The primary motivation for selling any home is to, ideally, make a profit on what was spent in the first place. However, regardless of what that figure was in the original purchase, one also has to consider inflation and the value of the dollar today. So, automatically, the figure needs to be higher adjusted for inflation. Then comes the cost of any improvements already paid into with other aspects of the home. Soon enough, a homeowner will likely realize they probably need 25 percent more than originally paid just to break even. Fortunately, real estate prices tend to increase over time, and that tends to cover the return on investment needed.
A new HVAC system is definitely an upgrade and, in theory, it could be built into the price of a home for sale and recovered, technically speaking. However, due to market changes and buyer demand, the timing of the upgrade and the ability to recover the funds as well as still sell the home for a profit varies considerably.
Understanding A Market Before Investment
The question of should I upgrade my HVAC before selling is a unique one to the homeowner’s situation.
A home upgrade via an HVAC replacement is a big investment. Unlike interior painting or flooring upgrades, which are only in the hundreds of dollars in cost, today’s HVAC packages can easily run between $10,000 to $15,000 for a full installation. There are plenty of tax incentives that can be leveraged from time to time, which bring that cost down, but it is still a sizable commitment in any situation.
A homeowner also needs to consider the reception of the market at the time the home will be listed for sale versus when the HVAC system is installed. If installed right before selling, the market may be in a downturn where it is a buyer’s market versus a seller’s market. In these situations, the homeowner then has to be competitive, and may likely have to lower the price of the home to get it to move on the market. Adding a cost of $15,000 to a home may not be possible if the return on investment expected is already very shallow versus what was originally paid. On the other hand, where a buyer has seen a large appreciation in the home value since purchase, it can absorb the cost of the HVAC upgrade mathematically. Every home is different, so the choice to move ahead is a personal financial one.
Significant Value Added With A New System
There is no question that an HVAC upgrade will justify a higher home price. HVAC systems generally last between 10 and 15 years. Depending on the status of the home for sale, a buyer may expect a lower price knowing they will need to deal with an HVAC replacement soon on their own after the purchase of a used home. However, knowing the home has a recently-installed brand new system definitely is an advantage for a buyer moving in. Not having to then worry about a repair on their own is a big peace of mind after a large home purchase commitment goes through.
Additionally, an upgrade will provide a home with the latest features and HVAC technology versus what was available a decade or so ago. That means the buyer is getting the advantage of better systems, performance, sensors and output versus an older HVAC system. Knowing these details could be the reason why a buyer picks one home over another, which can be a competitive advantage when selling.
No Generic Answer
Regardless of what might be found in online videos and articles, every homeowner should do their own homework and math regarding what to expect financially with a home sale and one that includes an HVAC upgrade or similar to sell the home faster. Upgrades for selling are not unheard of; many people upgrade bathrooms and kitchens for the same advantage. An HVAC upgrade can definitely be a selling feature for a home, but the timing of the market makes a big difference too.
