The Unintended Consequences of a Buyer’s Love Letter
May 27, 2017
As the elements of an uncomfortably familiar marketing period unfold, I encountered a set of circumstances that gave me pause.
In a heated market where there are multiple offers, competition is painful for buyers and difficult for sellers who have to make choices about what offer to select. It is rare that all offers are the same when you look at the variables of down payment, quality of lenders, and reliability of pre-approval letters, job stability and credit scores. It is possible for a seller to select an offer on its own merits.
An interesting practice has developed where buyers provide letters appealing to a seller’s emotions. Photos are often included which show the family on an outing at the beach with the little bouncing children tumbling with the non-descript playful pup. Of course, the kids are cute and the parents are charming.
Or, the photos might show grandma and grandpa holding the three little grandchildren who come to visit and that is why they need the big yard and two master bedrooms.
In a case of multiple offers accompanied by a variety of appeal letters, it may be easy for a seller to be viewed as discriminatory if a solid offer was bypassed because it was written by two men or two women, or a single career woman from what is considered to be a minority with no children, or two professional men who are business partners and want to lease the home to college students.
The Fair Housing Act protects people from discrimination when they are renting, buying, or securing financing for any housing. The prohibitions specifically cover discrimination because of race, color, national origin, religion, sex, disability and the presence of children.
Housing discrimination occurs when an individual or family is treated unequally when trying to buy, rent, lease, sell or finance a home based on certain characteristics, such as race, class, sex, religion, national origin, and familial status. This type of discrimination can lead to housing and spatial inequality and racial segregation which, in turn, can affects the wealth disparities between certain groups. In the United States, housing discrimination began after the abolition of slavery as part of a federally sponsored law, but has since been made illegal; however, studies show that housing discrimination still exists.
Federal and State governments have various laws stemming from rights guaranteed by the US Constitution. Most of us think we know what that means, but a recent experience in the market place makes me wonder.
Most of us believe a seller has a right to select any offer they choose no matter what. In a recent specific example, the seller selected the offer on her 2000 sf home from buyers who had children. A competing offer was from a multi-lingual, single woman with a master’s degree and with no children. Her offer was over asking price, credit score was high and the down payment was almost a full 50%.
The agent representing the seller stated the other offer was accepted because of a written and passionate plea for consideration–and they had children.
In another case where a “Love Letter to the Seller” was written to entice acceptance of the offer, there was a moment in time when the seller and the buyers ended up at the property for a garage sale without their agents. There was an argument over a delayed closing and strong words were used. The sellers felt their buyers’ “love letter” was deceptive and considered opportunities to cancel the transaction fearing an unhappy future for family members who lived next door. This is not a discriminatory practice but the letter set up the circumstances for second thoughts.
This matter is very important to Realtors®. Our Code of Ethics provides specific instruction in Article 10 where “REALTORS® shall not deny equal professional services to any person for reasons of race, color, religion, sex, handicap, familial status, national origin, or sexual orientation. REALTORS® shall not be parties to any plan or agreement to discriminate against a person or persons on the basis of race, color, religion, sex, handicap, familial status, national origin or sexual orientation. (Amended 1/11).
Real estate contracts and documents include warnings, admonitions and agreements about fair housing, equal opportunity and fairness. In the typical listing agreement, it simply states in paragraph, “14. EQUAL HOUSING OPPORTUNITY: The Property is offered in compliance with federal, state and local anti-discrimination laws.
In the Real Estate Purchase Agreement, paragraph 27 reads: “27. EQUAL HOUSING OPPORTUNITY: The Property is sold in compliance with federal, state and local anti-discrimination Laws.”
Generally speaking, anti-discrimination law refers to the law on the right of people to be treated equally without regard to sex, age, race, ethnicity, nationality, disability, sexual orientation, gender identity and sometimes religious and political opinions.
I believe we all have a sense we can sell our home to anyone we choose, particularly if one party is viewed as a better fit for the neighborhood. However, there are many laws which should prompt all of us to think differently about that and look at the merits of the offer and not the attributes of the people making it.