"It's Personal" - Pete Meredity
This is a re-print from Dawn Carter at Director's Mortgage/503-351-1314 or firstname.lastname@example.org:
Guidance on Personal Property Included in a Real Estate Transaction
Fannie Mae and Freddie Mac have expanded policy to provide additional guidance for a sales contract containing personal property.Amounts in excess of limitations and contributions of financing concession per product guidelines are considered sales concession. Sales concessions may include vacations, furniture, automobiles, securities, property allowances or other give-aways granted by any interested party to the transaction
If the sales contract contains personal property, a fully executed sales contract addendum signed by the buyer(s) and seller(s) that deletes the personal property from the contract can be obtained and no adjustment to the sales price will be required. As with any other sales contract addendums or updates, the appraiser must be provided the sales contract addendum and comment on the addendum.
The appraiser must discuss the impact to value due to the removal of the personal property
No adjustment to the sales price is required
The dollar amount of the sales concession must always be deducted from the purchase price to calculate the maximum loan amount. The LTV ratio is then calculated using the lower of the reduced purchase price (after the reduction for all sales concessions has been made) or the appraised value
If the appraisal report does not clearly and adequately reflect the presence and effect of any sales and/or financing concessions, the Underwriter must deduct the cost of these contributions from the value provided by the appraiser
A third party source is required to verify the value of the concessions with a written, accurate value. For example, a person or firm familiar with the item, such as an auctioneer, may provide value.
For situations where the LTV, CLTV, or HLTV are significantly below the required guideline limit (including MI coverage), the Underwriter may use their judgment to determine whether the personal value will significantly impact the transaction
To clarify . . . "personal property" are things that are not permanently affixed to the property.Â For example - a big screen TV that is mounted to the wall is considered personal property. If it were built in (as noted by the appraiser), then it is not considered personal property.Â The same is true for hot tubs.Â Most underwriters do not consider appliances "personal property." A seller can always agree to leave behind personal property if the buyer agrees, it just cannot be part of the purchase contract.