Lending Appraisal EXCLUDES furniture!

[Mark Miles]

I'm looking at a particular market and I've heard from a number of people to be careful because most appraisers in this market will under-appraise furnished houses. E.g., if I'm buying a furnished house for $300k, they'll insist the house is only worth $280k because the $300k price includes $20k of furniture. This is apparently quite common in some areas, especially areas where it's not necessarily typical of houses to sell furnished. Has anyone else run into this? I know in many areas like Pigeon Forge, ALL of the properties sell furnished - so I'm assuming lenders don't insist on removing $20k from every appraisal to account for the value of the furniture?

I mean, I realize that an appraisal should be based on house + land value, and that technically furniture shouldn't be included in a home's value (since furniture is a depreciating asset). BUT, it's a little ridiculous for appraisers to discount furnished home sales by $10-$20k to account for the cost of the furniture, right? That just makes it a huge pain in the neck for people to finance and buy furnished homes in this area.

[Julie McCoy]

Furniture is not real estate and should not be included in the appraisal or in the list price of a home.  In real estate transactions, furniture is on a separate bill of sale and a lender will not touch it; I frequently write furniture bills of sale for fully furnished houses in the amount of $1.  

The list price should not reflect the cost of furniture; if it does, there's a problem with the listing prices.  If the appraisers insist on deducting the cost of the furniture, the only recourse seems to be to challenge the appraisal.  Ultimately, I'd talk with some local real estate agents and see how it's typically handled.