In the real estate purchase process, it is normal to ask that appliances be left in the property. In certain cases, home buyers may want additional personal property as well, such as mirrors or equipment. Prior to noting these in purchase agreements, it is vital to find out the affect that it may have on the loan approval process. This blog discusses the topic of can personal property be included in purchase agreements?.
How Lenders Handle Personal Property
When wanting personal property at a home, home buyers might be willing to pay a higher price for the property considering the cost of the additional items. However, lenders and appraisers will not provide any value for personal property. This is understandable given that loans are granted according to the value of the real estate. If a buyer defaults on a loan, the lender may start the process of foreclosing on that property. Lenders do not repossess belongings such as furniture, so those will not add value to the price of the home from a lender's perspective. If a home buyer increases the offer dollar amount to cover personal property, it is likely that the appraisal amount will not meet the sale price. Furthermore, underwriters will not like particular items being added to purchase agreements.
How to Address Personal Property
Personal property may be handled in several different ways. Minor items may be noted in purchase agreements as being included as gifts. For costly things, or a long list of items, it would be better to address it in a separate agreement. The owner would basically be agreeing to convey the personal property for a specific amount to the Buyer simultaneously with the property sale. The cost and other logistics would not be noted in the official purchase agreements and the real estate transaction would therefore not be contingent upon the transfer of these additional items.
Can Personal Property Be Included In Purchase Agreements?
Buyers may certainly purchase specific personal property from an owner of a property, but how that is addressed will differ based on the particular items. Speak with your real estate agent and loan specialist beforehand to figure out the optimal solution. This will diminish problems in the appraisal process. This information on "Can personal property be included in purchase agreements?" was provided by Bradford Pratt at REMAX on the Charles.