plan on getting that done? Any special circumstances? 
  3. As a buyer it is very risky to waive home inspections - and many buyers are doing that to make their offer look better. But, is that a smart move? What if the septic system is in failing condition? That could be a $10,000 repair bill. Your buyer agent has to balance your needs to get your best offer in - and also your risks. Have that discussion.
  4. Consider how much repair work you are willing to accept. Are you able to waive the small repairs - like repairs that cost less than $1,000? Have that discussion with your agent to learn about ways to balance the risks and rewards. The same discussion needs to be had IF you decide to waive the appraisal contingency. 
  5. Lastly, consider using an escalation clause which is a way that your offer can get automatically bumped up over the price of the next best offer. There are many considerations to take into account on using this tactic, so be sure to work with an agent who understands this strategy well so that you, as the buyer, can be informed about the pros and cons of using this approach. 

Ultimately, the best way to get the house you want is to put the best offer forward. In order to do that, it's important to work with an experienced agent to advise you on how to create the best offer. The Schmidt Home Team is made up of exceptionally experienced and talented individuals who are ready to put in the work for you. Contact us today to see how we can help you move into the home of your dreams!


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