Agents Who Submit ‘Love Letters’ Risk Committing a Fair Housing Violation

Until recently it was a common practice for buyers’ agents to submit a “love letter” with their offers, hoping to convince the seller to choose their buyer over others in a bidding war.

That practice has fallen out of favor, however, as doing so might constitute a violation of federal Fair Housing rules as well as of the Realtor Code of Ethics.

Article 10 of the Code includes the following: “Realtors shall not be parties to any plan or agreement to discriminate against a person or persons on the basis of race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity.” Such discrimination is also a state and federal fair housing crime.

It would be hard not to reveal any of the above characteristics in a “love letter,” especially if it contains a photo of the buyer or buyer’s family. But there are other subtleties to consider. One of the sessions at last month’s National Association of Realtors conference was titled, “How to Stay Out of Trouble: Risk Management and the Code of Ethics,” taught by Barbara Betts, a California Realtor who is also a hearing officer for violations of the Code of Ethics.

In her talk, as reported by Inman News, Betts described how risky such letters could be, especially for the seller and listing agent. “Sellers are humans. Even though they are not purposely trying to create a fair housing situation for themselves, they inadvertently are,” she said. “When the seller gets these letters, they get excited to sell the home to someone they feel will fit into their neighborhood, and that’s where there’s a problem.”

The danger is intensified when there are competing love letters. Imagine, for example, that one of the buyers reveals himself to be a single African American who says your home is perfect for him because he is wheelchair-bound, but your seller chose a family with children who liked your home because it’s close to their synagogue. That choice has offered a veritable smorgasbord of fair housing violations that the rejected buyer could mention in a fair housing complaint, and that their broker could cite in a Code of Ethics complaint against the listing agent.

“We need to consider raising fair housing concerns with our buyers,” Betts advises her fellow Realtors. “Don’t read or accept these letters that are drafted by a buyer. Certainly do not give any support or suggestions. As listing agents, we definitely need to discuss the potential liability during the listing interview and not deliver or accept these letters for the seller.”

Betts added, “If the letter is all about ‘I love your home. It’s beautiful. I love how you’ve remodeled it, I promise I won’t tear it down and remodel it,’ there aren’t any fair housing violations in those statements. The second you start talking about family, color, race, religion, marital status, those things instantly become possible fair housing violations.”

For all these reasons, the agents at Golden Real Estate no longer submit or accept “love letters” from buyers. If we receive one, it’s best that we don’t even read it and that we inform the buyer’s agent that we have deleted it.

There are other ways in which Realtors can commit a fair housing violation, perhaps unconsciously. One is the practice known as “steering,” in which an agent recommends different neighborhoods to different buyers based on where they would “fit in” because of their race, color or religion. We must truly be blind to such characteristics and give the same information to all buyers. Fortunately, buyers do their own searching most of the time. As agents, we must show any buyer what they want to see without comment of any kind.

When a buyer from out of town asks us to describe our neighborhoods, it’s best to avoid all demographic descriptions, limiting ourselves to describing the housing stock, price range, etc. We must not provide such information with an intention to steer them based on their profile.

Meanwhile, sellers expect us to show their homes only to qualified buyers, but if we ask some buyers but not others to be pre-qualified by a trusted lender before showing a listing, we open ourselves to possible fair housing complaints.

We’d all like to believe that racism and other kinds of systemic or cultural discrimination are artifacts of the past, but we are more aware than ever that such discrimination exists even within ourselves, hopefully unconsciously. Unconscious or not, we need to realize that beyond being morally wrong, it can get us into serious professional trouble as agents and that it can also put our clients at risk, making it more important than ever that we educate our clients about the risks they could be facing.

Author: Golden Real Estate, Inc.

Golden Real Estate is a prominent member of the Denver/Jefferson County real estate scene. Based in Golden, we service both Denver and Jeffco, representing both buyers and sellers. We're well known for Broker Jim Smith's weekly "Real Estate Today" column published in the Denver and Jeffco editions of the Denver Post's YourHub section each Thursday. The column also appears in several weekly newspapers and is archived at www.JimSmithColumns.com. We have nine agents, all of whom are Realtors and EcoBrokers. Our office is Net Zero Energy since December 2017, and several of us drive electrics cars. Known for our sustainable practices, we accept polystyrene (aka "Styrofoam") for recycling, keeping 200 cubic yards per year out of area landfills.

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