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Wednesday, September 25, 2013

Buying a Furnished Home - What is the value? Why do it?

In the Brevard County, Florida real estate market we routinely encounter buyers looking for second homes.  In some cases they prefer a house or condo that is already furnished - a turnkey solution.

The question that often arises is how much value do the contents add to the purchase.  Does the buyer calculate the inventory and assign a value?

With cash purchases my guess is there is a convenience consideration with little actual correlation of inventory/value to purchase price.  It may just be a way to save time.

But if there is a mortgage involved in the transaction many lenders do not want the personal property on the purchase contract.  The reality is the lender ignores personal property.

If the contents are included in the contract price the appraisal may come in low because the appraisal focuses on the real estate (real property) not the personal property (contents).

In my opinion the contents should be outside of the real estate transaction.  The contents should be negotiated separately.

From a buyer negotiation position the contents can be a distraction that blurs the real value and interferes with obtaining the best price possible.

Since I am not an attorney or tax adviser the appropriate professional should be consulted.   There may be sales tax consequences or other unexpected issues.

Here is a link to Naples Florida Realty Attorney Raymond J. Bowie's website and an article that provides some insight into "Selling Personal Property with Real Estate."

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