Today's housing market hasn't exactly been kind to homebuyers. Competition is tough, there are fewer homes on the market and residential financing rates and home prices have been moving up and down.
Overall, this makes navigating the experience a trickier challenge. As a real estate professional, it often falls on you to help clients find their dream homes. That could mean you turn to alternative methods of buying, such as writing a letter to the seller. These "buyer letters" have become increasingly popular as a way to stand out from the crowd, but they might not be all they are cracked up to be.
Here is what you need to know about buyer letters, and why you should be cautious moving forward:
Letters become more common strategy
A buyer letter is when a client pens a heartfelt note to the seller of their desired home, explaining why they are the right people to move in and sharing all sorts of details about their personal life. Many people feel that this intimate approach will sway the seller to accept their offer.
According to The Washington Post, buyer letters have increased in popularity in recent memory. This is likely driven by a desire to succeed in a tight market, where homes for sale are few and far between and buyers are plentiful. One couple that tried this tactic was Monica Vohra and Vishal Patel, who had previously lost three bidding wars and didn't want to lose another.
Vohra told the media outlet that they simply wanted the seller to know who they were and how much they valued living in that property.
Nathan Guggenheim, a Washington, D.C.-based real estate agent, told the news source that he often recommends buyer letters to his clients.
"I think there's a direct correlation between the intensity in the market and these types of strategies," Guggenheim said to The Washington Post. "[The strategy] really boils down to only being effective where sellers have pride in or a personal connection to their home."
For Vohra and Patel, the strategy worked, and they beat out a higher offer for the home.
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Why letters can be risky
You may be thinking that buyer letters are perfect for your clients. Well, there is more to them than meets the eye.
In an article for ActiveRain, real estate agent Christine Smith wrote that there are negatives to this strategy. She instead believes in making a stronger offer and using negotiation as a way to close the deal. From a more legal aspect, she also explained that a letter could even be a violation of the Federal Fair Housing Act, which prevents sellers from turning down a buyer based on race, religion, sex or other trait.
For example, say your client's letter talks about how great it would be if their family got to move in to the home. If a separate, single buyer who made a higher offer finds out, they could file a Fair Housing complaint. Smith noted that this can fall back on you, assuming you suggested writing a letter. Even if the claim is unfounded, you'd likely have to go to court to prove it - and that is costly.
With that in mind, Smith believes that it is better to avoid that risk and skip the letter altogether. Instead, focus on creating a great offer and helping your client win at the negotiating table.