SHOULD I ASK THE SELLER TO THROW IN THE HOT TUB, APPLIANCES, FURNITURE and PLASMA TV?
TIPS FOR BUYERS, TIPS FOR SELLERS, TIPS FOR SENIORS
August 4th, 2008
Many times as I’ve sat down with buyers to draw up a contract on a home they wish to buy, inevitably the 
question about personal property comes up. The C.A.R Residential Purchase Agreement has an entire paragraph dealing with personal property either to be included in, or excluded from the sale. First, we must decide if the items in question are considered fixtures and fittings of the home. These are defined as attached items including lighting, ceiling fans, built-in appliances, fireplace inserts, window coverings, garage door openers, in-ground landscaping and security systems to name a few. If the items in question don’t qualify as fixtures or fittings, a blank is provided to write in the items to be included.
However, how wise is it to mix personal property with your real property purchase? It depends! If the property is of minimal value or no value to seller then it’s OK to ask. However, if the personal property has several hundred dollars or even thousands of dollars of value it can create unforeseen problems. Firstly, if financing is being obtained to buy the property, the lender may not like the fact valuable personal property is being rolled into the real estate transaction. Why? The bank knows that if their loan is based on a value that includes personal property as collateral, that collateral will be gone should the bank foreclose on the property. Yes, the buyer will move the hot tub, load up the furniture and rip the plasma TV off the wall! Therefore, if the bank notices a considerable amount of personal property written into the contract, they will usually ask the appraiser to put a value on it and deduct it from the purchase price. The bank is also not keen on a buyer paying interest for 30 years on a hot tub, furniture and plasma TV. Another reason not to include personal property worth thousands is it could result in a higher county property tax bill. In California, property taxes are slightly more than 1% of the purchase price/year. If the Assessor does not adjust the value of the real property downward to reflect the value of the personal property, the buyer could pay more property tax as long as the buyer owns the property. In the event personal property is included with the sale, the contract makes it clear no warranty on these items is provided by seller.
The only reason I know these pitfalls to a transaction is because I have experienced these situations at one point or another in the past 25 years of listing and selling real estate. It is important to work with an agent that not only knows how to advise you when these matters arise, but to know why these matters need to be handled in a certain way. The bottom line is if the seller has anything of value you wish to buy, make the deal for personal property separate from the real estate transaction. It really is the smarter way to go!
If you have any questions or comments, I’d love to hear from you. My contact information follows:
530-224-6767
530-941-7492
BRAD GARBUTT
REALTOR/BROKER
REAL ESTATE PROFESSIONALS GMAC
TWENTY FIVE YEARS OF LOCAL EXPERIENCE
