Legal Breakdown: Buyer Love Letters

This article was updated April 23 with a link to the Buyer Love Letters Part 2 video and its transcription below.

This is a transcription of the Legal Breakdown videos on Buyer Love Letters by Gabe Walsh, IAR Legal Counsel.  This topics was presented in two videos and the transcripts of each video are provided below. 


You can go to our IAR YouTube Channel if you prefer to watch this video.  That transcription of Buyer Love Letters Part 2 is also included below.

Buyer love letters, that's the topic for today. And it is a very important one. It is very timely right now, especially in a hot market. What is a buyer love letter? A buyer love letter is essentially something that a buyer wants to write to a seller to appeal to the emotions of the seller to try to gain some sort of advantage as to why the seller should accept their offer and not somebody else's offer. But what is important is this isn't like trying to get the price or the inspection contingencies or any of that type of thing. These letters are trying to deal with more personal issues.

For example, Bob and Susie write an offer on a house, and after they write their offer, they submit a love letter. Their love letter reads something like, "Susie and I sure loved looking at your house today. My wife and I, we have three kids. They're beautiful. We can just imagine ourselves pouring our hearts into trying to improve this house. We can imagine our kids waking up on Christmas morning and playing in the backyard and doing all these things. I am sure your family over the years did the same thing, and we'd like to create similar memories for our family." The hope is when you submit a letter like this, that you are going to get the seller to fall in love with you. You want them to accept your offer. Here's the problem. What did we just talk about in that letter? We know that Bob and Susie, a heterosexual couple that are married, just wrote a letter talking about the holiday of Christmas, talked about their kids playing in the backyard. We have implicated sex, which is a protected class under Fair Housing laws. We've implicated sexual orientation, which is a protected class under Fair Housing laws. We've invoked familial status, religion. All these things have come up.

So what happens if Bob and Susie write an offer that is identical, or let's say not identical. Let's say Bob and Susie write an offer on a house, and there is an offer for an additional $150 from Bill and Bobby. And the seller takes Bob and Susie's offer. There is going to be a strong argument that could be made that by taking that offer, you have made a decision based on a protected characteristic and violation of Fair Housing laws. And we know that both sellers can be liable for Fair Housing violations, and realtors can also be found in violation of Fair Housing laws as well.

So what do you do? How do you make sure that this never happens? If you are a buyer's agent, you advise on the front end of the transaction that you are not going to submit any love letters. You are only going to make an offer based on criteria, such as the price, such as inspection provisions, such as all those things that are normally part of a real estate contract. You are not going to try to get the house based on a protected characteristic because that could be a Fair Housing violation. 

On the other side, if you are a listing agent, you are going to tell your seller in the beginning that they shouldn't accept any love letters, that there are Fair Housing violations that could arise if they accept those. So what happens if your buyer is demanding a love letter? You definitely do not participate in it. You don't deliver it. What happens if a seller is demanding that they want you to accept love letters? You just explain the issues with them. The liabilities associated that you are not going to read them, that you are not going to deliver them, that you are not going to touch them.

Again, how do you make sure that this doesn't become an issue? You advise on these types of things at the front side of the transaction. And when you think about these love letters, by the time you take away all these protected classes*, race, color, sex, sexual orientation, religion, national origin, disability, familial status. By the time you take away all these things, it is pretty hard to write anything of any value that doesn't implicate one of these protected classes. While somebody might honestly think that they're not doing anything wrong by submitting such a letter or might feel that they have no intent to do something that is violating the law, that might not matter at the end of the day because what they need to understand is what they are really trying to do in that situation is get a house for a reason that is not allowable. That is illegal.

So again, please be aware of these buyer love letter issues. Again, look at the National Association of Realtors' position on their website on these love letters as well, and understand just the issues that can arise with these letters next time you hear about them. 

Buyer Love Letters Part 2

This is a transcription of the Video Buyer Love Letters Part 2.

As many of you probably have already seen, we released about a week ago a video called Buyer Love Letters. Before watching this video, you should definitely watch part one, which fully explains what a buyer love letter is, what the potential issues and what the potential liabilities are when using these letters, all those things. Watch that first video.

