It’s the perfect house in the right neighborhood, so the competition is stiff, but you’ve absolutely got to have it.
So what do you do?
You make your bid, offering more than the list price because that’s how insane the California real estate market can be in many neighborhoods, and then you sit down and write a love letter.
“We cannot express to you how much we love your home,” says an internet letter-writing primer that includes tidbits about 20-month-old Jimmy, “a wild, fun, curious boy” who’s going to love the backyard, while family felines Bubba and Mr. Cat “will love basking in all the natural light.”
This practice has always struck me as creepy — a fawning essay contest in the dream house sweepstakes. But it’s been part of the super-competitive real estate market for years. Full disclosure: When my wife and I sold our house in Silver Lake five years ago, three bidders wrote us letters, and we were advised to write a letter when we put in a bid on another house.
Lately, though, love letters are generating their own hate mail. They’re under attack from those who say there’s a temptation on the part of buyers to portray themselves as similar to sellers, and likely to perpetuate their values and sensibilities.
Oregon, in fact, recently banned such letters as a potential tool of discrimination. Legislation there directs a home seller’s agent to “reject communication” from a buyer that might lead to a seller basing a decision on a bidder’s “race, color, religion, sex, sexual orientation, national origin, marital status or familial status.”
Meanwhile, both the National Assn. of Realtors and the California Assn. of Realtors have put out guidelines for agents on ways in which love letters can lead to violations of federal fair housing laws.
“The letter can reveal information about a buyer … that should not be considered by the seller in choosing among competing offers,” said the California group, which warned that a seller’s assumptions about a bidder could run afoul of the law. “Applying those assumptions (whether intentional or not) can result in unlawful discrimination.”
I began looking into love letters after reading a story by my colleagues Andrew Khouri and Jack Flemming about an explosion in the number of L.A. neighborhoods where typical homes are now valued at $1 million or more. The story quoted a couple, Dee Foster and Alec Zopf, who wrote a love letter and won the competition for a Highland Park house that drew 27 offers and 15 counteroffers.
They got the place for $1.175 million, or $280,000 more than the listing price. Foster, who had written love letters in the past when bidding on rental properties, said the couple’s agent gave them a to-do list that included writing a letter that essentially explained who they were and why they wanted the house.
“It seemed like it was just a part of the process, and everyone would be doing it and it would be weird if we didn’t,” Foster said.
In the letter, Foster and Zopf said they had looked all over Los Angeles and this was definitely the house for them. They appreciated the love that had been put into it and they would give more of the same to both the property and the neighborhood, and they hoped to raise a family in the house, as the owners had.
This frenzied home-buying free-for-all is a byproduct of California’s housing crisis and staggering income inequality, in which millions are priced out of the market altogether while high earners fight over the short supply of available properties.
When the market is particularly tight, said Dave Walsh, president of the California Assn. of Realtors, the bidding process “is on steroids,” and love letters have included family photos and even videos. Walsh said there’s no consensus among the state’s thousands of agents as to whether legislation is needed. But agents are being advised to inform sellers that the potential for discrimination exists “in today’s super-heated” market.
“We’re advising sellers … to look only at the terms and conditions of the offer, and don’t pay attention to the names on the contract,” Walsh said. “I have seen people put their kids on the play sets in the backyards of properties and videotape their children swinging.” Then, said Walsh, they’ll add the video to their love letter submission, saying, “they’re so looking forward to little Billy or little Sally enjoying this wonderful backyard.”
As contrived and over-cooked as some of those attempts might be, some might argue that homeowners who built a playground for their kids have a right to wish that another set of kids will enjoy the amenities. But in some cases, favoring like-minded people can be a slippery slope, and of course there’s a long history in California and the rest of the country of blatant housing discrimination.
There are also subtle ways, Walsh said, in which the process can be exploited.
“Buyers could go through a property and notice something on the wall that’s religious and make comments in their offers about that in trying to connect with the sellers,” Walsh said.
That can lead to second-guessing from losing bidders, Walsh said, who demand to know, “'Why didn’t you choose me? We offered the same price or more, with better terms, and you didn’t choose me.' So it could be the color of someone’s skin, sexual orientation, or familial status.”
Some agents told me the practice is already being scaled back. Richard Stanley, an agent for 34 years, said he never advises clients to write a letter, and if they insist, he tells them to keep it short and sweet. But he has seen some over-the-top pitches.
“I have seen people mention that they work in the entertainment industry or on a certain show,” said Stanley, who’s with Coldwell Banker in Los Feliz.
Going too far can backfire, he said. He once represented a seller above the Sunset Strip whose bidders included a family who sent a love letter along with a framed photograph of their kids, with a ribbon tied to the frame, like it was a valentine card. When the seller reviewed the offers, she said to Stanley, “Wasn’t it terrible, how they used their kids.”
Stanley said nothing works better when making an offer on a house than to come in “high, quick and clean,” meaning to offer a lot of money that’s quickly on the table, without contingencies that would delay closing the deal.
But sometimes love letters do make a difference, he said, and that bothers him because of the potential to turn what should be nothing more than a business transaction into something else.
“We live in a multicultural society, and while we, as agents, are barred from showing preferences … sellers may not feel the same way and could have hidden agendas,” said Stanley, who thinks California should follow Oregon’s lead on love letters.
“I think they should be banned.”
This story originally appeared in Los Angeles Times.