Home may be where the heart is, but playing with a seller’s emotions can lead to problems.
In competitive housing markets, agents sometimes encourage buyers to write “love letters” in the hopes of influencing the seller to choose their offer. But experts are warning more and more that these missives could lead to discrimination.
The problem is, these letters often contain personal information and reveal characteristics of the buyer, such as race, religion, or family status. These facts could then be used, knowingly or through unconscious bias, as the illegal basis for a seller’s decision to accept or reject an offer.
For the buyer, it can mean losing a dream home. Meanwhile, the seller risks rejecting a strong deal and possible legal repercussions.
“In a perfect world, the ability to buy a home and the ability to do so should be based purely on your qualifications. Do you have the capacity to make a purchase? Says Lionel Lewis, a broker with New Era Real Estate Group in Cleveland. “But we don’t live in a perfect world. We live in a society where, unfortunately, a lot of decisions are made purely on the basis of race, ethnicity and things like that. “
Does it always pay to write a sales letter?
The National Fair Housing Alliance has not taken a position on whether the real estate industry should get rid of love letters from buyers. But one of her biggest concerns is that there is little standardization when it comes to the use of love letters. This means that using them – or not using them – could lead to bias.
“We urge caution when using love letters and encourage real estate professionals to obtain fair housing training on how to provide advice to consumers who wish to use it,” Lisa said. Rice, President and CEO of the National Fair Housing Alliance.
While letters can be a more personal way to bond with a salesperson, Rice cautions that a letter may not always have the desired effect.
“There are agents who say, ‘Hey listen, join this letter to sell yourself, to sell your family, to convince the seller that they should choose you over this institutional investor who brings money to the deal. “” Rice said. . “You know it can work, but again, it can backfire. “
The information contained in the love letter could favor a discriminatory result. For example, if a housing applicant provided information about family status, religious beliefs, race, ethnicity or ability status, that information could be used against them.
What do sellers need to know to accept a letter?
Rice points out that when salespeople are taken to court and asked why they rejected a potential salesperson, one of the answers the NFHA invariably gets is, “I watch over my neighbors, they are my friends.”
But she says that shouldn’t be a salesperson’s concern. “People wonder who is going to buy my house? Who am I moving in the community? Who is going to move in next to this neighbor whom I consider to be a member of my extended family? So people have these personal considerations, ”says Rice
To avoid violations of fair housing law and costly liability, she says sellers should know what a protected class is as well as what characteristics constitute a protected class under the Fair Housing Act.
The Fair Housing Act prohibits the denial of housing to a person on the basis of belonging to one or more protected categories. The protected classes are race, color, religion, national origin, sex, family status and disability.
Nick Libert, broker-owner of Exit Strategy Realty in Chicago, notes that there are many possibilities for discrimination with or without a letter. For example, social networks serve as information channels.
“What I tell people is when I walk in or out of a house, it’s kind of like going to a cocktail party,” he says. “You probably don’t want to talk about politics or religion, but at the same time you also need to be aware of what you have online when you go to buy or sell a home. “
If you are writing a sales letter, what should be included?
If you want to send a love letter to the seller, the National Association of Realtors recommends asking a lawyer to review it.
“As a general rule, love letters in and of themselves do not violate fair housing laws,” says Rice. “However, any advice that a real estate professional might give to a consumer could result in a violation of the law.”
For example, if a real estate agent advised a man looking for housing to submit a love letter but did not advise a woman to submit a love letter, it could be a violation of federal or state laws. on fair housing.
To increase the chances of staying out of fair housing issues, experts suggest focusing only on the merits of the offer, such as price and terms, the likelihood of the sale closing, and the financial standing of the deal. ‘Buyer.
Lewis recommends focusing on financial credentials and what owning this home would mean to you. It could be finding a better school district, upgrading to a bigger house, downsizing, or a desire to be closer to family members.
“Focusing on bringing out your race and family background, it could be just as damaging as it could be something that improves your status or your ability to get the home you want,” he says.
Simply put, the focus should be on what a buyer can bring to the closing table.
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