Why Shouldn't the Buyer Write a "Buyer Love Letter" to the Seller?

Fair housing issues are coming to the forefront of the real estate profession and being addressed at all national, state and local levels of the industry for REALTORS.  Problems with race, color, ancestry, gender, marital status, military affiliation, plus other groups of the legally protected classes continue to exist for many buyers and sellers in real estate transactions. Even appraisals have come under review.

One of the mechanisms by which discrimination may arise has been called the "buyer love letter" -- it arrives with the buyers' offer to a seller because it has been traditionally thought to help positively influence the seller into accepting an offer. They are often accompanied with photos, background stories about the buyer, and other personal history disclosed willingly by buyers who want to appear sympathetic to the seller, people who would love their new home just as much as the seller has, all designed to create a connection in order to get chosen for the contract.

This tactic has been addressed in the past, yet agents and their clients continue to submit such letters.  In one state, it is now outlawed.  In California they are not illegal, but agents are cautioned to advise their clients of the negative potential of this practice.  If a buyer insists on submitting such a letter, they are advised to eliminate personal information (but that's what some people hope will gain traction with the seller).  

Buyer Interest Letters, as they are official referred to, are considered a legal risk for unconscious or implicit bias. The buyer cannot really know what is in the seller's mind or background, and sometimes the seller doesn't either until the selection time comes, or the seller may not consciously be aware of their reasons for certain choices. Photos meant to present the buyer in a positive light may instead do the opposite, or personal buyer stories such as "I grew up in the neighborhood", "I have kids", or "my church is nearby" may elicit a negative reaction from the seller, or a favorable reaction towards a buyer but which excludes other buyers who do not have kids, a church or grew up in another state and thus cannot make any of those claims, and which in fact may violate one of the federal or state protected classes mentioned above.  So this is where Fair Housing issues come into the transaction.

The only information that I advise my clients to submit with an offer is the financial qualification dealing with price and terms of the offer, which in fact is required in the contract terms anyway, because the ability and motivation to buy are the actual buyer requirements. I do not advise my buyers to write any other personal information, and in fact, the seller may have actually instructed his/her agent to not accept any offers accompanied by a Buyer Interest Letter.

So please be aware that while a listing agent must notify the seller of all offers received, per California Association of Realtors: 

 "Even if the agent is following the seller’s instruction, the agent should disclose to the seller that an offer was received with a buyer letter and returned to buyer or agent per the seller’s instruction. Paragraph 10C(2)(A) of the C.A.R. Residential Listing Agreement, C.A.R. Form RLA, contains a seller instruction not to present buyer letters.  Only if the alternate paragraph 10C(2)(B) is checked is broker authorized to present such letters."

By carefully considering potential Fair Housing guidance, the parties will not be subject to doubts about their participation in the contract process.

Julia Huntsman, REALTOR, Broker | http://www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996

Here Are Important Tips For Your Online Home Search

Hunting for a new home online is a great place to start your search, but it should not be your end all be all. Good listing agents are excellent at highlighting the best features of the home, but keep in mind there may be more than meets the eye. To make the most of your time and efforts and gather a well-rounded picture of home listings online, keep the following three things in mind.

1. Stay up to date. When you start your search, make sure you find a site that pulls up-to-date listings directly from the multiple listing service (MLS) where real estate agents actively post their most current homes for sale. Many online resources update less often or fail to remove listings that are off the market, making it more difficult to sort through the clutter.
2. Pictures can be deceiving. Real estate photographers are experts at showing a home in the best possible light. Many use tools and strategies to boost appeal, such as a fisheye lens to make areas look larger and creative editing to make colors and textures really pop. But, often listings will not contain photos of unappealing parts of the home, like small closets or outdated bathrooms.
3. See it to believe it. Once you find what appears to be your dream home online, call up your REALTOR and schedule a showing. You want to take the opportunity to vet the home in person and explore every part of it before beginning the offer process. Your REALTOR will help you cover all your bases and will ask questions you may not have thought of.

---

Julia Huntsman, REALTOR, Broker | www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996

Updated: The Ten Commandments of Buying a Home, Plus a Few More

Lenders are just not kidding around when they advise buyers about what to do for successful loan completion.  See the links below for my previous blog post on this subject, and in this post are more sage pieces of wisdom about how to have a best experience:

Always check with your lender, Realtor, and/or escrow officer personally on the phone, before sending a wire transfer to anyone.

Obtain complete documentation from your bank itemizing all money transfers.

Don't withdraw of deposit large sums into accounts unless absolutely necessary.

Try to avoid making career moves before close of escrow.

Don't allow your bank accounts to go negative, even if you have overdraft protection.

Don't apply for new credit.

All gift money must be documented, so avoid having a friend or relative pay for anything concerning the purchase of the home without first discussing with your lender.

If transferring money from overseas account, discuss the best time to do so with you lender.

Be aware if you close any credit card accounts, your debt ratio may appear higher, so DON'T close credit card accounts.  Just stop using them.

