Oregon bans auction war tactic popular with homebuyers
When I bought my house almost three years ago, I wrote a letter to the seller. I talked about my dog, my kids (they seemed to be about the same age as the seller, judging by the toys in their playroom), and loved my big plans for the huge dead end land. I even dropped a mention that my husband was a local teacher.
I don’t know if this letter influenced them, but I do know this: We got the house – even with other deals on the table.
My story is not unique. These types of “love letters for homebuyers” have long been a staple of the industry, especially in hot markets or those crowded with first-time buyers. Buyers use them to stand out, differentiate themselves from the pack, and often, establish a personal bond with the seller in the hopes of winning the home. According to Matt Brennan, a Redfin agent in Portland, they “are making a more humane offer.”
Soon, however, those letters will no longer be an option, at least in Oregon.
As of January 1, the state has banned buyer love letters, also known as offer letters, in a proactive attempt to avoid discrimination. These letters, according to supporters of the new law, open the door to violations of the Fair Housing Act, allowing sellers to potentially make decisions based on race, religion, family composition, location. gender or whatever else they should choose to include in the rating.
âI’ve never seen a love letter that doesn’t potentially violate fair housing laws,â 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, advocacy communications manager for the National Association of Realtors, says many real estate professionals have had similar concerns about fair housing for some time. The organization – which has more than 1.5 million member agents across the United States – actually issued a legal update last year with the headline “love letters or letters of responsibility?” “
âTo get a seller to choose their offer, buyers sometimes write love letters to describe the many reasons the seller should choose them,â the group said. âWhile it may sound harmless, these letters can actually pose risks to fair housing, as they often contain personal information and reveal characteristics of the buyer, such as race, religion or family status, which could then be used – knowingly or through unconscious – as an illegal basis for a seller’s decision to accept or reject an offer.
It will soon be illegal to write a letter to a house seller in Oregon
This undue influence is exactly what Oregon’s new legislation – HB 2550, seeks to curb. Introduced by Oregon State Official (and Licensed Realtor) Mark Meek earlier this year, the law prohibits agents from accepting photos or documents not explicitly required for the transaction, including letters of credit. ‘love.
âWe have certain transactional documents – the documents we use to draft the offer, add-ons, disclosure forms, etc. – in the state of Oregon, âsays Alaina M. Giguiere, broker / owner at RE / MAX Coastal Advantage in Cannon Beach, Oregon. “The reality is, these love letters are not one of them.”
It is quite the about-face of the way things are being done now. In fact, Turner estimates that about half of his past transactions have included love letters. And Patrick R. Smith, president of Century 21 Cascade in Clackamas, just outside Portland, says they’ve been especially popular in recent years as Oregon housing warms up.
In the past year alone, home prices in Oregon have jumped more than 20%. And at one point, nearly two-thirds of Portland buyers faced a bidding war.
âOver the past few years, Oregon has experienced an aggressive seller’s market in most parts of the state,â Smith said. âIt hasn’t been unusual – during peak periods, that sellers receive up to two dozen or more bids on their homes. Buyers have often written letters to express how much they love a seller’s home, to bond with each other through their love of pets, or even to draw a seller’s heart with a heartwarming story. Several times they worked.
A legal challenge
Oregon’s new legislation is the first of its kind and, according to Turner, should establish a “level playing field for buyers,” while protecting sellers and agents from inadvertent fair housing violations.
Yet not all real estate professionals are happy with the move.
Total Real Estate Group, a specialty real estate company in Bend, Oregon, is actually challenging the legality of the ban in court. The group alleges that the new law violates the rights of the First Amendment agents and consumers.
“This censorship is based on simple speculation that sellers could sometimes rely on
information in those letters to discriminate on the basis of a protected class, âthe claim states. âAssumptions are not sufficient grounds to suppress true speech. “
Although the case is still pending in the Oregon court system, a motion to expedite the process was rejected. The defendants – Oregon Real Estate Commissioner Steve Strode and Oregon Attorney General Ellen Rosenblum – have until Dec. 23 to file a response.
As it stands, the ban is expected to go into effect on January 1, 2022.
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