Fair Housing Act

The National Association of REALTORS® recognizes April as Fair Housing Month. The Fair Housing Act is a federal law enacted in 1968 that prohibits discrimination in the purchase, sale, rental, or financing of housing—private or public—based on race, skin color, sex, nationality, or religion. The statute has been amended several times, including in 1988 to add disability and family status. So how does Fair Housing translate to real life real estate transactions in the greater Morgantown community with the current state of affairs?

We regularly talk about how aggressive the housing market currently is. Houses go under contract very quickly; many times with multiple offers in competitive situations. Some strategies in multiple offer situations used to help tip the pot in the buyers’ favor may include cash offers, fast closing/escrow time, no inspection contingencies, and/or paying an appraisal gap. Another tool which has been practiced for several years is the writing of ‘love letters’.

Love letters are a strategy used by some buyers in an attempt to stand out to a seller, especially in hot markets with low inventory and multiple offers. Seemingly harmless, these letters actually raise fair housing concerns, and could open real estate professionals and their clients to fair housing violations. This week, we’ll learn how to protect yourself from the potential liability related to buyer love letters.

To entice a seller to choose their offer, buyers sometimes write “love letters” to describe the many reasons why the seller should “pick them.” While this may seem harmless, these letters can actually pose fair housing risks because they often contain personal information and reveal characteristics of the buyer, such as race, religion, or familial status, which could then be used, knowingly or through unconscious bias, as an unlawful basis for a seller’s decision to accept or reject an offer.

Consider where a potential buyer writes to the seller that they can picture their children running down the stairs on Christmas morning for years to come in the house. This statement not only reveals the potential buyer’s familial status, but also their religion, both of which are protected characteristics under fair housing laws. Using protected characteristics as a basis to accept or reject an offer, as opposed to price and terms, would violate the Fair Housing Act.

Before the next time you are faced with a buyer love letter, consider these best practices to protect yourself from fair housing liability:

Educate yourself about the fair housing laws and the pitfalls of buyer love letters.
As a SELLER, your decision to accept or reject an offer should be based on objective criteria only.
Understand your BUYER’S agent may choose not engage in the origination, drafting, or delivering of the love letter as so limit the risk of violating Fair Housing laws.

Your list agent should document all offers received and the seller’s objective reason for accepting an offer.
Be mindful of these guidelines if you choose to exercise this strategy. Learn more about the Fair Housing Act online. Until next week, love where you live. And if you don’t… contact your local REALTOR®.

Brian Haufe, 2022 MBOR President