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Buyer Love Letters

To Be or Not To Be
Posted: February 06, 2021 by Mark Griswold

Romeo, Romeo, wherefore art thou my next home? Poor Romeo and Juliet never got the opportunity to buy their first home together but, chances are, if they had, and if their parents hadn’t disowned both of them, they probably would have been able to make an all-cash offer on a nice little villa overlooking the Adige River, such was the wealth they both came from. I’m guessing competition was also not as stiff back then as it is today.

Buyers today, though, face tough competition for a house, especially here in North Idaho. Multiple offers, often in the double digits; starting bids well above asking; and all-cash offers are typical. So what are buyers to do to separate themselves from the competition? Usually, it does come down to who can pay the most with quick and easy closing terms also being strong predictors, but, sometimes, it pays to offer something that numbers can’t buy and that’s where buyer love letters come in.

They’ve been around a long time but, in a hot market like the one we’ve been experiencing for a few years now, they are more popular than ever. They’ve even started being included with offers for commercial properties.

The fact is, for most people who’ve lived in a house for more than a year or two, that house becomes a part of the family. They formed countless memories under that roof; celebrating birthdays and holidays and witnessing many “firsts”. Their house isn’t just a house, it’s a home, and they do care, even if it’s just a bit, about who is going to live there after they do. Are the new owners going to rip it down or remodel it? Are they going to care for the garden the seller planted? Are the buyers even going to live there? (During the heady days of foreign real estate investment, some buyers even bought houses as cash-shelters, sealed them up, and let them sit, no one to “love” them.)

Some agents may disagree and plenty of lawyers, afraid of Fair Housing lawsuits, advise buyers and sellers to stay as far away from Buyer Love Letters as possible. They advise sellers not to look at them if received and to only make a decision based on objective criteria. But lawyers are paid to consider worst case scenarios and mitigate certain risks down to as close to zero as possible. (To be sure, real estate is just a very small subset of the law so, as an agent, my job is to do the same to a large extent; it’s why there are so many pages of paperwork to fill out when buying or selling a home.)

The fact is, though, life is full of risks that have to be balanced and the same is true with buyer love letters. I know of a number of instances where sellers didn’t accept the “highest and best” offer. Perhaps they didn’t want an investor coming in and ripping down the home that their grandfather had built with his own two hands. Perhaps they wanted to know that those prize roses they’d spent so much time tending would receive the same attention. Perhaps the buyer love letter expressed an excitement to be part of the neighborhood, to attend the summer block parties, and exchange more than a curt nod to those living next door. If those sentiments weren’t portrayed in a letter, the sellers may have chosen to go with someone else and that’s the risk to not including one.

What’s the downside? For the buyer, none really. I suppose there might be sellers and agents so afraid of violating some Fair Housing Law that they decide not to accept any offers that come with a letter, but, even if that fear might be real for some, they are likely to just not read the letter and continue on choosing based on objective criteria.

For sellers, the risk might be slightly greater but it’s still so minimal that it shouldn’t be of great concern as long as the seller is not discriminating based on any Fair Housing criteria. But here’s how it might play out, just for the sake of argument. A seller receives a letter that talks about how much the buyer’s kids will enjoy playing in the backyard and how the vaulted ceiling in the living room is perfect for the family Christmas tree. These two things, which reveal family status and religion (although plenty of non-Christians put up Christmas trees so I’m not sure that’s even accurate) of the buyer, could be possible grounds for a Fair Housing suit, but again, what are the realistic chances of a potential buyer who lost out suing on the off-chance that they think they lost out because they fell into a certain category? Offers are private. Letters don’t get posted on some website for the world to see and listing agents aren’t allowed to show them to anyone other than their sellers.

All that said, here are some tips when drafting that Buyer Love Letter:

  • First, your agent probably won’t help you draft it nor should they. You know best what you love about the house and your personality will come through better if you write it.
  • Steer clear of details about yourself that could reveal your status in a Fair Housing class (race, color, national origin, religion, sex, family status, and disability; in some jurisdictions, sexual-orientation and identity are also categories). Don’t talk about your kids, your holiday gatherings, or how the oven will be perfect for baking a big pan of your particular culture’s special dessert. (Just say it’ll be perfect for baking.)
  • Do talk about the house and neighborhood! Not only will this allow you to steer clear of those Fair Housing categories; people usually like hearing about themselves more than they like hearing about other people. So, talk about how much you love the roses and how you plan on taking care of them. Talk about how your dream home always included a soaking tub or wainscoting. Talk about the fact that the house is located on a dead end and you see dead ends as bringing life to a neighborhood. (True story: I was moved by this exact sentiment in a letter when I sold my personal home; objectively, the offer was also the best, but I was still touched by the sentiment in the letter.) Talk about the large basement room and how it will be perfect for movie nights.
  • Bonus: if the seller hasn't "depersonalized" their home and you see something that you share in common—maybe you graduated from the same college; maybe you both love Harleys—it doesn't hurt to include that.
  • Do talk about how you plan on living there and not just using it as a rental or fix-and-flip project. Again, people love their homes as if they were another family member and the fact that you are the intended occupant can sometimes sway the seller if a similar competing offer is from an investor.
  • While there are several Fair Housing categories, a buyer's financial and employment status is not one of them. Typically, an offer comes with a pre-approval letter from the mortgage lender (if your offer doesn't include one of these—or "proof of funds" if you're making an all-cash offer—your agent isn’t doing their job), but you may also want to let the seller know you are secure in your employment. While this doesn't need to go into the your letter, a pro-active call from your mortgage lender to the listing agent to assure them that your loan is on track and all your financial statements and employment have been verified, is probably the most important thing you can do beyond making a strong offer. Having your mortgage lender be pro-active also shows the listing agent that they'll be easy to work with during the transaction since, in most cases, any issues that come up after the inspection has been completed will be mortgage related.
  • Don't "oversell" yourself. You still want to get the best deal you can and, if something comes up during an inspection and you want to ask for a price reduction or some other concession from the seller, you still want to have some negotiating power, so avoid using language like "I'd do anything to get this house!" or "this is the tenth house we've looked at and if we don't get it I don't know what I'll do!"
  • It probably goes without saying, but don't include anything negative in the letter like "I really love your house but what were you thinking painting the walls green?! That will be the first thing we change when we move in!"
  • Consider hand-writing it (then scanning it, if you're submitting it electronically). The hand-written note is increasingly a thing of a bygone era and will go a long way.
  • Keep it short; one page typed or two-pages handwritten.
  • Proofread it. A lot of people don't seem to care much about grammar and spelling these days, but enough do that your attention to detail here will reflect on your attention to detail during the transaction (even if your agent is the one doing most of the work).
  • Include your letter in a sealed envelope separate from the rest of the offer (or as a separate attachment, if sending it electronically) so that sellers who do want to refrain from reading it can easily do so.

Finally, remember that, while buyer love letters may push your offer over the edge, “highest and best” is almost always the deciding factor, so make your offers objectively strong!

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