Why Selling Your House Furnished Can Cost You

When homeowners list their house for sale, they frequently consider trying to sell it furnished. After all, those Shaker chairs that worked perfectly in the old New England farmhouse are going to look downright wrong in the sleek new Florida contemporary. Worse yet, who wants the added hassle and expense of moving things they don't want anymore?

Don't do it, say realty and tax experts. Not only will listing your house furnished complicate your deal, it could also wind up costing you money.

Experts cite three main reasons why listing at a price that includes furnishings is a bad idea:

1. Real estate agents are paid a commission on the final sales price of the home.

If you're selling for $500,000 and pay a 6 percent commission, you'll owe the agents involved $30,000. If you throw in the furniture and the buyer agrees to pay you $525,000, you just boosted the agents' fee by $1,500.

A better solution: Hold a garage sale, advertise on Craigslist or simply call your local charity thrift store and get a nice tax deduction for your donation. Or you can negotiate the price of the furniture privately with your buyer; just keep it out of the escrow process.

2. Having a higher price tag may mean that the home won't appraise for enough.

Appraisers look at comparable recent sales of properties in your neighborhood to determine what yours is worth. If everyone else sold for $500,000, they won't agree your house is worth more because it's being sold furnished. Most likely they won't know -- and they certainly won't care. A mortgage is a home loan, not a furniture loan. If the appraisal comes in low as a result, that could jeopardize your buyer's financing.

3. Why pay capital gains on something you don't have to?

You can make up to $250,000 in profit on the sale of your primary residence if you're a single owner, double that if you're married, without having to pay capital gains tax. If you exceed those amounts, you'll have to pony up. Why inflate the amount of tax you owe?

There are exceptions to the no-furnishings rule, of course. Architects like Ed Niles frequently design furniture expressly for the homes they build. When that original seller lists the property, they often include the custom-built furnishings.

Even then, though, don't be surprised if some buyers thumb their nose at the offer. "Buyers like to do their own decorating," says Melissa Oliver, Coldwell Banker, Los Angeles. "It helps them make the house their own."

By all means, adds Oliver, keep the furniture in the property while it's listed for sale. "Just don't make it part of the deal."

For more tips on selling a home see these AOL Real Estate guides.

More on AOL Real Estate:
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Blue Bird

PLEASE find another writer for this subject. A real estate purchase contract will state if any personal property is included, and the price of the personal property. You will not pay a commission to a real estate agent on personal property (i.e., furniture). The house will be appraised on the REAL property, and lenders are savvy enough to decipher from the real estate purchase contract the dollar amount listed as personal property. You will not pay a capital gains tax on personal property (unless we are talking about antiques, art work, etc.).
Pay no attention to this article, as it is rife with misinformation. If your furniture won't "work" in your new home, donate it. There are numerous non profit entities which will glady accept furniture donations, and even pick up the furniture. Additionally, you will have the noncash charitable contribution to write off on your Schedule A. The IRS expects to see that deduction when a home sale is reported.

August 10 2011 at 12:06 AM Report abuse rate up rate down Reply

If the furniture is in good condition and really enhances the decor of your home but you can't use it in your next home and you don't want to deal with moving it out before selling, simply tell prospective buyers that the furniture is being included FREE as a buyer incentive. That way they know it will have nothing to do with the price they pay or negotiate. They will feel like they are getting an extra good deal with something for nothing. If they simply don't want the furniture whether it's free or not, then a local charity or second hand furnitute store will gladly take it and you will either get a tax write off or make a little money on it.

June 02 2011 at 3:10 PM Report abuse rate up rate down Reply

I could not disagree more. We purchased a Coastal Beachome(Sonoma County, CA) several years ago. Completely furnished, perhaps a little worn. Iron, ironing board, kitchen ware, linens, etc. What a deal!!!
We were able to stay over right after Escrow closed. Eventually, updated all linens, etc.
I consider it quite a find.

June 02 2011 at 2:15 PM Report abuse rate up rate down Reply

The commission increases from $30,000 to $31,500, an increase of $1,500. I think the decimal point got in the wrong place and the writer wasn't smart enough, or thorough enough, to know the difference. But I would take the rest of this person's advice? Not hardly!

June 02 2011 at 12:56 PM Report abuse rate up rate down Reply

Point #2 & #3 are fine, but Point #1 is just wrong in the given scenario. Yes you're boosting the agents fee, BUT you still wind up with a higher profit: $500,000 x 6% = $30,000 Leaving the Seller with $470,000. If you sell with furniture for $525,000 x 6% = $31,500 Leaving the Seller with $493,500. Looks like Ann Brenoff failed 5th grade math LoL

June 02 2011 at 12:18 PM Report abuse rate up rate down Reply

We sold our house fully furnished! We actually refused 3 offers of purchasing the house only. Our home sold in 3 days, WITH all the furniture. Also, it did not complicate anything! We did not use a realtor, and we sold it ourselves with just a lawyer drawing up the contract, and the purchasers laywer approving it. The only work to it was I had to write down all the furnshings we were including. No biggie. Realtors are not needed as much as they report they are. Try selling on your own..we have done it and it's easy. Scope out similar homes in your neighborhood that sold and figure your homes value. Doing it online is easy.

June 02 2011 at 10:43 AM Report abuse +1 rate up rate down Reply
Thomas Saunders

Apparently the author was not a math major...6% of $25000 is $1500, not $3150

June 02 2011 at 9:58 AM Report abuse +2 rate up rate down Reply
Sonya Mebane

Do offer to leave window treatments, especially if you have oddly shaped/placed windows.

June 02 2011 at 8:56 AM Report abuse +1 rate up rate down Reply

1 and 3 are just stupid. Unless the amount you get from furnishing would put you above the threshold for the CGT, these are bad reasons.

You should never try to reduce the amount of tax (or commission) you pay just by making less money. Would you take a low-paying job just to pay less income tax? In the example in number 1, sure you're giving the agent an extra $3,150, but you're also getting yourself an extra $21,850!

If you can get more money from selling or donating your furniture, go ahead and do it, but not selling the home as furnished just to make less money to pay less tax is nonsense.

June 02 2011 at 8:27 AM Report abuse +7 rate up rate down Reply
1 reply to axz's comment

I agree. Very poor advice all around. That's why people have to be very careful and use common sense rather than taking the advice of someone that writes for aol.

June 02 2011 at 11:47 AM Report abuse rate up rate down Reply

Gee. here is a novel idea that this writer did not think of....Sell your house and make the sale (and appraisal) soley on your house value then.....offer the buyer the option of purchasing the furniture as a totally seperate deal. All the negatives disappear. Why complicate your life or the buyers. Makes sense to me :)

June 02 2011 at 8:22 AM Report abuse +7 rate up rate down Reply
1 reply to Michael's comment
Mike Adams

Did you not read the article? Here is a quote:
"Or you can negotiate the price of the furniture privately with your buyer;"

You and 4 people didn't read the article...

June 02 2011 at 10:13 AM Report abuse rate up rate down Reply