Sale of personal property to qualify for home of your dreams

By
Mortgage and Lending with Hunt-Miller Insurance Agency

Short Money to Close or to use as a down payment?  There are some loan programs that allow a sale of personal property.  Please be careful when doing this to qualify though, there is paperwork that has to be retained and submitted.  I just had a closing where the buyer sold a hot tub to his mother in law... why we didn't just do it as a gift is beyond me.  I didn't know the kinship until the end of the process.  Well here is what I had to have:

1.  An appraisal of value - now I deal with real estate appraisers every day; this was so new to me and way out of my arena.  I was able to obtain this from Mr. Regan Skinner of The Rec Warehouse in Macon, Georgia who kindly went out of his way to write me a letter of value.  SO IF YOU HAVE A CLIENT WHO WOULD LOVE A HOT TUB... (smile).

2.  Proof of ownership prior to sale.  Some people are great with paperwork and have all their big ticket items filed away neatly and orderly.  Luckily this was the case with my client.  The hot tub was 2 years old and he had all of his original receipts and financing documentation.

3.  Bill of sale.  Simple enough completed and signed by all parties.

4.  Proof of payment received...and ability to buy (this means a cancelled check - and if it was a transfer of money, then the (in this case) buyer of the hot tub had to show their banking statement (going out) as well as the receipt into the hot tub seller's account.  NOTE:  this can get very tricky because in my opinion, I don't have a legal right to request this information...as they are not my mortgagee and have not signed any disclosure documents.  This however was required by the FHA underwriter that got my package.  This is the same type of situation with Gift Funds where the donor has to show ability to give.

5.  If like in this case the hot tub was financed... evidence that the hot tub was paid off with the sale of it.  This would be a letter from the collateral holder clearing the hot tub for sale.  (it also cleared the debt from the DTI).

It is definately a lot of hoops to jump through - just beware of them, so they don't trip you up. 

 

 

Comments (11)

Fernando Herboso - Broker for Maxus Realty Group
Maxus Realty Group - Broker 301-246-0001 - Gaithersburg, MD
301-246-0001 Serving Maryland, DC and Northern VA

good points

Jun 10, 2008 01:40 PM
Eric Reid
Renaissance Realty Group of Keller Williams Atlanta Partners - Lawrenceville, GA

I try and avoid the sale of personal property link to the sale of real estate because lets say the seller says I sell you this washer dryer and the house.. and the washer dry dies ... if it is linked to the home sale .. then guess what we have to go back and re write the whole deal ... sicky mess

Jun 10, 2008 01:42 PM
Melissa Cochran
Hunt-Miller Insurance Agency - Macon, GA

Thank you Fernando.  It was a toughy, but everyone is so happy now - well worth the hoopla.  Have a great evening.

Jun 10, 2008 01:45 PM
Melissa Cochran
Hunt-Miller Insurance Agency - Macon, GA

Eric, my lesson was well learned.  Thank you for the feedback.

Jun 10, 2008 01:47 PM
Greg Hampton
Re/Max Around The Mountains - Blue Ridge, GA
North Georgia Mountain Property,Blue Rid

Great information, great post, this is the kind of stuff I like to read.

Jun 10, 2008 01:47 PM
Linda Lipscomb
Linda Lipscomb RE/MAX Lexington Henderson County TN - Lexington, TN
731-695-1118, Lexington TN Homes

Thanks for sharing.

It's a lot of paperwork, but if it helps your buyers, guess it's worth it.

Have a great week.

 

Jun 10, 2008 02:03 PM
Melissa Cochran
Hunt-Miller Insurance Agency - Macon, GA

Greg, Thank you for the interest.  I will post more of the day to day --- strange requirements I'm running up against.  It's so good to see a fellow Georgian.

Linda - thank you.  That is a mouthful right there, if it helps - then it is all worthwhile.  The happy faces of new homeowner's is like that new car smell!!!

Jun 10, 2008 02:09 PM
Tom Davis
Harrington ERA,DE Homes For Sale, $$ Save $$ Buy Today ! - Dover, DE
FREE Delaware Homes Search!, $$ Save $$ - Find Homes! Delaware Realtor

Interesting post and Eric I agree about stickyness....never had a deal like this one.

Thanks though...new info for me!

Tom Davis

World Class Delaware Realtor

 

Jun 10, 2008 02:40 PM
Melissa Cochran
Hunt-Miller Insurance Agency - Macon, GA

Hi Tom, You and Eric are Realtors and are looking at the contract side... please don't put personal property in your purchase agreements if it can be avoided.  I am on the mortgage lending side.  The person with the hot tub would be your "buyer" trying to qualify for financing by selling personal property.  I make sure you and Eric have approved buyers that close on time and bring the money to the closing table.  It could be useful information should you run into a situation where a potential buyer has some personal property assets that they are planning to sale to help with their purchase by letting them know what it takes to be able to make them verifiable funds.  Melissa

Jun 10, 2008 03:05 PM
Jolynne Photography, Creative Wedding Photography, Family Portraits, Bar Mitzvahs
Jolynne Photography - Hemet, CA
Bat Mitzvahs, Senior Pictures, Event Photography

Hey there...good stuff. I featured you in the Mortgage Pro Week In Review.

Jun 16, 2008 01:28 AM
Melissa Cochran
Hunt-Miller Insurance Agency - Macon, GA

Thank you Joey... I appreciate the feature.  : ) 

Jun 16, 2008 03:50 AM