Does BOA allow a Seller to replace furniture to close a sale
My Seller needs to replace about $4,000 worth of furniture in order to close a transaction on an approved short sale. Has anyone done this successfully?
Replies to This Discussion
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Permalink Reply by Smitty on
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LOL...seriously? Why does the seller need to replace furniture to close a sale? Wasn't this anticipated BEFORE they put the house on the market? Why is the "furniture" threatening the sale?
If you're asking can a buyer give a seller $$$ for furniture, well, there are many schools of thoughts on this. The short answer is YES, and long answer is NO. The approval usually states the seller is to get NO MONEY in regards to the transaction of the property being sold. So if your definition of the property being sold is only the purchase price, then some people would say yes, you can have a buyer give a seller money, HOWEVER, I would err on the side of caution and most people know me to be a bit more liberal, but I wouldn't give a seller ANY MONEY if I've signed something stating they won't get any.
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Permalink Reply by Kevin - Greenville, SC on
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ditto.
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Permalink Reply by david milstead on
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Thank you for your response. The only way this buyer will buy the condo is with replacing the older furniture. My question pertains to BOA allowing the Seller to come out of pocket $4,000 to pay for the furniture in order to close the transaction. Will BOA allow this or will they say any contribution of furniture should not be made because it would be a contribution from the Seller. This would all be stipulated in the contract. I'm putting all this together as a back up contract that may be moved to first position soon.
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You can put anything you want in the contract, but it doesn't mean BOA will allow it. Did you list the condo "SOLD AS IS"? - I would tell the buyer the seller can't do it and if they don't like it, they need to move on.
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Permalink Reply by Thom Colby CA Brkr 888-391-5245 on
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Furniture is not REAL PROPERTY and likely should not be included in the Purchase Agreement. BofA likely didn't include the furniture in the existing mortgage (or were not aware of it).
A colleague of mine had a Short Sale recently and the short sale lender increased the "net" to them by $25,000 to account for furniture that had been "included in the sale" by the Buyer and Seller. The lender wanted nothing to do with it as part of the short sale stating it was "not real property".
In your situation, if the Buyer is stating they want the furniture replaced as part of the transaction, I would tell their agent it's not going to happen on a short sale and they can decide to buy or walk away because it won't be approved and all short sales are contingent on an approval from the lender.
Best of luck,
Thom Colby
Broker
Newport Beach and Palm Desert CA
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Thom,
Thanks for the input. I have one day to put this together with prior approval and the furniture has to be in the deal.
I have to disclose the furniture and was wondering if anyone had gotten a deal like this approved.
All input is welcome.
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Permalink Reply by Beverly Cibulsky on -
We sell real estate, not furniture. Gee when did this become an issure? Does the purchase priced reflect the fact that the sale (and furniture is "as is") What did they buyer base the offer on? The funiture that was there? Or knowing that they would want to replace it? Are they financing? Did the appraisal come in with the "crappy furniture?) Anticipating they didnt like it from the begining? Did anyone explain to th buyer from the "get go" that this is a short sale. Yeh BOA is mostlikey taking a big hit, if there is $4,000 more in the transaction, they would probably want it. Buyers will always be Buyers, and Sellers will always be Sellers, however, Did Buyer what the furniture replaced in the inital contract! David, the sad part is, when all is said in done (you finally get the short sale approved!) There are seller's who change their mind, and there are buyer's who decide to go for the throat knowing that this seller is in a desperate situation! BUYER: The seller is getting away with their debt, lets see what we can get out of this!
Another post: SELLER: changes their mind, and does not want to do now!
This is a very difficult market! If your approval is stong! Let the buyer's walk! Heck, they did you and the seller a favor! You know what you seller's lender wants. Plus it' BOA you can replace buyer!
All and all. Good Luck, Let BOA know! It will make or break the deal, but you did your best!
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Permalink Reply by Valerie Crowell on
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Why does the furniture have to be in the deal? Like others have said, we sell real property, not personal property. And why does the seller have to replace the furniture for the buyer? It sounds like another buyer is the right answer here.
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Permalink Reply by Bryant Tutas on
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Furniture is not part of a real estate transaction and should be sold separately. Not why the seller would need to replace it before the buyer will close. Sounds like this deal was not properly negotiated from the get go.
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Permalink Reply by Kimberley Kelly on
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Short Sales are different than Equity Sales. This Buyer's Agent was apparently not aware of this??? Furniture etc., is done outside of escrow, not part of our deal or interest as Realtors. Buyers and Sellers operate in their own worlds..B of A will not approve this. In the Lenders world, the Seller has NO money. Why tangle up a deal with this stuff? Close it, re-list and move on..and don't do it the second time around.
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Permalink Reply by Rodney Mason on
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If the buyer is obtaining a mortgage, then the buyer's lender will not allow furniture to be included in the sale. That would be considered an inducement to purchase and is not allowed in the lending world. The sales contract should not contain any stipulation for furniture to be included in a sale.
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Permalink Reply by Donald Johnson on
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This was actually a good topic to bring to light. Most agents are completely unaware of this subject matter since it is not really taught in pre-licensing, or any other class other than a college level real estate course.
The fact is "Chattel" can be included in a sale, we do it everyday, despite some comments saying it is not within our scope as Realtors (or licensee's). It most certainly is, and banks lend on it on almost every loan they write.
The only thing about this situation is whether or not the original mortgage/trust included the furniture??? If it did then the lender would need to discount the value of the depreciated amount of that furniture (or at least take it into consideration), but chances are very high it was not. The reason being that "chattel", other than hard appliances such as washers, dryers, ovens, refrigerators, and what we commonly call fixtures, does not normally convey, especially furniture. It has a high depreciation factor is the main reason. In other words, paying interest on a 30 year note for something that will lose all it's value in the first 4 1/2 years just isn't something the average consumer wants, banks love it because they make outrageous profits, but consumers not so much. it was actually something they did quite often prior to the 90's.
This came to light in the late 1980's when in Maryland a New Homes Builder (left out name intentionally) was sued for nearly $300 million dollars for taking profit on chattel, when it was not specifically included in a mortgage covering those items, what was then called a "Chattel Mortgage". After that point, and with the S&L bust, lenders became shy of the inclusion of personal property, although they still recognized and even gave valuable consideration to some chattel.
So then, yes we do deal with chattel daily. It is a part of your job and you should now (if not before) make sure to document each and every "Appliance, fixture, etc" in a sales contract. This is not only for your seller/buyers protection but as well as your own. It can cost you commission dollars, in fact it can cost you your license.
Unless specifically included in a sales contract, and I mean specifically, it doesn't matter. As the saying use to go, too bad so sad! If a party says they won't close "unless", prove your case or close. In the case of a short sale, never under any circumstance include the "SALE" of personal property (other than known and normally customary fixtures and appliances - but again document them). Other items are just a waste of time and make you look like an amateur.
So I agree with several others, let the buyer know it is outside the realm of that sale and that the seller (and you) are bound by agreement to not participate in any "sales" action outside of a closing. Now if the seller wants to have a garage sale and that buyer happened to come and buy all their stuff BEFORE the sale, well then, but of course they'd need to declare the income to the lender and they of course would want it applied. (No quick fixes is that moral).
Don Johnson
Broker/Owner
MORE Realty Services LLC
Licensed Real Estate Broker
www.MoreRealtyServices.com"Because You Deserve MORE Realty Services!"
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