Buyer Letters...What You Don't Know May Hurt You

By
Real Estate Agent with Buyers Brokers Only LLC - www.BuyersBrokersOnly.com MA Broker Lic 148149
https://activerain.com/droplet/5bJt

As an exclusive buyer agent, homebuyers ask me all the time about buyer letters.  You know the letters I mean.....the ones where the buyers write about how much they love the house and why they or their family or their kids will love living there and why the Sellers should pick their offer.  The question usually comes to me as "My friend told me I should write a letter....she said it worked for her" or "I read online that I should write a letter when I submit an offer....what do you think?".

I'm really not a huge fan of the letters to start.  Let's just present a strong offer and leave the negotiating to me.  I know Sellers sometimes like to know who will be buying their beloved home.  But, they shouldn't.  First of all, it's none of their business.  Buyers do not need to know about the people selling the house. Sellers should expect the same.

Federal Fair HousingHowever, more importantly, that letter could be a violation of the Federal Fair Housing Act.  The Federal Fair Housing Act provides, in part, that Sellers cannot refuse to sell a house based on race, religion, color, national origin, sex, family status, or disability.  Furthermore, Massachusetts Law further protects homebuyers from discrimination based on age, sexual orientation, marital status, veteran status, ancestry or source of income.

That letter that the buyer wrote that says that their family and kids would love living in that house? Well, if that buyer's offer is chosen and another buyer - perhaps a single person without kids - does not have his/her offer chosen, well then that Seller could be facing a Fair Housing  complaint.  Not only that, any real estate agent who facilitated that letter - by encouraging or even forwarding the letter - could be facing the same complaint, as could their broker. 

The fine for a first violation of the Fair Housing Law is $10,000.00.  The fines increase substantially after that, not to mention any further civil charges or action by your local real estate board.

Sure, the Seller may have just picked the highest offer or best terms.  Do you really want to have to go to court to prove that?  

Let's just focus on the price and terms of the sale and let the strongest offer win. And while you're at it, you may want to re-think some of those property descriptions, stop asking me what my clients do for work, if they're married, where they're from or if they have kids.  But those are stories for another blog post.

 

 

 

 

 

 

 

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Christine Smith is an Attorney and Exclusive Buyer Agent with over 25 years of experience in the real estate field. 

 

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Re-Blogged 2 times:

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Rainmaker
570,170
Christine Smith
Buyers Brokers Only LLC - www.BuyersBrokersOnly.com - Canton, MA
Exclusive Buyer Agent & Attorney, Canton, MA

Jeff Dowler CRS .....I had no idea I was pickded up by Inman!  I must go find that!

While the fair housing is hard to prove, that does not stop someone from bringing the case to begin with.  And the cost of defending one is not cheap. Plus, if a Seller is sued and their agent did not warn them about the risk, then the agent could be on the hook to the Seller.

Oct 28, 2014 07:20 AM #69
Ambassador
4,044,775
Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

More good points, Christine Smith 

Here's the INMAN LINK

Jeff

Oct 28, 2014 08:03 AM #70
Rainer
133,134
Deleted Account
Fort Myers, FL

Christine, I can sum it up in two words.......WELL SAID!  I would never pass a letter along and for the reasons you stated.   When a seller client asks about the buyer client or the other way around, I simply say we really shouldn't say anything about the other side, as some things could and would violate agent-client confidentiality.

Oct 28, 2014 09:34 AM #71
Rainmaker
570,170
Christine Smith
Buyers Brokers Only LLC - www.BuyersBrokersOnly.com - Canton, MA
Exclusive Buyer Agent & Attorney, Canton, MA

Thanks Jeff!

William...exactly right...and why risk it?

Oct 28, 2014 10:34 AM #72
Rainer
5,921
Imran Mohamed - Broker Associate
La Rosa Realty,LLC - Orlando, FL
CIPS®,ABR®, SFR®, AHWD, PPMC

The seller or the agent did not prevent anyone from viewing the property or from presenting an offer or violated any of the Fair housing.  They did not refuse to sell, they did not set different terms, conditions or privileges for sale, etc. based on race, color, national origin, religion, sex, familial status or handicap (and other state specific additions). The seller however has the fundamental right to select the offer he/ she wishes to accept and that decision could be on compassionate grounds or monetary or a combination of both. So I think there is no basis to not present the letter if the buyer so wishes.

