Real Estate Jargon: The Difference Between Real and Personal Property

Image Credit: James Bruce Photography

So you’re thinking about selling your home. The house is in good condition, the yard looks amazing and you’re ready to call a real estate agent to help you sell your home.

Now, hit the brakes for moment and take a look around.

Did you plan on bringing that new, top-of-the-line refrigerator with you to your next home? How about those cool flowers that you recently planted — do you consider them your babies? And is the hot tub coming with?

These can be tough questions for homeowners who have grown attached to certain appliances, plants or other items.

So, let’s start with a few really basic concepts.

For tax and real estate purposes, real property is generally your house, anything attached to it and the trees and plants embedded on your property. These are things that, with a few rare exceptions, go with the house in a real estate deal.

Personal property, on the other hand, is a bit trickier to define. And it is often at the heart of disputes between buyers and sellers who realize in the moments before or after a sale that they hadn’t agreed on whether something was expected to stay with the house when the former owners move out.

When Personal Property Becomes a Fixture

This is where the term “fixture” comes in. Once something is attached to the property (nailed down, screwed in, glued on, etc.), it generally becomes a fixture that is considered part of the house.

For example, a nice chandelier may really make a dining room pop. It might help convince a potential buyer that they’ve found their dream home. Since it was affixed to the home, the chandelier would be considered a fixture. If it was there when the buyer last saw the home and decided to buy, it should be there when they move in.

The gorgeous dining room table beneath that chandelier, however, is a different story. That’s personal property that can easily be removed with damaging anything. The buyer shouldn’t expect that to be there when they move in.

But real estate agents can itemize things like dining room tables or other moveable property in hopes of getting the seller to agree and then adding them to the total cost of the home. That may include a particularly interesting piece of art, a piece of furniture or a nice grill.

If the homeowner is willing to sell it, it can often be bundled into the real estate deal. Or buyers and sellers may agree to strike a private deal with a separate “Bill of Sale” outside of the real estate transaction — no different than if they were at a garage sale.

Remove What You Want to Keep Before Selling

For home sellers, the best way to avoid conflicts over what is and is not included in the real estate deal is to simply remove items that you plan to keep.

If you don’t ever plan to let that chandelier out of your sight, it might be best to replace it with another one and store yours before potential buyers ever have a chance to fall in love with it.

If you plan to keep a lot of items, that may mean renting some storage space. But in Austin’s hot real estate market, with houses averaging 42 days on the market before selling on average in August 2014, it may be worth a couple months of renting storage.

On the other hand, if there’s something you hope to sell with the house (perhaps that big piano that goes untouched) be sure to let your agent know so that potential buyers can consider that in their plans.