A common practice in real estate is coming under new scrutiny because of concerns about discrimination. And one state has made it illegal.

Dec. 17, 2021

When Dashini Jeyathurai was shopping for a home in Berkeley, Calif., last spring, the market was at a fever pitch. Most homes in the area were receiving multiple offers — sometimes a dozen or more — and many were selling for as much as 50 percent over the asking price.

So when Ms. Jeyathurai and her husband, Byron White, found a home they wanted to make an offer on, they did what many others do: They wrote a letter to the seller, gushing about the house and introducing themselves. Notes like that, known as love letters, have been common in real estate for decades, but their use has increased over the past year or two in the midst of a pandemic real estate boom in which 74.5 percent of homes nationwide had multiple offers at the market’s peak, in April 2021, according to data from Redfin. (In October, the most recent month for which data are available, the number was still very high — about 60 percent.)

“The market was so crazy, we felt like anything that gave you a sense it was meritocratic or gave you a sense of control, like, ‘Maybe if I write a good letter I’ll have a shot?’” was worth trying, said Ms. Jeyathurai, 37, who works for a technology company. “We have to stand out in a pile of offers.”

Although there is no data on how many offers include personal letters from hopeful buyers, real estate agents say the practice is widespread. So widespread, in fact, that it has inspired a cottage industry: On Etsy, you can choose from dozens of “home proposal” templates in a range of styles, from Boho chic to rustic, with prompts for introducing family members and slots for photos.

Many agents say that well-written love letters can help buyers stand out, particularly when there are similar offers in a bidding war. “It can be the decision maker to sway a seller,” said Patton Drewett, a real estate agent with Compass, in Austin, Texas. “I do think it helps.”

But last year, the National Association of Realtors issued a warning about the practice, cautioning that it may make sellers and agents vulnerable to accusations of discrimination, as love letters often disclose personal details that can reveal buyers’ family status, religion, sexual orientation or race — all protected statuses under fair housing laws. (The Fair Housing Act prevents landlords, banks, real estate agents and anyone else involved in leasing or selling homes from discriminating on the basis of race, sex, disability status, religion, national origin or familial status; states like California recognize additional protected categories, including occupation and gender expression.) Realtors’ organizations in California and Ohio followed suit.

And this year, the state of Oregon took it a step further, passing legislation banning such letters. Starting in January 2022, it will be illegal for a seller’s agent to pass a love letter along to a client in Oregon.

Mark Meek, the Oregon State Representative who proposed the legislation, said the idea emerged from his own experience as a real estate agent, observing the disparity in homeownership among racial groups, something he formed a task force to address in 2018. In 2019, he said, the rate of white homeownership in Oregon was 65 percent, compared with 35 percent for Black residents and 40 percent for Hispanic residents

“Whoever is the successful bidder of a home should be based on the qualification of the offer,” Mr. Meek said. “Not the preference of that seller.”

Ms. Jeyathurai, the Berkeley buyer, said she had mixed feelings about writing a love letter. Her real estate agent told her to focus on what she liked about the house, rather than talking about her family, she said, but she did briefly introduce herself, her husband and their 4-year-old daughter, Selma. And regardless of what she mentioned, she said, “when someone looks at my name, they know I’m a person of color.” (Ms. Jeyathurai is of Sri Lankan descent; her husband is biracial.)

The home in question sold in a bidding war to another buyer, who made a higher offer. A few weeks later, Ms. Jeyathurai made another offer, on a Tudor-style home in Oakland. When she inquired about writing a letter, she learned that the seller was not accepting letters from potential buyers. Ms. Jeyathurai and her husband eventually bought the house, offering about $500,000 over the asking price.

So do love letters lead to discrimination? There isn’t much hard evidence one way or the other. But according to the National Association of Realtors, it has been a concern of agents for years, although there has yet to be a lawsuit challenging a seller or a real estate agent on discrimination based on a love letter. Real estate lawyers say it would be nearly impossible to prove or prosecute through legal channels.

The new Oregon law, Mr. Meek said, is based on the potential for discrimination, rather than concrete examples of it happening in the state.

Daniel M. Ortner, a lawyer with Pacific Legal Foundation, is among those skeptical of the new law. Mr. Ortner has filed a lawsuit to halt the ban on behalf of Total Real Estate Group, in Bend, Oregon, claiming that it violates free speech.

While housing discrimination is a real problem, Mr. Ortner said, “these letters convey accurate, truthful information that is helpful to the seller.”

The idea that they lead to discrimination “is speculation on speculation,” he added, noting that more often than not, the letters might convince a seller to go with a slightly lower offer if it came from a buyer “who will use and cherish a house.”

Cari Field, a real estate agent in Los Angeles, said she has had homes that received as many as 60 offers, but the competition usually comes down to two or three of the highest offers — and that’s where love letters can tip the balance. What sellers often want to know, she said, is if it’s “going to become an income property or an Airbnb party house.”

In one case, Ms. Field said, she had a seller who chose a buyer whose letter talked about how well equipped the house was for a person with disabilities. (The buyer used a wheelchair and the seller had altered the home to accommodate a disabled parent.) “I’ve really only had it work in favor of the underdog,” she said. “Is that such a bad thing?”

Sarah DiLeo, 42, who works in digital media production, was renting in Brooklyn when she bought a home in the Berkshires in July of 2020, as a rural escape for her wife and 4-year-old twins during the height of the pandemic. It was like “the beginning of the Gold Rush,” Ms. DiLeo said, with urban dwellers fleeing small apartments, and the competition for homes outside the city was steep. So when they found a house they loved, they wrote a letter to the seller, talking about the home’s elaborate native garden and how much she thought her children would enjoy it. The sellers, it turned out, had raised their own twins in the home.

“It was a funny coincidence and a little bit of kismet,” Ms. DiLeo said. She got the house.

While she can’t be sure that the letter sealed the deal, she said it was helpful in starting an ongoing relationship with the sellers, who were able to recommend a local babysitter and offer gardening tips: “It’s been very positive and gratifying.”

Although she is in a same-sex marriage, Ms. DiLeo said it didn’t occur to her to avoid mentioning that in the letter — or that love letters, in general, might elicit a biased response from sellers.

“In the wrong hands, this could be used in a negative or discriminatory way,” she said. “But in an ideal setting, it’s a way to humanize a process that can be a little sterile.”

Of course, there are other, more effective ways of making the home-buying process less discriminatory, starting with appraisals, which often assign lower values to homes owned by Black people. Redfin, which will issue its own educational program for sellers about love letters early next year, will include guidance recommending sellers leave homes on the market for enough time before accepting offers that more buyers have chance to view them. The company will educate sellers on V.A. and F.H.A. loans, which are perceived as taking longer to close, leading to discrimination against veterans and first-time buyers, although Redfin’s data show they close as reliably and quickly as other loans.

Perhaps the best way to ensure equal access to housing, however, would be to build more of it, so it’s not as scarce, said Mr. Meek, the sponsor of the Oregon bill: “We’ve been grossly under-building homes.”

But if you’re determined to write a love letter, what’s the smartest way to proceed?

Real estate agents agree that the safest approach is to keep the letter focused on the home’s attributes, rather than revealing a lot of your own personal information.

“We’re not saying these letters are, per se, bad,” said Gov Hutchinson, the assistant general counsel of the California Association of Realtors, which recently issued guidance on the state’s 22 protected classes to agents whose clients want to write letters. “Just be a little thoughtful about what you put in the letter.”