Oct 29, 2014 04:23 AM #73
Rainmaker
570,170
Christine Smith
Buyers Brokers Only LLC - www.BuyersBrokersOnly.com - Canton, MA
Exclusive Buyer Agent & Attorney, Canton, MA

Imran Mohamed - Broker Associate .....it's not about viewing the property or presenting the offer.  Refusal to sell based on these protected classes is a violation. That's the same as picking one offer over another based on one of thse protected classes.

We are talking in hypotheticals here. It depends on what the letter says.  But IF the Seller accepted an offer, accompanied by a letter, and that letter mentioned a protected class - maybe it's a married couple with kids, maybe they mention they're of the same religion as the Sellers - and there was also another offer or offers - those other offers maybe did or didn't have letters but maybe one was from an unmarried couple or a single person and maybe one just happens to be of a different religion.  And - then the offers were identical or maybe even the offer without the letter was even higher - yet the offer that had the letter was chosen - right there is your possible Fair Housing violation.  

If the buyer whose offer was not chosen feels that they have been discriminated against because they were not married or didn't have kids (or whatever may have been on the list), they can go to HUD, claim a Fair Housing violation and bring a complaint against the Seller, the listing agent and the buyer agent.  They do not have to prove intent in order to bring a claim.  The letter will be subpoenaed for evidence.  Even if the case is dismissed - the cost of defending it will be pretty high.

True,the Seller can sell to whomever they wish - but not because of someone's race, religion, color, national origin, sex, family status, or disability.  In Massachusetts refusal to sell cannot because of age, sexual orientation, marital status, veteran status, ancestry or source of income.  They can't sell to a white family because they are white or not choose a Latino couple's offer because they are Latino.  They can't choose a married couple because they are married or not choose an unmarried couple because they are not married.  They can't refuse to sell to a same sex couple because they are gay or refuse to sell to someone because he or she is Italian.  These are just a few examples.  

Once those letters start mentioning any one of those items it gets into dangerous ground. The letter has to be completely innocuous. Without the letter, it is more plausible that they picked that offer just because it was a better offer or had better terms or for some other reason - compassionate grounds as you say even.    

I just had an agent ask me last week if my buyer who had just submitted an offer was married "because the Seller would want to know." Really?? What business is it of theirs if my buyer is married or not?!  It smacks of a Fair Housing violation.  

Oct 29, 2014 05:06 AM #74
Rainer
45,041
Christine Yedo Johnson
RE/MAX Unlimited Inc. - Aurora, CO
ABR CRS CNE SFR

Interesting post.  I often ask the buyers to write a personal letter to the seller.  It often works.  It can be the deciding  difference.  It is food for thought

Oct 29, 2014 09:12 AM #75
Rainmaker
570,170
Christine Smith
Buyers Brokers Only LLC - www.BuyersBrokersOnly.com - Canton, MA
Exclusive Buyer Agent & Attorney, Canton, MA

Christine....I think just making sure the letters don't cross the line or disclose more than you'd want to disclose is the key.  I write an introduction with my offer anyway highlighting the key facts - downpayment amount, strength of preapproval - things that point to the strength of the offer.

Oct 30, 2014 09:15 PM #76
Rainer
46,140
Scott Webster
William Raveis Real Estate, Mortgage & Insurance - Wilton, CT

This is good insight, Christine. With my last deal, the letter made all the difference. It did not disclose too much information, yet it personalized my buyers' offer enough to win the house over other offers.

Oct 31, 2014 03:25 AM #77
Rainer
255,116
Geoff ONeill
John L. Scott Medford - Medford, OR

Christine, I think that buyer's letter are useful in many situations.  There is a very troubling aspect of the discrimination scenario that you've brought up.  If the other buyer who did not write a letter were to attempt to sue, on what grounds would that be?  If they were to get hold of a copy of the winning buyer's letter, someone would have had to breached their fiduciary duty to that buyer by not keeping the offer confidential.  The only situation this would be disclosed, would be if the buyer were to allow it.  You might want to take off the Attorney hat.  If the buyer's agent provided the letter with the offer, it is part of the offer, and you have a duty to present it as a package with the offer.

Nov 01, 2014 03:09 AM #78
Rainmaker
570,170
Christine Smith
Buyers Brokers Only LLC - www.BuyersBrokersOnly.com - Canton, MA
Exclusive Buyer Agent & Attorney, Canton, MA

Geoff ONeill .... As I stated a few other times in the comments, I was at a CE class where the longtime, certified instructor raised this issue. You're right about the fiduciary duty but I see listing agents breaching this more often than I'd like to think. And there may be something else that makes a buyer think there was some violation. And just because you're not caught does not mean it's not wrong. If what my client asks me to do is a violation of the law, I do not have a duty to do as they ask either.

