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With intense competition in many housing markets around the country, many buyers find it’s difficult to buy their dream home at a price they can afford. In a seller’s market, buyers often have to make a larger offer than they’d like or come up with more cash upfront than they’re comfortable with. But a larger offer isn’t the only way to stand out — sometimes, an offer letter to buy a house can make a big difference.
A real estate offer letter is an opportunity to make a connection with the seller, allowing you to introduce yourself, explain why you want to buy the home, and clarify any financial details that may need explaining. It’s an accompaniment to your offer that appeals to the seller’s emotions and might make them lead towards choosing your offer over a competitor’s offer. And you'll need all the help you can get in a hot market.
Writing an offer letter to a seller is a delicate process. There are a number of factors to consider, including a few legal ones. Here, we’ll explain how to write an excellent home offer letter that will appeal to sellers and make your offer stand out.
Why is an offer letter important?
The vast majority of home sellers are human beings, not corporations. As such, there’s an emotional element for most people selling a home. With many offers on the table and a lot of similar looking paperwork and numbers to look at, some owners may struggle to figure out which offer is the “right” offer.
In that case, a home offer letter makes your offer stand out from all the other paperwork and numbers. When you include an offer in your application, there’s immediately one thing that’s different from the rest of the offers, and it gives you a chance to make an emotional appeal to the owner. In a seller’s market, an offer letter could give you a leg up on the competition.
Even if you’ve always been a renter, you’ve established emotional connections and memories with your past apartments. Now imagine that nostalgia ratcheted up to 11 and that’s how some home sellers feel about their homes. It might have been their first home, or may have raised their children there, or met their spouse while living there. Home is where the heart is and, as such, many home sellers think with their heart when selling. Appealing to that sentimentality and showing them that you will love their home as much as they do is important for many sellers.
When is an offer letter not appropriate?
Because offer letters appeal to the emotional side of a business transaction, there are times when they are not appropriate. For instance, if a house is being sold as part of a divorce, a death in the family, or some other tragedy, it’s best to leave it to the numbers. A sentimental offer letter might stir up complicated emotions and make a home seller uncomfortable or upset — not the reactions you want from an offer letter.
Likewise, if you’re buying a house as an investment property, sentimentality isn’t likely to make a significant impact on the seller. Or, vice versa, if a seller is just trying to maximize profit, your letter won’t make an impact if there are higher offers.
In recent years, offer letters have become more controversial as well as they can lead to violations of the Fair Housing Act. For this reason, they’re banned in some parts of the country.
Why is that? Because Fair Housing Act states that it’s illegal to discriminate on the basis of any protected class when selling a home, including race, color, religion, sex or gender, disability, national origin, or familial status. If a seller deduces your race or family status through your offer letter and uses that information to make a decision, they may face legal penalties. Worse yet, if anyone perceives or thinks that they used an offer letter to discriminate against another person’s offer, they could still land in hot water.
Some real estate agents won’t send offer letters and some sellers won’t accept them to avoid violating Fair Housing laws. As such, you should always check with the agent and the seller before submitting a letter.
How to write a home offer letter
If your agent and the seller approve a home offer letter, it’s time to get to work!
When you sit down to get this done, don’t feel like you have to write it all by yourself — your agent or attorney may have some good tips for you. But for now, these are some of the top do’s and don’ts for home offer letters.
What you should do
- Keep it about a page long. Don’t go overboard and overwrite this. Keep your letter to about a page, at the most.
- Use paper and pen. Email might be easier but this is a personal note. Writing it out yourself shows you care enough to, well, write it out yourself. You might even consider using nice stationery.
- Greet the seller by name and introduce yourself. Nobody wants to be addressed as “seller,” so get the seller’s name from your agent if you don’t know it. Begin the letter formally, state your purpose, and then get to the introduction. When you introduce yourself, don’t give away too many details. Let them know what you do (especially if you’re a public servant) and why you love the house, but less is more — especially with information that might hint at your status as a (un)protected class.
- Find common ground. This can be difficult if you viewed a staged home or one where the seller had already left. Still, you can discuss the neighborhood, the backyard, the porch, or other fixed aspects of the house that you love. Dog house in the backyard? There are no rules against choosing offers from dog people.
- Explain why you love the home. Get specific with the details you love about the house but also explain how you’ll live there. Do you have a large family? Describe the holidays and family events you hope to host thanks to the giant kitchen. Working from home? Share how you plan to set up your office in that delightful reading nook.
- Include a few financial details. The home offer letter is sentimental but if you aren’t offering full asking price or you haven’t been approved for a mortgage yet, this is a good chance to clarify some points. You can respectfully explain why you’re not offering full price and emphasize your mortgage pre-approval letter, even if you haven’t been formally approved yet. This part can be tricky, so don’t be afraid to ask for advice from your agent or attorney.
- Say thank you. The closing of your home offer letter gives you a chance to make a lasting impression. Thank the seller for their time and consideration, reemphasize your interest in buying the home, and convey the sincerity of your love for the home.
What you shouldn’t do
As discussed, home offer letters are a dicey business and not always appropriate. As such, there are some boundaries to keep in mind when writing one.
- Don’t get too personal. To reiterate the earlier point, it’s good to share a little about yourself, your family, and what you do, but you cannot reveal anything that identifies your status within a protected class. For instance, be careful to use neutral terms like “partner” or “spouse” rather than “husband” or “wife.”
- Don’t say what you want to change. Sellers can be sentimental, they don’t want to think about how you’re going to change your house, they want to think about how you’ll enjoy the home they’ve already made for you.
- Don’t complain. If you think the price is unfair or you’re unhappy with the seller’s timing needs, the offer letter is not the place to adjudicate.
- Don’t give away too many financial details. Explaining why your offer is lower than the asking price is fine. If you’re concerned you may not be able to secure a loan or are unwilling to move on your offer, don’t bring it up.
- Don’t contradict the purchase agreement. The offer letter is an appeal to emotion, not a legal document. If you don’t want to pay for certain repairs, negotiate that later, not now.
- Don’t include a photo. Again, a photo is the easiest way to run afoul of Fair Housing issues. Let your words speak for themselves.
As a buyer, an offer letter to buy a house can give you a leg up in a competitive seller’s market. But it can also be the quickest way to see your offer rejected. If you’re writing a home offer letter, keep it vague, positive, and brief.