Selling a property fully furnished is fairly common in vacation-home markets, where a house without furnishings can become a chore for buyers rather than an immediate retreat. But it’s probably not a smart decision most anywhere else. 

In the popular Colorado ski town of Crested Butte, furnished listings are expected, reports Briggs Freeman Sotheby’s agent Shelle Carrig. “Vacant homes always take longer to sell unless there is a noticeable price incentive,” she said in a piece for Inman.com. 

That’s not the case in Dallas, where “very few homes” are sold with their original furnishings, said Lucy Johnson, a Briggs Freeman Sotheby’s executive. Most buyers want to put their own touch on a new place, she told Inman. 

Indeed, it’s highly likely that wannabe buyers will simply scroll past any place listed as “fully furnished” when they peruse the market. Even when the idea is intriguing, they’re not likely to give a property much thought unless the furnishings are up to date. 

“Furnishings that aren’t on trend and fresh can prevent some prospective buyers from seeing the underlying positive attributes of any home,” Johnson warns. 

Buyers See Extra Costs 

Then there’s the matter of cost. In Florida, where thousands of houses and apartments are sold full of furniture, plates, silverware, pictures and sometimes even towels and sheets, many sellers believe that offering their properties “turnkey” adds value and justifies a higher price. 

But some buyers may not see it that way, said Christopher Carter of the Waterfront Realty Group in Naples. Carter is also a mortgage broker and writes a popular blog about Florida real estate. “In most buyers’ minds, furnished real estate asking prices already reflect added cost, which they may or may not be willing to pay,” he wrote on his blog. 

Beyond all this, selling a furnished house tends to complicate the transaction – in more ways than one. Consider sales taxes, for example. 

In most places, sales tax is not levied on the sale of a house. (There are transfer taxes and other fees, just not a sales tax, usually.) But furnishings sold with a house are considered tangible personal property. As such, said Carter, they are taxable. 

If the contract, or an addendum to it, mentions the personal property remaining in the house, the seller may be responsible for collecting and remitting the tax, Carter points out. In Florida, that’s 6 percent of its value. Some sellers’ agents “unknowingly create a taxable situation when they attach a written inventory” to the contract, he warns. 

Lenders Look Askance 

But whether there is an itemized list or not, the value of the furnishings could very well become part of the property’s assessed value. Consequently, the buyer’s property taxes could be higher than they need to be. More important, the buyer’s lender is probably going to look askance at the deal, and the appraiser will want a say, as well. 

Carter points out that lenders lend funds for real estate, not personal property. So, if the contract includes furnishings, the lender is going to either send back the borrower’s application or deny it altogether. 

Why? The house is a permanent structure that stands as the collateral behind the mortgage. “Houses and condos usually stay where they were when purchased,” he said, “which is not always the case with couches, beds, dressers and lanai lounge chairs.” 

It’s OK to list items like ceiling fans, light fixtures and draperies that are attached to the property and staying put. Ditto for major kitchen and laundry appliances: Even though they are removable, they usually convey unless the contract states otherwise. 

But if the contract lists wall hangings and a golf cart, “the buyer’s lender will red-flag the contract and make everyone start over,” writes Carter.  

“Even when specific or itemized value is not given to the personal property, mentioning it at all in a written real estate contract artificially raises the inferred property value,” which lenders won’t allow, Carter said. The result: unnecessary delays that neither party wants. 

There’s also going to be an issue with the appraisal. Appraisers are trained to remove the value of any personal property mentioned in the contract when coming up with a valuation. That is, they must subtract personal property from the agreed-upon sales price – which, of course, means a lower appraisal. 

If the house doesn’t appraise for enough, three things can happen: The buyer will have to come up with more cash for a down payment, the seller will have to lower the price to make up the difference, or the buyer and seller can throw up their hands and walk away. 

The better way to handle selling a furnished house is to sell the house separately from the furnishings. Place a price on each that will add up to what you wanted for them together. Then the buyer can either pay cash for the furnishings or choose to finance both – the house with a mortgage and the furnishings with a personal loan. 

Lew Sichelman has been covering real estate for more than 50 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications. Readers can contact him at lsichelman@aol.com.