Biting the Bullet vs. Discounting the Sales Price
Can Minnesota homeowners sell a house with a red-tagged furnace?
The somewhat surprising answer: “You betcha!”**
Ahhh, but is it smart to sell a home that needs a new furnace?
The answer to that is more nuanced.
Here’s mine: “Usually not — but it depends on the home’s overall condition.”
Getting Off on the Wrong Foot
So, when a home is otherwise in pristine condition, stipulating that the sale is subject to the Buyer replacing the furnace, post-closing, is likely to cost the homeowner much more than the $4k – $5k it would to simply replace it themselves before going on the market.
That’s because the bum furnace will inevitably shift the focus of the sale from Buyers’ emotional connection to the home — the best way to maximize any home’s sales price — to how much it’s going to cost the Buyer to make the home livable, post-closing . . . and what else might be wrong with it!
Anticipating the Buyer’s Wants
“That all makes sense,” I can hear some Sellers reply, “but, isn’t it better to give the Buyer an allowance to pick their own furnace? (including preferred contractor, brand, spec’s, etc.).”
I agree with that argument when it comes to Kitchens and Baths — there’s just too much variability in taste, budget, and contractor finish levels for Sellers to profitably guess what the eventual Buyer will want.
Plus, the dollars are much bigger.
Kitchens vs. Furnaces
By contrast, furnaces (or boilers) are usually much more straightforward.
They’re either standard (80%) or high-efficiency (90%), and made by a few well-regarded manufacturers like Carrier and Trane.
If the homeowner simply gets a model and brand whose quality is consistent with the rest of the home . . . they’re usually fine.
Then their Realtor can focus on drawing Buyers’ attention to all the home’s pluses. 🙂
**Subject to these caveats: 1) the sale has to occur outside of heating season (July qualifies); and 2) the local municipality has to give its say-so.
In most Minnesota cities with point-of-sale inspections, that’s usually granted in return for both parties to the deal agreeing to create and fund an escrow account, to ensure that the work actually gets done (usually no more than 90 days after closing).
Finally, assuming the Buyer is getting a mortgage, the lender has to sign off on the post-closing furnace replacement as well.