It was a vacation rental. My wife is totally in love with the furniture. The sellers must have spent a fortune on it…and the 75” flat screen is too good to be true! But it was the new car the seller is throwing in that really sealed the deal! Oh yeah, I almost forgot to mention the garage. It’s perfect for all my hobbies. Who cares about permits. I’ll have my own man cave! But really, the coolest thing of all is the privacy. No neighbor will ever be close; after all, the lots on both sides are included in the sale. When the kids are grown, they can be right next door. It’s all too good to be true, and it’s all just a mortgage loan away. To this I say… “Whoa…not so fast cowboy!”
Every Market Has its Idiosyncrasies
With soaring shipping costs, sellers sometimes want to include personal property (furniture and autos), but this can be tricky. While it’s possible to include a few things, interestingly, doing so has more to do with the seller’s needs than the buyer’s wants. Mortgages basically last a lifetime, furniture does not. Lenders don’t want to finance furniture. If the value of personal property seems high, it may need to be removed from the contract. After that, the lender may require a declaration by the buyer and seller that there are no outside agreements regarding these items.
It’s Not So Simple!
Bottom line is that including things as a convenience to the seller may not be as simple as you think. Those with strong intuition have likely figured out that including additional parcels is basically impossible. While it may be possible to manipulate the purchase price in order to include value for personal property or the lots, there’s no guarantee it will work. The seller might offer to carry paper on the additional parcels, but the lender will want to include the additional payment in the buyer’s debt ratio. Additional parcels should rarely be included in a purchase contract when there’s a mortgage. It makes perfect sense. Two TMK numbers on a property complicate a foreclosure should one become necessary. Of course, when a buyer is pursuing a purchase, the last thing they are thinking about is foreclosure but that’s exactly where a loan underwriter’s focus is. Permits are always an issue. Your agent should provide you with information on the status of permits. Some loans will allow limited unpermitted areas while others do not allow them at all. Whether buying or selling, it’s best to know the challenges from the git-go!
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