Oregon Is About to Ban a Popular Homebuyer Bidding War Tactic
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When I bought my house almost three years ago, I wrote a letter to the seller. I talked about my dog, my kids (they looked to be about the same age as the seller’s, judging by the toys in their playroom), and I fawned over my big plans for the huge cul-de-sac lot. I even dropped a mention that my husband was a local teacher.
I have no idea if that letter swayed them, but I do know this: We got the house — even with other offers on the table.
My story is hardly unique. These kinds of “homebuyer love letters” have long been a staple of the industry — particularly in hot markets or those rife with first-time homebuyers. Buyers use them to stand out, differentiate themselves from the pack, and often, make a personal connection with the seller in hopes of winning the home. According to Matt Brennan, a Redfin agent in Portland, they “make an offer more human.”
Soon, though, these letters will no longer be an option — at least in Oregon.
As of January 1, the state is banning buyer love letters, also called offer letters, in a proactive attempt to avoid discrimination. These letters, supporters of the new law say, open the door to Fair Housing Act violations, allowing sellers to potentially make decisions based on a buyer’s race, religion, family makeup, gender or anything else they should choose to include in the note.
“I have never seen a love letter that did not potentially violate Fair Housing laws,” says John Turner, CEO of Century 21 Northstar in Portland. “These letters always describe individuals and families and how they are unique — AKA different from others.”
Tori Syrek, head of advocacy communications for the National Association of Realtors, says many real estate professionals have harbored similar Fair Housing fears for some time. The organization — which has more than 1.5 million member-agents across the U.S. — actually issued a legal update last year with the heading “love letters or liability 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,” the group explained. “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.”
It will soon be illegal to write a letter to a home seller in Oregon
That undue influence is just what Oregon’s new legislation — HB 2550, is looking to curb. Introduced by Oregon State Representatives (and licensed real estate agent) Mark Meek earlier this year, the law prohibits agents from accepting any photos or documents not explicitly required for the transaction — including love letters.
“We have certain transactional documents — the paperwork that we use to actually write up the offer, addenda items, disclosure forms, etc. — in the state of Oregon,” says Alaina M. Giguiere, broker/owner at RE/MAX Coastal Advantage in Cannon Beach, Oregon. “The reality is those love letters are not a part of that.”
It’s quite the about-face from how things are currently done. In fact, Turner estimates about half his past transactions included love letters. And Patrick R. Smith, president of Century 21 Cascade in Clackamas just outside Portland, says they’ve been particularly popular in the last few years as Oregon housing heated up.
In just the last year, Oregon home prices have jumped over 20%. And at one point, nearly two-thirds of Portland buyers faced a bidding war.
“For the past several years, Oregon has experienced an aggressive seller's market in most parts of the state,” Smith says. “It has not been unusual — during peak periods, for sellers to receive as many as two dozen or more offers on their homes. Buyers often have written letters to express how much they like a seller's home, to make a mutual connection through their love of pets, or even tug at a seller's heartstrings with a heartwarming story. Many times, they worked.”
A legal challenge
Oregon’s new legislation is the first of its kind and, according to Turner, should establish a “more level playing field for buyers,” while also protecting sellers and agents from inadvertent Fair Housing violations.
Still, not all real estate professionals are pleased with the move.
Total Real Estate Group, a boutique real estate firm in Bend, Oregon, is actually challenging the ban’s legality in court. The group alleges the new law is a violation of agents’ and consumers’ First Amendment rights.
“This censorship is based on mere speculation that sellers might sometimes rely on information in these letters to discriminate based on a protected class,” the claim reads. “Guesswork is not adequate grounds for suppressing truthful speech.”
Though the case is still working through the Oregon court system, a motion to expedite the process was denied. The defendants — Oregon Real Estate Commissioner Steve Strode and Oregon Attorney General Ellen Rosenblum — have until December 23 to file a response.
As it stands, the ban is set to go into effect January 1, 2022.
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