Discussing furniture outside of contract

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Discussing furniture outside of contract

Joshua B Pruitt
Real Estate Agent · Jacksonville, FL · Member since 2020 · 22 posts · 9 votes

Good Afternoon,

I am under contract to purchase my first investment property. We are going to utilize it as a short term rental. I have had an inspection completed, but before I ask for repairs I want to discuss the furnishings that the selling is willing to convey. We purposely left them out of the initial contract to discuss compensation later. We now want to discuss before asking for repairs. The problem is that the seller is represented by a Realtor, and I also am a Realtor.

I just want to make sure that I don't get my self into any ethical issues with discussing the furnishings and then if I ask for repairs.

My intentions were to let the listing agent know that I was going to call and discuss the contents of the home, and then based on those conversations ask for repairs, if any.

Any insight on how best to handle this situation would be greatly appreciated.

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Joe SplitrockPro Member
Moderator
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
5y
Originally posted by @Joshua B Pruitt:

@Marcello Di Gerlando, I want to discuss the contents and what they are willing to part with. Based on that I would either not ask for any repairs and take care of them after closing, or ask for some...it would all dependent on what we come up with outside the contract.

 I would negotiate a price for furnishings separately. You can most likely use bonus depreciation and take the expense year one. If you put the cost into the purchase price, you are stuck depreciating over 27.5 years. 

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  • Paul Sandhu
    Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
    5y

    I would do 2 separate agreements.  1 for the purchase and repairs of the property.  These 2 things go together because they are related.  A separate agreement for the purchase of the furniture.  The furniture and repairs are not related.  

    2Reply
  • Dustin Allen
    Real Estate Agent · South Lake Tahoe, CA · Member since 2016 · 681 posts · 644 votes
    5y

    @Joshua B Pruitt

    Why not make your offer for furnishings through the other Realtor? They don’t have to negotiate it for the client but they can certainly pass along the information and protect the rest of the transaction. I would not let another realtor talk to my clients until all negotiations are handled and all contingencies are released.

    2Reply
  • Marcello Di Gerlando
    Investor · Colorado Springs, CO · Member since 2011 · 322 posts · 238 votes
    5y

    Can you clarify your question please. Not sure what your intent is. 

    Do you want to roll the furniture cost into the loan? or do you want to negotiate it separately under a mutually exclusive agreement?

    I probably would not pay more than 10% or 12% of its retail value.

    1Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    5y

    I would just add it to the price of the house via an addendum. Make an offer and see if the counter or say no.

    2Reply
  • Joshua B Pruitt
    OP
    Real Estate Agent · Jacksonville, FL · Member since 2020 · 22 posts · 9 votes
    5y

    @Marcello Di Gerlando, I want to discuss the contents and what they are willing to part with. Based on that I would either not ask for any repairs and take care of them after closing, or ask for some...it would all dependent on what we come up with outside the contract.

    1Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    5y
    Originally posted by @Joshua B Pruitt:

    @Marcello Di Gerlando, I want to discuss the contents and what they are willing to part with. Based on that I would either not ask for any repairs and take care of them after closing, or ask for some...it would all dependent on what we come up with outside the contract.

     I would negotiate a price for furnishings separately. You can most likely use bonus depreciation and take the expense year one. If you put the cost into the purchase price, you are stuck depreciating over 27.5 years. 

    3Reply
  • Marc RiceBusiness Member
    Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
    5y

    The point @Joe Splitrock mentioned above is very key. Separating the furnishings from building will allow accelerated depreciation of it. I recommend talking to a CPA to further explain.

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    2Reply
  • Jonathan StonePro Member
    Rental Property Investor · Camas, WA · Member since 2020 · 285 posts · 202 votes
    5y

    Great point as always @Joe Splitrock.  I'd hesitate to reach around the other agent in any manner.  Even if you want to negotiate furniture outside of the contract you have to wonder, this raised an ethics question for you so would a third party see this a potential issue.  Is the cost of the furniture worth having to defend your actions to your realtor association? Could this impact your name in the market?  Probably not worth it to me.

    1Reply
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