Personal Property in Real Estate Transactions


It’s very common for appliances such as stoves, refrigerators, and dishwashers to be included in a real estate purchase and sale agreement (sometimes referred to as a P&S agreement). Although these items are not real estate according to the traditional definition of the term, they are difficult to remove and are often considered part of the property. But there are other situations in more of a gray area. Perhaps there is a nice rug, or a particular piece of furniture, that the seller wants to include in the deal. However there are a number of things you will need to consider if you want to include personal items such as these in your purchase and sales agreement.


In most cases, lenders will base the amount of a mortgage loan on the real value of the home as determined by an appraisal. However, when personal items are included in a real estate sales contract, the sales price will often reflect the inclusion of these items. A buyer may be willing to offer a higher price because of these extras. But lenders are only willing to finance the price of the home, leading to a discrepancy. A mortgage loan exists for the purpose of financing real estate; personal items do not fit the definition of real estate. If the buyer defaults on the loan and the lender must foreclose, they cannot reclaim or repossess personal items. Often underwriters will even require such items to be removed from the contract.


There are some different options to address this problem if you want to include personal items in your real estate contract. You could list them in the agreement with a value of $0.00, indicating that they are gifts and that they will not affect the sales price. For larger, more valuable items, a better solution might be to write up a separate agreement specifically for the sale of these items. This agreement would be between the buyer and seller and would not affect the mortgage loan or the sale of the home.

The inclusion of personal items is a great way to make your home more attractive to potential buyers and can simplify the moving process for you too. But to avoid problems and delay, make sure you come up with a plan for how to accomplish this effectively. Always consult with your real estate representative and loan representative ahead of time to decide on the best approach.