With a signature from Governor Kate Brown in June, Oregon became the first state to prohibit seller’s agents from accepting so-called “buyer love letters” and other forms of communications from buyers to sellers.
Buyers use love letters to make their offers stand out and reach sellers on an emotional level. They are more common in competitive markets, like Portland, where sellers often receive multiple offers.
However, divulging information about race, gender, religion, and family makeup raises fair housing concerns, as sellers may unconsciously — or purposefully — reject and accept offers based on a protected status.
Given the fair housing concerns, love letters are becoming less popular and Oregon’s ban may be the start of a national trend.
Once a common practice, love letters have been losing steam as seller’s agents try to steer clear of Fair Housing Act violations.
In October 2020, the National Association of REALTORS® (NAR) released guidance surrounding this practice, which includes the following:
“Inform your clients that you will not deliver buyer love letters, and advise others that no buyer love letters will be accepted as part of the MLS listing.”
The NAR guidance uses the example of a love letter depicting the potential buyer’s children running down the stairs on Christmas morning. The scenario reveals both the buyers religion and familial status, and opens the door to fair housing violations.
House Bill 2550’s chief sponsor Rep. Mark Meeks (D-Clackamas) is a real estate agent of over 25 years.
The bill specifically states “a seller’s agent shall reject any communication other than customary documents in a real estate transaction, including photographs, provided by a buyer.”
While some industry professionals view love letters as a fair housing minefield, critics claim the ban is a an unenforceable overreach and a flimsy solution to the problem of housing discrimination.
According to HousingWire, some real estate professionals believe it is their job to educate their clients on fair housing practices and let them make decisions accordingly. Others point out that even in the absence of love letters, sellers may still make judgements based on the surnames or a Google search of the buyers’ names.
There’s also an argument that while it’s intent is to even the playing field, it may tilt it further in favor of investors and all cash-offers. Love letters gave buyers a chance to compete even if they didn’t put forth the best financial offer.
Finally, there’s the question of how far the housing industry could (and should) go to level the playing field. Should names be redacted on offers? Should the type of loan be left out of the equation?
Oregon will serve as an interesting testing ground for the love letter ban. But fair housing concerns are a trending topic, both in the housing industry and government, and it wouldn’t be shocking to see more of this kind of legislation.