In the real estate buying process, it is normal to ask for appliances. In some instances, buyers may want additional personal property to be included as well, such as rugs or electronics. Prior to adding these to P&S agreements, it is important to understand the impact that it may have on the mortgage process. This article covers the topic of should personal property be added to P&S agreements?.
When including personal property in P&S agreements, buyers may be willing to pay more for the property based on the cost of the items. However, mortgage companies and appraisers will not include any value for personal property. This is justifiable because money is lent based on "real" property. If a home buyer defaults on a loan, the lender will take initiative to foreclose on the home. They would not be able to foreclose on belongings such as furniture, so they will not add any value to them in the lending process. If a home buyer increases the purchase figure to include personal property, it is possible that the appraisal amount will come in below what is the purchase price. Also, underwriters might have a problem with some things being included in P&S agreements.
Solutions for Including Personal Property
Personal property can be noted in a few different ways. Insignificant items can be noted in P&S agreements as gifted items. For costly items, or a long list of items, it would be better to address it in a different agreement. The owner would basically be agreeing to sell the items for a particular price to the Buyer at the same time that the property closes. The price and important logistics would not be noted in the standard P&S agreements and the home sale would therefore not be reliant upon the transfer of these additional items.
Should Personal Property Be Added To P&S Agreements?
Buyers can certainly arrange to purchase certain personal property from a seller of a property, but how that is handled can vary based on the specific items. Always consult with your real estate representative and loan officer beforehand to determine the best approach. This will decrease problems in the appraisal process. This information on "Should personal property be added to P&S agreements?" was shared courtesy of Arina Hanciulesco at Realty PROS Las Vegas.