In the real estate process, it is normal to request that appliances be left in the property. Occasionally, people might request other personal items to be included as well, such as decorative items or equipment. Prior to inserting such things in real estate agreements, it is vital to know the affect that it can have on the loan approval process. This article discusses the topic of should personal items be added to real estate agreements?.
Underwriting Impact
When wanting personal items at a home, buyers might be willing to pay more for the home considering the value of the additional items. However, mortgage companies and appraisers do not attribute any value for personal items. This is normal because lenders are loaning money based on “real” property. If a borrower defaults on a loan, the mortgage company will take steps to foreclose on the real estate. Lenders would not be able to foreclose on personal items, so they will not add any value to those items in the lending process. If a buyer increases the offer figure to cover personal items, it is likely that the appraised value will end up below what is anticipated. Furthermore, some underwriters might have a problem with particular items being listed in real estate agreements.
Solutions for Addressing Personal Items
Personal items can be noted in several different ways. If the items have low overall value and the offered price is not inflated to include them, then they can be added to real estate agreements as being given as gifts. For costly items, or a large number of them, it may be best to address it in a different document. The owner would essentially be agreeing to sell the personal items for a particular dollar amount to the home buyer when the property closes. The amount and additional logistics would not be noted in the actual real estate agreements and the real estate transaction would thus not be reliant upon the sale of these items.
Should Personal Items Be Added To Real Estate Agreements?
Home buyers can certainly purchase specific personal items from the owner of a home, but how that is noted can vary based on the specific items. Consult with your real estate representative and loan specialist early on to figure out the optimal solution. This will lessen the chances of delays in the loan approval process. This information on “Should personal items be added to real estate agreements?” was published by Christopher Graves at Emery Federal Credit Union. Please contact Chris at 978-376-5389 or christopher.d.graves@gmail.com for further information.