Nov 01, 2014 10:49 AM #79
Rainer
255,116
Geoff ONeill
John L. Scott Medford - Medford, OR

One can only speculate why a seller will pick one buyer over another.  If a buyer's agent were to include a picture with their letter, one would have to prove intent by the seller to pick their offer based on the picture.  In any case, I could see a seller picking a buyer with a letter, because it shows that the buyer really wants the house, and might not be as apt to nickle and dime the seller once the contract has been ratified.  In addition, if the buyer's lender needed additional documents at the last minute to make the sale go, the letter speaks to the seriousness of the buyer to perform the extraordinary amount of paperwork needed by the lender to get a loan closed.  The bottom line is:  These letters work. 

Nov 02, 2014 12:44 AM #80
Rainmaker
570,170
Christine Smith
Buyers Brokers Only LLC - www.BuyersBrokersOnly.com - Canton, MA
Exclusive Buyer Agent & Attorney, Canton, MA

Geoff ONeill ....my point being that there is nothing wrong with the letter but it's what some buyers put in them that can be problematic. And Buyers do need to be warned - and then left to their decision - that letting the Sellers know how much they want the house can backfire.  It can go either way.  As long as my buyers are informed and there are no Fair Housing issues then I have no problem with them.

Nov 03, 2014 06:42 AM #81
Rainmaker
414,837
Tni LeBlanc, Realtor®, J.D.
Mint Properties, Lic. #01871795 - Santa Maria, CA
Tenacious Tni (805) 878-9879

Hi Christine -

Thank you for writing this.  Obviously I agree.  However, I am in the extreme minority on this issue and I cannot understand why other agents do not see the issues involved.  Maybe it is because I'm an attorney as well.

I hate these letters.  There are so many problems with them.

I wish there was better education on the issue.

Tni

Nov 03, 2014 02:20 PM #83
Rainmaker
570,170
Christine Smith
Buyers Brokers Only LLC - www.BuyersBrokersOnly.com - Canton, MA
Exclusive Buyer Agent & Attorney, Canton, MA

 Tni LeBlanc  ....I wish there were better education on it too.  I hadn't thought of a number of these issues until I was at a class that covered Fair Housing.  Thanks!

Nov 03, 2014 08:32 PM #84
Rainmaker
226,933
Liane Thomas -Top Listing Agent
BROKER Allison James Estates & Homes BRE 01885684 - Corona, CA
Bringing you Home!

I have to confess, I have never thought of a buyer letter being a Fair Housing violation. Holy cats! So should listing agents just shred them before presenting the offer? Ask the buyers agent to resend without the letter?  

Nov 18, 2014 04:48 AM #85
Rainmaker
570,170
Christine Smith
Buyers Brokers Only LLC - www.BuyersBrokersOnly.com - Canton, MA
Exclusive Buyer Agent & Attorney, Canton, MA

I hadn't thought about it too much either Liane Thomas - Corona & Riverside Real Estate until I attended a seminar on Fair Housing.  The more I thought about it though, the more I realized that some of these things could be violations.  I guess if I were a listing agent I may tell the buyers agent that I was submitting the offer without the letter - as long as you treat all letters the same way.   

Nov 18, 2014 10:39 AM #86
Rainmaker
686,759
Hella Mitschke Rothwell
(831) 626-4000 - Honolulu, HI
Hawaii & California Real Estate Broker

These questions were raised here in Hawaii as well during a time when it seemed like everyone was including a letter with offers. No more.Fraught with potential liability issues.

Jul 10, 2015 01:49 PM #87
Rainmaker
889,605
Sussie Sutton
UTR Texas Realtors - Pearland, TX
UTR TEXAS Realtors - Rep for buyers and sellers.

I have never had anyone request to send a letter or suggested to do it. I have thought about it but never did it. I am so glad you wrote this post because this is a very good point!

I certainly will never asked or let anyone submit one of these letters!

Jul 10, 2015 02:11 PM #88
Rainmaker
570,170
Christine Smith
Buyers Brokers Only LLC - www.BuyersBrokersOnly.com - Canton, MA
Exclusive Buyer Agent & Attorney, Canton, MA

Thanks Hella and Sussie!

 

Jul 12, 2015 03:33 AM #89
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