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Ask the Underwriter: Can personal property be included on the sales contract?

It varies by loan type

Ask the Underwriter is a regular column for HousingWire's new LendingLife newsletter, addressing real questions asked to, and answered by, professional mortgage underwriter, Dani Hernandez. 

Your borrower finally found the perfect house! They send you a copy of the executed sales contract and everything is great… until you notice that the window treatments are listed as personal property to be included in the sale. Suddenly, you’re having flashbacks of your underwriter losing their $^!# because the last sales contract you sent included a lengthy list of personal items from the Seller’s “Custom Man Cave” to be included in the deal. These are just window treatments though… no big deal… or is it?! Keep reading to find out!


Can you address the requirements when "personal" property items appear on a purchase contract? Things such as used grills, pool tables, etc… These items generally have no value and are left as a convenience. Will the underwriter accept a statement indicating the items have no value from the agents or sellers?


Determining how to treat personal property listed on the sales contract varies depending on the type of loan being obtained. Some types of personal property can be included in the sale without impacting the purchase price of the home. While others are viewed as a type of sales concession or inducement to purchase and require the appraised value of the subject property to be reduced.

FHA Loans:

Replacement of existing personal property items listed below are not considered an inducement to purchase, provided the replacement is made prior to settlement and no cash allowance is given to the Borrower. The inclusion of the items below in the sales agreement is also not considered an inducement to purchase if inclusion of the item is customary for the area:

•     Range
•     Refrigerator
•     Dishwasher
•     Washer
•     Dryer
•     Carpeting
•     Window treatment
•     Other items determined appropriate by the Homeownership Center

Any item not on the list is treated as an inducement to purchase and will result in a dollar-for-dollar reduction to the Adjusted Value of the property before applying the appropriate Loan-to-Value percentage.

Conforming Loans

Acceptable Items:

  • Most built-in appliances (such as stoves, refrigerators or dishwashers), window treatments/coverings, carpeting, or other custom-made items that are affixed to/convey with the property, are considered to be fixtures and no downward adjustment to the purchase price is required.
  • Personal property items left for convenience (i.e., pool cleaning equipment or covers, lawn mowers, picnic tables and/or patio sets). (As a general rule, if the personal property is less than 2% of the value of the subject property or has a value of less than $500, it is not considered an interested party contribution.)

The appraiser must note ALL personal property included in the sales contract and determine the aggregate value, if any, of the items. With regards to the above, it would be sufficient for the Appraiser, to site the items in the report as personal property, which he has given $0.00 value to.

If you find yourself looking at a sales contract and the list of personal property includes a Picasso hanging on the wall or the ‘67 GTO in the garage, do not send it to your underwriter! Send it back to the borrower! Get those items removed from the purchase contract. If the borrower really wants the car or flat screen tv from the man cave, tell them to apply for a personal loan AFTER they buy the house!

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