Avoid having your credit report run unless required by your lender of choice on a transaction.

More posts: Buyer Mistakes: https://longbeachrealestate.blogspot.com/2017/05/being-prepared-buyer-in-sellers-market.html
                    Wire Fraud:  https://longbeachrealestate.blogspot.com/2017/07/wire-fraud-in-real-estate-is.html

Being a Prepared Buyer in a Seller's Market

I am encountering, over and over, a situation where a buyer contacts me to see properties, but I have no information about this person at all.  Besides some safety issues that could be involved, and precautions I must take, I otherwise have no information about what kind of fit, financially and otherwise, this person actually is for the property he/she is interested in.

It seems that it can never be said enough that in this very tight market, the buyer must be prepared.  How can a Realtor take a buyer to show properties without having information? Very few buyers prepare themselves before contacting me to see a home.  If they contact me because they don't know where to start and are looking for a Realtor's help, then that is exactly what I'll do, which means getting started with loan pre-approval while getting to know their hopes and aspirations about what type of home they would like, and then fitting in their loan scenario with homes available to show.

Here is the mantra, as very well stated by a Realtor in New York:

“Time kills deals,” says Andrew Sandholm of BOND New York Properties in New York. “Dragging your feet means you could wind up paying more in a bidding war situation or missing out on the property altogether.” Buyers need to be ready with their paperwork, such as bank statements, a preapproval letter, and documents supporting proof of funds, from the day they begin house-hunting mode. That way they can pounce quickly with an offer when they do find a home they like.

Yes, folks, time kills deals.  You think you won't find something right away, and that you're not prepared.  So think at a minimum:  LOAN PRE-APPROVAL, PROOF OF FUNDS whether financing or all cash, and PRE-APPROVAL LETTER.  These things should be available at a moment's notice, and please keep in mind that providing this documentation to your Realtor is a normal part of your home search, and next, it's required in the contract.  Realtors do much much more than get the door key out, they make sure that you eventually get the key to the door you want.

You may believe that you have have plenty of time, but I know better. You think you're not ready to buy yet, and you're right if you've done nothing to prepare.  But you may also be wasting your own time.  Your Realtor has the ability to help you find the right home, but you're wasting that Realtor's professional expertise if you don't do these basic things.

This is a multiple offer environment for many homes in multiple cities and states, and while I've never thought it wise for the buyer to waive all their usual contingencies in order to beat out another buyer, it's important for buyers to present a very reasonable offer.  The article about making an offer states very good points to keep in mind for buyers.

Being a Buyer In An All-Cash Competition

I hear from buyers who put in offer after offer, but don't get the house because of losing out to the all-cash buyer or mostly cash buyer. 

What does such a buyer need to do?  First of all, be prepared to be persistent, and persevere. Next, be totally pre-approved with a good lender.  Know the difference between the average "pre-qualification" letter and a good pre-approval letter from a reputable lender with a local track record and who can close on time, and not surprise you with last-minute underwriting issues that could have been avoided up front.  A good REALTOR can be of tremendous assistance here by pointing you in the right direction, not only with all buyer preparation for an offer, but with the local market. See how quickly you can close, and be willing to negotiate with the seller on some extra days to accommodate their moving date. Be prepared to provide all necessary documentation at the time you submit your offer, sellers want to know they can close the deal with motivated and qualified buyers, not get stuck putting the house back on the market again.

Keep in mind that cash buyers may not offer a seller the most attractive offer, and that a good price from a well-qualified buyer who is getting a loan may stand a very good chance with a motivated seller.  Keep your offer terms clear and simple, and bear in mind that trying to change your contract terms after acceptance by the seller could cause them to cancel and go with one of their backup offers.

Let the seller know you are very interested in their property as your next home (presumably you are), and tell them that when you make an offer.

Last, but not least, review the 10 items to the right to remind you about being a successful buyer! I'm experienced with both 1st time and repeat buyers and can help you position yourself towards success for your next purchase, contact me at 562-896-2609.

Top 10 Mistakes Buyers Make

 

California Association of Realtors has made a very nice graphic about their list of buyers' top 10 mistakes in a transaction.  Since they have the experience of hearing from many agents all over the state, they would be in a position to hear the most common complaints.

Personally, I haven't had equal experience with every single one of these items when working with a buyer, but when I think about, I can come close.
Item 1:  In every market, there seems to be a certain buyer who makes a below market offer (possibly known as "lowball") and wonders why the seller didn't respond with a counteroffer, or at least hear from the listing agent. Buyers, if you are this type of offeree, please know the seller is not ever required to respond (although it's nice of them to do so) if they don't like your offer.  Even if you are totally right about the price, and sometimes you are, it doesn't matter. Because the seller has a different perception, and does not agree with yours, even if you are right. Which leads to an important point: a good contract agreement reflects a meeting of the minds. Buyers, sometimes you have to either move on, or wait and see.  

And then there's the frustration of Item 2, where the seller accepts another buyer's offer. That other