Real Estate Advice

Bad Furnace Can Send Sale Up in Smoke

Dear Pat
We’ve been getting our home ready for sale, doing some last minute decorating and fixing. Now we’re concerned that our huge old gravity furnace might be a problem in selling. It looked a little scary to us when we bought the house 10 years ago, but it’s been working fine ever since. Would it pay to replace it before we sell?
--Octopus Owners

Dear Octopus,

Let’s start with the most important question, namely: will we need to replace the furnace anyway?
Many furnaces that seem to be working “fine” are actually unsafe, and subject to red-tag shutdown by the gas company or licensed heating contractors. The worst scenario for you would occur if an unsafe condition were revealed during a buyer’s inspection, after the house is sold and the price is set. Sellers usually have to replace the furnace in this situation. If the sellers refuse to negotiate this problem to the buyer’s satisfaction it could kill the sale. Of course, at this point the sellers might choose to replace the furnace and go back on the market at a higher price, with the cost of the furnace added. But in addition to the mountain of ill will already created, the sellers now face the uphill task of re-entering the market at a price thousands higher than they had asked before.

So to answer that all-important question, Octopus: you should get your older furnace certified by a licensed contractor before you go on the market, even before you call for a Truth-in-Sale-of-Housing inspection. If the heating contractor’s inspection reveals that you need to replace the furnace, then you have a chance to

price your home with the cost of a new furnace added. Replacement of a big gravity furnace with a new forced air unit can cost between $6000-$8000, depending on asbestos removal required and other factors. It’s hard to know if you could recover all the cost by adding it to your sale price, but it’s a fair bet that you’d be able to recover at least half—which is, by far, the best you could hope for by renegotiating with a buyer after the price has been set (most buyers would simply insist that the furnace be replaced at the seller’s expense). Plus, a new furnace makes your home more desirable, removing a major objection and opening it to a wider market.

Please get your furnace tested as early as possible. If replacement is necessary, and cash is in short supply, there are a number of pre-sale strategies at your disposal. Call me for details. Good luck!

Pat Rosaves is broker/owner of River Realty. She has over 30 years experience helping people with their real estate needs. Questions may be sent to her at River Realty, 2543 38th Ave S. Minneapolis, MN 55406. She can also be reached at 612-724-1314, or at www.riverrealty.net