I tried to buy a house last week. I had the highest bid in multiple offers, but lost the deal to another buyer who offered less money but wrote the sellers a “love letter”. Does this kind of thing happen often? – FEELING UNLUCKY IN LOVE
DEAR FEELING: In real estate, a love letter is a personal note that a buyer sometimes writes to a seller and submits with their offer, in hopes of standing out from the competition. The author will typically share background about their life, and explain why they’re excited to build a future in the home. Defenders of the practice say love letters are a way of making sellers feel good about the offer they accept, but if an offer is good enough to be accepted, it shouldn’t need emotional leverage. Increasingly, love letters are frowned upon by the real estate industry. They were even briefly outlawed in the state of Oregon, though the ruling was later overturned. Generally speaking, love letters tend to be neither ethical, nor particularly effective when it comes to winning multiple offers.
In our region, multiple offers are common. Even before the start of the 2016 real estate boom, I was received multiple offers on a regular basis. Back then, a winning offer would typically come in a few thousand dollars over asking, perhaps with a short conditional period to sweeten the deal. In today’s competitive environment, the stakes are a lot higher: now it’s not unusual to see four or five offers coming in at once, many of them firm, and some tens of thousands of dollars over asking.
Price is the driving factor when it comes to winning multiples. That said, if one bid comes in $10 thousand above the rest, is conditional on the sale of the buyer’s property and has an inconvenient closing date, it loses a lot of its’ shine. By comparison, a firm offer worth $10 thousand less might be perfectly acceptable, if it meets the seller’s expectations and closes when they want it to.
Including a love letter with an offer can derail what would otherwise be a straightforward business decision. If a seller receives two offers that are very close, a love letter might sway them towards making a choice based on someone else’s circumstances. As a listing agent, my role is to protect my seller and act in their best interest. This includes shielding them from undue emotional pressure brought on by pictures of kids and puppies.
PRO TIP: As an agent, I get paid to say “no” to a lot of things, including guilt trips. Imagine if an elderly homeowner were to choose a buyer because of a love letter, then feel devastated months later when they drive by to see a renovation flip where they thought a young family would be. Offers should be chosen based on merit. If a winning offer comes with a love letter, I may show it to my sellers after the fact. But presenting a love letter before they make their choice is potentially manipulative, and highly unfair. #Advice #AskDavid #TheNegotiator
David is a top-selling Broker in Kitchener-Waterloo Region. He works personally with you when selling or buying your home. Call or text today for your free home evaluation! 519-577-1212.