In California’s competitive markets, real estate agents depend on an arsenal of creative weapons to secure home sales transactions. But one of those weapons — the buyer love letter — is now coming under fire.
Homebuyer love letters are personal notes sometimes included in an offer, written to appeal to the seller on an emotional level. They often gush about the property (“I love your additions to the living room”), reveal some personal detail in the hopes of making a connection (“I noticed your garden, I have a green thumb too!”) and might even include a picture-perfect family portrait.
A good love letter plucks the seller’s heartstrings in a way that all-cash offers cannot. But even heartstrings wear down and being inundated with love letters in a hot market can cause sellers to tune out. More importantly, the letter might reveal a personal detail about the buyer against which the seller may harbor implicit bias.
The seller loves me, loves me not
Though agents are split on their effectiveness in swaying sellers, love letters come roaring back during competitive markets. In California, home prices rose sharply in response to the pandemic; closing transactions became an industry meme. Up against all-cash offers, California’s real estate professionals pulled out all the stops — including love letters.
In less competitive markets, these letters fall on deaf ears. And such a market is looming; the second half of the double-dip recession is expected to arrive heading into 2023.
California’s housing market stands at the precipice of a downturn, with prices expected to bottom in 2025. In fact, real estate licensees in the state are already seeing steep price cuts at every tier. Shortly, today’s hand wringing over the appropriateness of love letters will become moot. They may not return again until 2026 or 2027, when firsttuesday expects a sustainable recovery.
Editor’s note — Prepare for the upcoming recession by expanding your real estate skills and credentials with firsttuesday’s California Notary Education course.
But there’s a chance love letters may not even return for the next boom cycle. Thanks to increasing scrutiny on discrimination in real estate, some professionals are writing them off altogether. The concern is that sellers will base their decision on a personal detail, possibly discriminating against a stronger offer from a protected group.
The Federal Fair Housing Act (FFHA) prohibits discrimination in the sale, rental, and financing of housing based on:
- race or color;
- national origin;
- religion;
- sex;
- familial status; or
- disability.
California’s list of protected classes is more extensive than federal protections, with discriminatory practices prohibited based on an individual’s:
- race or color;
- religion;
- sex;
- sexual orientation;
- gender identity;
- genetic information;
- marital status;
- national origin;
- ancestry;
- familial status;
- source of income; or
- disability.
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Some states have gone as far as banning love letters entirely. Oregon House Bill 2550 prevents a seller from accepting love letters (including photographs) from buyers entirely. The bill became effective in 2022 but was recently blocked by a judge, establishing a preliminary injunction that prohibits enforcement of the law until a final decision is reached.
But here in California, love letters are still free to pluck heartstrings. A lawsuit has yet to challenge a seller or a real estate professional on discrimination based on a love letter. Experts rate the likelihood of successful legal prosecution in a love letter case as difficult to impossible. This is because a prosecutor would have to prove beyond doubt that the seller discriminated against a buyer based on their protected group status, and not the myriad other variables in the offer.
Implicit Bias training
For seasoned agents and brokers, the quiet discussion of managing clients’ personal biases is nothing new. But with the passage of California Senate Bill (SB) 263, that discussion has been codified in real estate licensing and education law.
SB 263 requires California licensees to undergo 2-hour course in implicit bias training; and 3-hour course on fair housing. This includes a critical interactive component in which the licensee roleplays as both consumer and real estate professional to explore implicit and explicit biases in the industry. These tools aim to create a better understanding of discrimination’s many facets, including those potentially communicated through love letters.
Editor’s note — firsttuesday is one of the first California real estate schools to develop and submit its own training and to the California Department of Real Estate (DRE) for approval. Sign up for the firsttuesday Newsletter to be notified when the course is available for your license.
Identifying personal biases in the real estate industry is only one step toward creating a fairer and more equitable California. Visit the firsttuesday resource page Legislative steps toward more affordable housing to stay ahead of California real estate’s changing legal landscape.
And let us know in the comments: will you continue to use buyer love letters in California despite their potential liability?
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Real Estate Principles
Chapter 8: California Fair Employment and Housing Act
