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The Furnishings - They Are Not Part of The DEAL

Central Oregon homes are often sought after by the second home buyers. Many of these homes are sold furnished, which can be confusing to the lender, the buyer and the seller. When furnishings are included they should NOT be part of the transaction. Any value should be addressed outside of escrow - in our resort communities this can make or break a deal.

A couple of years ago I listed a condo at about $50,000 over what both the seller and I knew an appraisal would come in at. A lot of agents questioned our pricing, they thought we were out of line. What they failed to realize is that we knew the appraiser could not add the furnishings to the appraisal and that there was no way an lender or appraiser could say that the $60,000 of furnishings had no value.

Yes used furniture is not worth much, however, a furniture package that has been used for about 4 weeks at retailed at over $60,000 is worth a lot more than nothing.

The condo sold for the asking price and did so quickly - however, the buyer did have to pay more than the home appraised for.

If you are a seller that intends to sell your home furnished, be sure to have an inventory and know that this can cause issues. Buyers if you are looking to purchase a home furnished - be prepared to possibly have to come to the plate with a little more money or purchase the furnishings outside of escrow.

Furnishings are considered personal property and a mortgage can not be placed on personal property. The mortgage is for the home which is real property. Make sure your lender knows about the furnishings - and be certain your agent is familiar with the process of closing a home with furnishings, it can save you a lot of headaches.

Posted by Central Oregon Real Estate | Broker Thesa Chambers, Licensed in Oregon on 06/11/2008 01:19 AM

Comments (9)

central oregon homes for sale, vacation homes, sunriver vacation homes, central oregon realestate

Originally posted at: Central Oregon Real Estate Info: The Furnishings - They Are Not Part of The DEAL

Post is included in group: Resort Communities
Post is included in group: Moving to Oregon
Post is included in group: Vacation and Second homes

9 Comments on The Furnishings - They Are Not Part of The DEAL

JUN

2008

Thesa, great post for your Central Oregon home buyers and sellers. This is a simple item that most would not be aware of. I have one such property listed right now. Although the our furniture package is being used as an incentive (no 60K here!).

We see alot of homes on lakes being sold with furniture, we bought ours that way, saved us a big hassle and it was in good shape. If I have a seller selling some furniture, I have them leave a list by the sign in sheets so the potential buyers know.

Thesa,

Unless the deal includes the furniture then I'm not a furniture salesman. It should be a separate transaction between the buyer and seller after closing.

Thesa, Great post!! I know down here we see a lot of that same as you. I am with you from the financing end it really muddy the water when you add in the transaction.

Thesa Like yours ours is a second home market. may of the homes we sell are fully furnished. Lenders today hate to see this. What we have done is put a statement in the contract saying " Furnishings are of no value and are not a part of the sale". Lenders have not balked at this and we have had no problems with closings. If the seller is looking to sell the furniture apart form the home we do a separate contract between the two parties outside of the contract.

Suggest furniture stores? Yeah...I've had a few who insist on looking at the 'stuff' and not the home.

Hi Thesa,

Good information. It's rare we having anything like this in Oange Co. yet it does happen every now and then. The last time was 2 1/2 years ago for me. We too knew the house would not appraise, we seperated the furniture from the sale of the real property. At that time it did appraise and we sold the furniture seperately ($40,000) with a bill of sale, all cash. The sellers left wall decor and everything. The buyer a single woman, moved in with her tooth brush, everyone was happy.

BTW, I've been looking for condos myself in desert communities near Palm Springs and with some of those places, I'd have to pay to have the furniture hauled away, lol.

JUN

2008

Personal property included within the Real Estate transaction is sometimes a little tricky for sure.

Sometimes however you've got to make the deal fly one way or another regardless of how it might screw up future comps. Additional cash materializing outsided of escrow isn't always a possibility, and although its definately the preferred course of action to isolate the sale of real property from anything else, sometimes it just can't be avoided.

This brings up the whole question about how and when the particulars of a transaction (personal property, seller contributions etc.) should be shared with appraisors. As you know, in our MLS we've been discouraged from providing that information, and I think that's wrong. The whole privacy argument behind it is illogical to me.

Anyway.. good post. I might elaborate a little on this with a post of my own.

SEP

2008

Thesa, excellent information that anyone, especially in a resort area, should be aware of. As a lender, I can't tell you how many times I have had to request an addendum that states the included personal property is of no value. Hard sell to the sellers.

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