Selling Personal Property

One way to come up with the money needed for a down payment on a new home is to sell personal property. This seems simple enough, and it is. But if you do not handle the sales transactions properly, you may run into trouble with your mortgage lender.

You see, a lender wants to make certain that you are the rightful owner of that property and are therefore entitled to the proceeds from the sale. The lender also wants to know that the amount for which you sold the property is consistent with the property’s current value.

Selling a vehicle

Now this is not much of a problem when the personal property is a vehicle. Simply make a copy of the vehicle’s registration since the registration lists you as the vehicle owner. Next, look up the make, model and year of the vehicle in a reputable book that lists current vehicle values, such as the Kelly Blue Book. Once you find the page showing the current value of that particular vehicle, copy that too.

Once you sell the vehicle, make a copy of the check you received from the buyer and also the Bill of Sale. Don’t accept cash for this transaction as you will not have proof of receiving the funds. Finally, photocopy the deposit slip showing that the money you received from the vehicle sale was deposited into your bank account.

Selling other property

The problems start when the personal property you want to sell is something other than a vehicle. That’s because it’s more difficult to prove the value of your furniture, heirlooms, collections, art, antiques and other non-real estate personal property. It’s not impossible to document; it’s just more tedious and time-consuming.

If you plan to sell other types of personal property, start gathering receipts and other records that document your purchases. Old inventory showing ownership should also be gathered. A specialist or independent appraiser can assist with determining the value of some of your property. Just be sure to have the appraiser’s findings documented.

The loan application

Remember, you are required on the loan application to list the value of your personal property. Lenders use this as a way of confirming that the amount you want to borrow and your personal property are consistent with your income. If something seems amiss, it’ll raise a red flag, especially when dealing with applications for large loan amounts.

However you need only document the value of that listed personal property if you intend to sell it and put the proceeds towards your down payment. When this is your plan, you have certain responsibilities if you plan to pass the lender’s verification process. You must:

• Prove ownership of said property
• Photocopy the Bill of Sale
• Photocopy the buyer’s check
• Photocopy the deposit slip you receive after depositing funds from the property’s sale into your bank account.