Also, important to know is for the purposes of that first video, when we were talking about buyer love letters, we were really talking about love letters that were not actually part of an offer. In other words, they might have been submitted at the same time as the offer or just after an offer, but either way, they weren't actually an incorporated term of the offer to purchase real estate. Let's talk now about the questions we've heard after publishing that first video. 

Some questions have been posed, "Well, what happens if a buyer love letter or paragraphs that could be construed as a buyer love letter are actually incorporated into the buyer's fully integrated offer?" Let's talk about that just a little bit. You know as a Realtor®, generally speaking, that you have an obligation to present all offers, right, and to deliver offers. As a listing agent, once you receive an offer from a prospective purchaser, you have an obligation to timely present all offers to your client.

Now, what happens if that offer has a love letter in it? Well, on the one hand, while you have an agency duty, generally speaking, to make your seller aware of all those offers, of course you do not have fiduciary duties to help them carry out illegal activity. On the flip side though, if they have that offer and you present it to them and it has something that could be construed as a love letter within it, you need to make sure that they fully understand what the ramifications of that letter are. That those letters, while they might appear to have maybe some non-discriminatory purposes, in effect if they are targeting or if they're mentioning protected classes, a seller could be violating fair housing laws if they are accepting an offer, for a discriminatory purpose. You have to have that conversation with your seller if you receive an offer that has that letter in it.

With that being said, make sure if a seller accepts an offer that could have some language in it that appears to be a love letter, document, document, document. Document your conversations and make sure you have made them aware of the issues and make sure there is an objective reason as to why they have accepted that offer. Because keep in mind, the first video never was intended to say that price means everything. There might be situations where price isn't the deciding factor. However, a seller cannot use a discriminatory purpose based on protected classes as a basis for accepting one offer over another. Keep that issue in mind.

Another concern or question that was raised was, "Well, what if we don’t use any descriptive language within the love letter or what if we don't implicate any of the protected classes?" Again, I think the video made it very clear the first time around that it's very hard to write a letter without implicating a protected class. But maybe there's something like you write a paragraph that says, "We really love the bushes that are in the front yard." That doesn't seem to be implicating a protected class. That being said, if that quickly is changed to, "My wife and I really like the bushes that are in your front yard. We'd love to have those at our house." Now you have arguably implicated the protected class, which is implicating fair housing laws. Just understand those nuances.

Finally, how do you avoid all this? You have these conversations right away at the very beginning of your first contact with your client. If you are representing a buyer in this hot market, you help them to understand that you are going to do everything in your power to get the house of your dreams. We're going to do everything we can within the law to be competitive to get that offer, but you have to understand, client, that I, as a Realtor®, am obligated to follow fair housing laws. Our Code of Ethics requires us to provide equal professional services to everyone. I cannot be a part of any plan or be part of something that is trying to get you to get a house for a reason that violates fair housing laws. Have those conversations up front. Again, if they're demanding that there be a letter, just do not participate in it. Have them deliver it. Just be very careful in those situations.

On the flip side, as a listing agent, before you even sign that listing agreement, when you are having that first meeting, make sure they understand love letters. Make sure they understand fair housing. Make sure they understand they cannot accept a house for a reason that is discriminatory in nature. Maybe you and your client can have a discussion on the front side and you and your client can agree in writing that they do not want to be presented any love letters at all. Get that written consent on the front side of the transaction to mitigate your risk later down the road. Have these conversations early.

As always, as we know you always do, continue doing the right thing. Continue upholding the integrity of this profession and please let us know if you have any other questions.



*The protected classes mentioned in the video and this article are a combination of federal and state laws. 

Disclaimer: This video and transcript is intended to be an education resource for Iowa REALTORS®. The information discusses general legal information and is not legal advice or a substitute. Every situation involving areas of the law, such as the areas discussed in this video/article, are sensitive to the particular facts of your case, and therefore, you should always consult your own legal counsel to get legal advice.


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