ROI on new heating system?

thisishishouseSeptember 14, 2009

Does anyone know the return on investment rate for a new heating system? Is a new heating system generally a selling point? If I spend $x to upgrade my heating system, can I increase my selling price by $x?

We need some minor (but costly) work done on our heating system. Someone suggested just putting that money towards a new high-efficiency system. Sounds good, but we're considering selling within the next year.

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cordovamom

In my opinion, no you cannot increase your selling price because you have an upgraded heating system. Mechanical systems, like roofs and plumbing, are things that buyers expect to be up to date and maintained, it's not something buyers pay extra for in my experience although some buyers will deduct from your asking price if the systems are not updated and maintained. Your home may sell more quickly because of the updated system, but I don't think you'll see more money.

    Bookmark   September 14, 2009 at 10:23AM
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Billl

Agreed.

Even beyond that, it is almost impossible to make money by paying someone else to make major improvements to your home. Unless you are able to do some or all of the work yourself, you end up spending more money to complete the project than the value of your home is going to increase.

I would suggest keeping the money in your pocket. In a year from now, if the potential buyer has issues with the heating system, you could always offer a credit towards a new one.

    Bookmark   September 14, 2009 at 2:00PM
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sue36

There is almost nothing you can do to a house that will give you a guaranteed 100% ROI, never mind 100%+. It will help you sell the house, period. How much will the repairs cost vs. new? How old is the existing system? What is the efficiency rating of the current system vs. what the new system would be?

    Bookmark   September 14, 2009 at 8:02PM
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calliope

Agreeing generally with previous posters, but will say it depends on other factors. If you have an older system, need to put a lot of money into it to just have a working 'older' system it may be worth upgrading to new, even if it means just a quicker sale. Time is money when you are holding on to a house you want to sell. Your lost dollars from holding on to a property may very quickly equal or exceed the difference between repairs and replacements.

It also depends on your home's value and the prospective market to whom you wish to sell. I had an investment property, and the first thing I did was to install a new heating plant. The old one worked, but was inefficient and noisy. It was a modest house and the target buyers would be people who would have much rather had a new, high efficiency unit built into their mortgage payements than have to spring for one after purchase. If you can use existing ductwork, furnaces just aren't that expensive. New furnaces are a selling point in my area on older homes. It's such a common worry.

    Bookmark   September 16, 2009 at 4:09PM
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cocontom

If you can upgrade for close to the same amount of money, then by all means do it- don't forget to factor in the energy tax credit.

It's not so much that I would pay more for a house with a new heating system, it's that I wouldn't even consider buying one where a previous owner cheaped out on maintenance (which this does fall under).

    Bookmark   September 16, 2009 at 10:01PM
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sue36

The OP never said the system was old or older, just not new. She also said the repair was minor but costly. Without more information (what is "minor", what is "costly") it is impossible to say which is the better value. Is the system oil, gas or LP? LP systems are relatively cheap, high efficiency oil systems are expensive.

Fixing a system that needs work is not "cheaping out on maintenance". We don't even know what the problem is!

    Bookmark   September 17, 2009 at 10:20AM
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calliope

Exactly. That's why the OP needs to consider all the factors and it seems most of the viewpoints were valid. I'm sure the OP can sift out what is pertinent to their situation.

    Bookmark   September 17, 2009 at 11:07AM
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thisishishouse

Sue/Calliope: We have a 22 yo gas boiler and recently discovered it isn't vented to spec. The flue enters the bottom of the chimney and just ends there. I'm told the flue should extend up the chimney to the top for the boiler to draft properly. Getting 35' of flex liner installed will cost us $1800. Someone mentioned, that with rebates and tax credits, we should consider a new direct-vent unit and forget the chimney problem altogether. But even with rebates and such, that's still $8-$10k out of pocket.

Like cocontom, I too go thru homes making a list of everything I'd need to fix/replace to make it livable. I know, for me, brand new mechanicals would be a big item off that list. I don't know if others would view things similar. If I spend $10k on new boiler, I wouldn't entertain low-ball bids.

Here is a link that might be useful: Does my chimney need a liner?

    Bookmark   September 17, 2009 at 12:44PM
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calliope

I have a gas fired boiler and wouldn't be afraid of a twenty two year old one in a prospective older home if it were inspected. If it were me, I'd get the flue situation done to code and breath a sigh of relief.

    Bookmark   September 17, 2009 at 6:59PM
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sue36

A friend of mine just replaced the furnace in her house. It was over 40 years old. And it was still operational, she replaced it because she got one at cost.

No liner is a common problem. Get at least two more quotes, that price seems high.

    Bookmark   September 18, 2009 at 6:59PM
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calliope

That's close to the price I was quoted ten years ago for a liner for one chimney, it doesn't surprise me.

    Bookmark   September 18, 2009 at 7:58PM
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