Working with some buyers recently, we encountered sellers
that had generously agreed, in their listing, to leave their washer and dryer
as part of the transaction. They either didn’t want it anymore or didn’t want
to move it, and the buyers thought that it was a great deal. A washer and
dryer, basically free, when they purchased this new house.
There is an issue, however, with financing and the inclusion
of personal property in the transaction. When using government financing such
as FHA and VA, an appraiser will sign a value to that included personal
property. In this case, if the appraiser decided that the washer and dryer were
worth $500, this would have an impact on the loan amount that the lender could
make under FHA financing.
For example, if the property value were $100,000; and then
appraised for $100,000; the maximum loan under FHA financing would be 96.5% of
this cost, which would be $96,500. However, with a $500 value on the washer and
dryer, the underwriter must decrease
the amount of maximum mortgage allowed, dollar per dollar, based on the value
of the personal property. Thus making the maximum loan available $96,000 even,
therefore increasing the down payment required for the buyers by $500.
The thought behind this is very reasonable once you stop to
think about it. The bank/lender/FHA doesn’t want to lend money on personal
property. The purpose on the loan is for the real property, and so they have to
assume that part of the value in the transaction is the value of the personal
property.
So, despite the fact that it sounds like a good deal, the
value of personal property have a direct impact on the real estate transaction
and the loan. Therefore, we discourage the inclusion of that type of personal
property on a real estate contract.
For more information on buying your first home, visit
www.springfieldfirsthome.com.
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