In the real estate process, it is normal to ask that appliances be included with the home. Occasionally, people may want other personal items as well, such as rugs or equipment. Prior to adding these to real estate contracts, it is helpful to know the impact that it can have on the mortgage process. This article covers the topic of guidelines for including personal items in real estate contracts.
How Mortgage Companies View Personal Items
When wanting personal items at a listing, home buyers may be willing to pay more for the property considering the value of the items. However, mortgage companies and appraisers will not provide any value for personal items. This is understandable because lenders are issuing funds according to the value of "real" property. If a buyer neglects to make payments, the lender can take initiative to foreclose on that home. They would not foreclose on items such as rugs, so they will not credit any value to them in the lending process. If a home buyer increases the purchase dollar amount to cover personal items, it is possible that the appraised value will end up lower than the purchase price. Additional, some underwriters may not like some things being included in real estate contracts.
How to Address Personal Items
Personal items may be addressed by a few different means. Minor items can be added to real estate contracts as gifted items. For costly things, or a long list of items, it is prudent to detail it in a different agreement. The owner would essentially be agreeing to convey the items for a specific dollar amount to the Buyer simultaneously with the property sale. The price and other details would not be entered in the actual real estate contracts and the home sale would thus not be contingent upon the sale of the personal items.
Guidelines For Including Personal Items In Real Estate Contracts
Home buyers can certainly purchase specific personal items from the owner of a home, but how that is transacted will vary depending on the specific items. Ask your real estate agent and lender early on to decide on the optimal solution. This will minimize problems in the loan underwriting process. This information on "Guidelines for including personal items in real estate contracts" was provided by Customer Service at Accurate Title.