Oregon has just made it illegal to include a so-called “buyer love letter” when submitting an offer on a home.
The bill was signed into law by Oregon Governor Kate Brown last week. It states that seller’s agents must now reject any communications from home buyers to sellers that contain any information outside of the actual offer they are making.
Oregon is the first U.S. state to ban buyer love letters in a real estate transaction.
Many times, especially when multiple people are fighting to buy a particular home, hopeful bidders will include a personal and heartfelt letter to the seller. The letter generally describes how much they love the home and how the can picture their family living their, growing up together, hosting holiday dinners in the kitchen or barbecues with the neighbors in the summer. Bidders may also express how they love the upgrades the current owner has made, and how they plan to take care of the home if they’re able to buy it.
The idea is that such a letter may help make the buyer standout when multiple, similar bids have been received. That could be true if the seller has a deep personal attachment to the home and wants to ensure it will be left in good hands.
In recent times though, bodies including the National Association of Realtors have warned against the use of such letters. The problem, according to the NAR, is they might contain personal information about the buyer that could lead to accusations of discrimination. It’s illegal for any seller to discriminate based on a buyer’s race, gender, religion or family makeup, and such a heartfelt letter may contain clues that could lead to the perception of discrimination.
“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,” the NAR explained in a post on its Fair Housing Corner blog last year.
In other words, there’s a danger that the seller could later be accused of choosing a particular bid for inappropriate reasons.
The NAR has welcomed Oregon’s decision to ban buyer love letters, saying that although it is not aware of any instances where they have led to a lawsuit or legal action, it is the right decision.
“We continue to stress that all parties in a real estate transaction should only consider legitimate, non-discriminatory criteria when making business decisions,” the NAR said. Failing to do so could leave realtors in a compromised position.”
The NAR is not alone in opposing the use of love letters. The bill’s main sponsor Rep. Mark Meek (D-Clackamas), is a real estate agent too.
The Oregon bill comes into law at a time when the use of love letters has become more common due to the fierce competition that many buyers face in the housing market today. With low inventory plaguing most U.S. housing markets, the average home sold in May received five offers, according to the latest Realtors Confidence Index Survey.
While love letters remain legal in every other U.S. state, the NAR continues to recommend against their use and encourages its members to educate clients about fair housing laws and the possible risks associated with the letters.
The NAR urges realtors to inform clients that they will refuse to deliver any buyer love letter and state they will not be accepted in their MLS listings. It also say agents should remind sellers that the decision to accept or reject an offer should be based on objective criteria only.