House hunters in Oregon will no longer be able to submit a “love letter” to try to woo sellers to their offers, a new state law says. Oregon Gov. Kate Brown signed a bill into law that says seller’s agents must reject such communications from buyers to sellers that contain information outside of the traditional offer. Oregon is the first state to make such letters illegal in a real estate transaction.
The use of love letters by buyers has become a common tactic to help make a buyer’s offer stand out. Buyers will write to sellers about how much they love the home, how they can envision their family living there, or how they'll spend the holidays.
But the National Association of REALTORS® has been warning its members to be aware of the potential risks involving love letters.
“While this may seem harmless, these letters can actually pose fair housing risks 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,” NAR warned on its Fair Housing Corner blog last year.
NAR released a statement in response to Oregon’s action banning the letters outright: “Although we are not aware of instances in which these letters have led to lawsuits or legal action elsewhere in the country, we continue to stress that all parties in a real estate transaction should consider only legitimate, non-discriminatory criteria when making business decisions. Failing to do so, could also leave REALTORS® in a compromised position. We also recommend that our members explain potential pitfalls to their clients while stressing the importance of sticking to objective criteria in order to adhere to federal and state Fair Housing laws.”
The practice of using love letters has remained popular as buyers face fierce competition for housing and have been desperate to make their offer stand out. Bidding wars have grown common: The average sold home in May had five offers, according to the latest REALTORS® Confidence Index survey.
These letters may seem harmless on the surface: But “an example—when a letter comes in, if it describes the family situation or circumstances, whatever that may be, or indicates or gives a clue to a religious or any other protected class, there’s always the risk that a seller could be accused of making a decision based upon inappropriate factors,” Paul Knighton, CEO of More Realty, told KGW.com.
In Oregon, love letters will no longer be an issue, under the new state law.
As for other real estate professionals nationwide, NAR’s Fair Housing Corner blog offers the following best practices to help protect agents and their clients from fair housing liability stemming from love letters:
- Educate your clients about the fair housing laws and the pitfalls of buyer love letters.
- Inform your clients that you will not deliver buyer love letters, and advise others that no buyer love letters will be accepted as part of the MLS listing.
- Remind your clients that their decision to accept or reject an offer should be based on objective criteria only.
- If your client insists on drafting a buyer love letter, do not help your client draft or deliver it.
- Avoid reading any love letter drafted or received by your client.
- Document all offers received and the seller’s objective reason for accepting an offer.
Watch this video from NAR’s legal team on how to handle multiple offers to minimize your liability risk.