Lenders Are In The Home Mortgage Business, Not The Appliance Business!
Real Estate Agents sometimes fail to realize that a Sales Contract on a Property is exactly that, a Sales Contract on Real Property. It is not a Sales Contract for the riding lawn mower, the 90" flat screen TV set, the custom curtains, appliances, and other Personal Property.
From a Lender's POV, the Sales Contract is strictly for the Value of the Real Estate. When the Appraiser appraises the property, they will NOT add value for Personal Property left with the house!
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We Are In The Home Mortgage Business, Not The Appliance Business. Barbara Altieri wrote a featured blog which I commented on titled "Where's the Washer and Dryer? Not in the Contract? Not in the House Either!" Barbara in her reply back to me suggested that I write a blog expanding on my comment:
"Whatever is included in the Inclusions/Exclusions Disclosure needs to be for No Value or there will be an issue obtaining a mortgage."
Realtors especially newer Realtors some times fail to realize that a Sales Contract on a property, is exactly that, a Sales Contract on a property. It is not a Sales Contract for the riding lawn mower, the 90" flat screen TV set, the custom curtains, and yes the washer & dryer, or any other appliance. The Sales Contract is strictly for the value of the property, and is to include nothing else for value. When the Appraiser appraises the property, they are not adding value for what ever is being left behind with the property.
So a Buyer and Seller have three choices if part of the furniture, appliances, or garden equipment is to be left behind with the house:
- The Seller can state in the Inclusions/Exclusions Disclosure which is part of the Sales Contract that the following items are remaining with the property at "No Value", or
- Buyer & Seller can have the Attorney draw up a separate purchase agreement for the items that the Buyer wishes to purchase from the Seller, or
- The Buyer can simply just purchase the items from the Seller before or after the Sale, generally for cash.
If the Sales Contract mentions any item in it as being conveyed with the property, and does not specifically state that the items are being conveyed at "No Value" the Underwriter will NOT approve the Mortgage until she receives an Amendment to the Sales Contract, or a revised Inclusions/Exclusions Disclosure stating the the items listed in the Sales Contract are being conveyed at "No Value"
This sounds simple but some times can cause a delay in meeting the Commitment Date on a Loan. By the way the same is true for repairs, the Seller cannot give the Buyer money back at the Closing for agreed upon repairs on the property, unless it is:
- Winter, and the repairs that need to be made are exterior repairs, and because of weather the repairs cannot be completed before the Closing. In such a case, the Lender will allow money to be placed in an escrow account to do the repairs once the weather permits.
- A HUD owned property which the Appraiser listed repairs. FHA will allow the repairs to be escrowed in that case.
We Are In The Home Mortgage Business, Not The Appliance Business. The Sales Contract on a property is exactly that, a Sales Contract for the purchase of the property and nothing else.
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Info about the author:
George Souto NMLS# 65149 is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com
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