How to Write an Offer Letter to Win a Bidding War

What is an offer letter in real estate?

An offer letter — also known as a homebuyer love letter — is a letter written by a prospective homebuyer to the seller in hopes of having their offer accepted. These letters are especially important when there are multiple offers on a home (a bidding war) and the buyer wants to have their offer considered above the others.

This letter is typically personal in nature, praising what you love about the home, and may include sharing personal tidbits about yourself and your family. (Warning: Some personal tidbits could lead to legal issues, as we’ll explain below).

Offer letters are submitted to the seller’s real estate agent and passed on to the homeowner along with the purchase offer.

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When to use (and not to use) an offer letter

Offer letters have long been a tool of homebuyers to help persuade sellers to consider their offer above others. But while offer letters can help your chances of buying a home, it is only one fact among many for sellers to consider. And with possible legal compliance issues and the potential to violate the Fair Housing Act, buyers should carefully craft their letters to avoid any legal issues.

When offer letters can help

Offer letters work best in scenarios where sellers have an emotional connection to their home or are motivated by personal stories:

A good letter could help you be considered, but it’s important to have a strong financial offer.

• Family sales: Sellers who have lived in the home for years may respond positively to buyers who share similar family values.
• Competitive markets: In bidding wars, a well-crafted letter can help your offer rise above others that are financially similar.
• Homes with sentimental value: If the seller has a strong attachment to specific features or memories, a respectful and sincere letter can resonate.

When offer letters aren’t recommended

In certain situations, an offer letter may do little to improve your chances or could even create complications.

• Investor or bank-owned sales: Sellers in these scenarios typically prioritize the highest financial offer, not personal stories.
• Legal risk markets: Some regions discourage or restrict offer letters due to Fair Housing Act concerns, especially if they reference protected characteristics like family status, race, gender or religion.
• Complex negotiations: If your offer includes unusual contingencies or financial arrangements, a personal letter may distract from the main terms.

How to write an effective offer letter

If you are ready to make an offer and want to craft the perfect offer letter, here’s what to include (and what to avoid):

Start with compliments

When crafting an offer letter, first highlight what you love about the home. The homeowner may be very attached to the home, and when you compliment the details and explain what you are looking forward to, it can help connect you with the seller on a personal level. Plus, no one hates it when you compliment their design work or home style choices.

Highlight your offer strength

After complimenting the home (and owner), share the details of your offer and why you believe it to be a very strong offer that the seller should consider. Include details of your loan preapproval or proof of funds for a cash offer.

The goal is to quickly let the seller know that you’re serious and have the financial strength to purchase the home.

Reference escalation clauses and strategic terms

In a competitive market, you can briefly reference strategic terms in your offer letter, such as escalation clauses, higher earnest money or waived contingencies. The key is to indicate your flexibility and seriousness without including exact numbers or details, which belong in the formal offer.

Share about yourself (within guidelines)

While offer letters should focus on your offer and the home’s qualities, you can share about yourself and why you think the seller should consider your offer.

To stay in compliance with the Fair Housing Act, do not reveal personal information that can be discriminated against. While this limits what you can share, the seller must know you are someone who wants to enjoy living there, rather than an investor or house flipper with no personal connection to the home.

Keep it brief

Sellers who get multiple offers will need to read and consider each one, so keep the offer letter short and concise. A simple greeting, a few paragraphs about your offer and then a conclusion is all that is needed.

Avoid long stories and drawn-out descriptions. Instead, keep the letter focused on why the seller should pick you over any other offer.

Avoid protected personal information

While it can be helpful to share some basic personal details about your life with the seller, avoid anything that would put the seller in a position to potentially discriminate.

Do not include information that would reveal your race, color, religion, sex (including gender identity and sexual orientation), disability, familial status or national origin. This will help the seller avoid any liability issues and will keep your offer based on its objective merits.

Offer letters and fair housing laws

Homebuyer offer letters have been around for ages and have been used to help prospective buyers gain an edge when vying for a home. But they may also conflict with the Fair Housing Act and cause the seller to discriminate, even if that’s not the intention of the letter.

While offer letters aren't illegal, they may have legal consequences for the seller.

The Fair Housing Act has a provision called “equal-opportunity housing,” which states that no seller can discriminate against potential buyers based on race, color, religion, sex (including gender identity and sexual orientation), disability, familial status or national origin. And buyer offer letters may inadvertently lead to this type of discrimination, as letters typically reveal personal information of the prospective buyer.

The National Association of Realtors actually advises against offer letters for this very reason.

How to make sure your letter complies

Ben Gold, a real estate agent and the founder of Recommended Home Buyers, a real estate investment firm in Philadelphia, gave some guidelines on complying with the Fair Housing Act in your offer letter:

• Focus on the property: Keep the letter focused on the property itself, not on the personal characteristics of the buyer or seller.
• Avoid discriminatory language: Refrain from mentioning race, religion, national origin, gender, familial status or disability in the letter.
• Consult an expert: Seek guidance from a real estate professional or attorney to ensure your letter complies with fair housing regulations.

Buyers who still want to proceed with an offer letter should be very aware of the Fair Housing Act and be intentional with the personal information revealed in their offer letter. And always consult with your realtor before sending over an offer letter as part of the homebuying process.

Sample offer letter template

Here is a sample homebuyer offer letter that you can use as a template when writing yours:

Dear [NAME OF SELLER],

Your [STYLE OF HOME] is beautiful and perfectly captures what we’ve been looking for in a place to call our home. The [DETAIL YOU LIKE ABOUT THE HOME] helps me envision spending time with my family in this home and enjoying [DETAIL YOU ENJOY ABOUT THE HOME].

We are grateful that you’d consider our offer of [DETAILS OF OFFER]. We are prepared to sign a contract upon acceptance of our offer and close on a timeline of your choosing.

This home is the perfect place for [DETAILS ABOUT YOURSELF (this might include how you came to find this home and other objective information about yourself and the home)]. My family and I love this home because [MORE OBJECTIVE PERSONAL INFORMATION].

Thank you for your consideration.

[YOUR NAME]

How to submit your offer letter to a seller

Once your offer letter is crafted, submit it to your real estate agent. They will share it with the seller’s agent along with the formal offer. You may need to attach supporting documents for your offer, including a preapproval letter (if financing) or proof of funds (if a cash offer).

The seller’s agent may also provide specific instructions on what is to be included with the formal offer, so make sure to comply with any requirements requested. If the seller does not have an agent, your agent will send it directly to the homeowner.

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