The backlash against love letters is part of an industrywide reckoning with its complicity in decades of housing discrimination and segregation that kept Black Americans from homeownership.
Rothstein’s new book, The Color of Law, examines the local, state and federal housing policies that mandated segregation. He notes that the Federal Housing Administration, which was established in 1934, furthered the segregation efforts by refusing to insure mortgages in and near African-American neighborhoods — a policy known as “redlining.” At the same time, the FHA was subsidizing builders who were mass-producing entire subdivisions for whites — with the requirement that none of the homes be sold to African-Americans.
It was in something called the Underwriting Manual of the Federal Housing Administration, which said that “incompatible racial groups should not be permitted to live in the same communities.” Meaning that loans to African-Americans could not be insured.
In one development … in Detroit … the FHA would not go ahead, during World War II, with this development unless the developer built a 6-foot-high wall, cement wall, separating his development from a nearby African-American neighborhood to make sure that no African-Americans could even walk into that neighborhood.
Realtors certainly played a role. But note that the reason the threat of persons of color moving into the area was a threat is because, due to the aforementioned rules, it would mean that future buyers wouldn’t be able to get mortgages, tanking real estate values. Not necessarily because those particular “FOMO Seller” homeowners were racist. ANY possible indication that “If X, future buyers won’t be able to get a loan on your house,” for ANY reason, spurs totally rational FOMO selling. What would you do if you found out your condo was in a building that, due to next year’s HOA budget and reserve study, no future buyers would be able to get loans on anything in the building, for at least several years? You’d fucking sell, and ASAP, wouldn’t you?
Back to the article.
But the right words can be persuasive. In 2019, the Redfin real estate brokerage studied the most effective strategies to win a bidding war. All-cash offers more than tripled a buyer’s odds. Writing a love letter came in second, increasing a buyer’s chances by 59%.
Under the law, which is scheduled to take effect in January, real estate agents will not be allowed to pass along personal pitches from buyers that can include details about people’s lives along with photographs and videos. Buyers will still be allowed to communicate directly with home sellers.
The combination of those two things are why this is a threat to realtors, specifically. You’ve got assholes like me on reddit pointing out that buyers can bypass their realtors, and mail them directly to the seller via the US Postal Service. A non-crazy response to that is: “Great, one more thing the consumer doesn’t need a realtor for.” And, with this law and similar efforts, realtors are moved another incremental step closer to being viewed as obsolete (let’s leave the “and that’s bad, why?” v “that’s horrible!” for another thread).
Last year, the National Association of Realtors warned members love letters were not as harmless as they seemed.
I vehemently disagree with NAR on this. I have no statistics to back this up (nor do I plausibly know how such statistics could be plausibly/credibly compiled), but I anecdotally it seems VERY MUCH that for persons with names that would lead a seller to make assumptions about the buyer’s protected class demographics, love letters have traditionally done a shit ton to HELP them. An offer / purchase contract has to have names on it, anonymous real estate contract aren’t a thing within the centuries old Western legal tradition of real estate contracts. Mohammed and Fatima may have problems getting their offer accepted, depending on the seller, because sellers are going to assume that they’re Muslim Arabs. Nothing can be done about that, currently. But Mohammed who enjoys baseball, Fatima who dotes on her kids, and the little girl who likes unicorn princesses and math, and the little boy who likes soccer, please see cute attached family pictures, have an easier time of it. They may still be assumed to be Muslim Arabs, but now they’re a human family with interests, etc. That isn’t going to do any good if the seller is wearing white sheets and flying rebel flags, but it does in fact do good when the seller is the ho-hum run-o-the-mill “that’s just how that generation is” boomer-ish generation type that makes up a LOT of current home sellers, looking at a pair of otherwise similar offers, deciding which one to take and otherwise on the fence.