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The buyer has requested I replace the HVAC + duct work on the home. The estimated cost is $6,000. I have also agreed to pay the closing cost which is close to or more than $ 5,000.

I am motivated to sell, should I agree to replace AC? It is currently working its just an old unit.

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    Replace HVAC? Don't replace HVAC? These are just details. The net price that you walk away with from the sale is all that matters. If the current HVAC is working, I'd negotiate with the buyer. Split the cost of replacement? The worst he can say is no. – Bob Baerker Oct 22 at 13:45
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    If you are happy with the price of house, just offer to discount by 6000 towards the AC. This way you are not stuck with costs if the house doesn't sell your. The buyer can decide what make to replace with. – Dheer Oct 22 at 14:59
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    @Dheer If buyer asks seller to cover closing costs it can often mean the buyer is not flush with cash, taking $6,000 off the price might not actually be attractive to them. Understanding their cash position is important for negotiating. – Hart CO Oct 22 at 15:42
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    @BobBaerker Not true at all! The seller cutting the buyer a check for $6k of AC work is super easy to do. The seller managing the AC work themselves (calling, scheduling, inspecting, handling issues/delays, discovering that you actually need another $10k of work) is hard. If the questions was just "do I take $11k less to sell now" is different than "should I undertake the burden of ripping out and repairing stuff to (maybe) sell now". – Brian R Oct 22 at 18:38
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    $6k with ductwork? They pulled that number out of a hat. – Mazura Oct 23 at 5:41
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A "seller concession" is a good solution for a buyer with no cash who wants things done on the house. You keep the sale price the same, and give them cash back at closing, which they use for the repairs. This solves the buyer's problem of having no cash and needing a way to fund the repairs, and it reduces risk for you, the seller, since you're not paying for repairs for a buyer whose deal may fall through. Financially, this ends up being the same as what it sounds like your proposed arrangement is (you pay the expenses out of pocket) but it reduces your risk.

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    I would be cautious about what effect this has on the commission you pay to the real-estate agent and stamp duty (if applicable in your area). – Oddthinking Oct 24 at 10:09
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    As a buyer about to close on a house where the seller agreed to fix a lot I fully support this answer. While it is great having the house move-in ready, getting the seller to do the fixes has complicated things... 1> It went into the offer. 2> Had to move the closing back several weeks just to allow time for the work to be done. 3> Since the particular fixes were included in offer, the appraisal (and by extension the whole loan) became contingent on them being complete/confirmed by the appraiser... 4> Last fix was delayed/rescheduled which has caused closing to get bumped again... – Mr.Mindor Oct 24 at 20:35
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I am motivated to sell, should I agree to replace AC?

There's no simple answer, home sale negotiation has a lot of variables. Here are some things I consider when deciding what I will/won't do to sell a house after receiving inspection objections:

  • Time on market - If I blow up a deal, how long will I likely be waiting for another offer and how much will that cost me?
  • Buyer's willingness to walk away - If I know they are selling their current house while buying mine, they are less likely to bail on the deal over little things. If they have all the time in the world to find their next home, I have less leverage.
  • Reasonableness of ask - If something major doesn't work, it's reasonable to replace/repair, if any buyer is likely to ask for the same thing, it's probably worth addressing.
  • Quality of offer - If I accept a lower cash offer or a lower offer with a short closing period, but then they ask for the moon after inspection I am less inclined to work with them.

As a motivated seller you have less leverage, but I would still suggest compromise rather than full on replacement. If the HVAC can be repaired to not require some workaround for normal operation that seems like a reasonable compromise. If it was just about age of the HVAC system I'd probably offer a 1 or 2 year home warranty rather than replacing or making an allowance for it in the sale price.

See what your realtor thinks, but remember that they have a substantial motivation to get your house sold sooner than later even if that means a slightly lower price.

Based on Dheer's comment above, thought I'd add a note about buyer's cash position. If they are asking for closing costs to be covered it could be because they don't have much cash on hand, in such cases discounting the HVAC cost from the purchase price isn't appealing to them because their concern is immediate need for cash to cover a big repair, not saving a couple bucks a month over the life of the mortgage. If that's their situation, you might actually be able to compromise by replacing the HVAC system but increasing the purchase price by most or even all the cost, which would have little to no net impact to you but get them a new HVAC system without having to have the cash on hand now.

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    This answer is superior to the accepted one, because it takes into account the fact that a seller concession impacts the buyer's ability to get financing. Under conventional mortgage rules in the US, the bank would treat a concession of that kind as a reduction in the purchase price. – tbrookside Oct 23 at 12:42
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I utilized a home warranty. For a few hundred dollars, I as the seller, provided a warranty that would cover any issues within the first year. This conveys, "It was working for me when I sold it to you." But at the same time gives the buyer a safety net.

In my case, the heating unit was working, but inefficient due to rusting out (it was old). The buyer had it serviced the following winter and the technician recommended a replacement. The warranty covered that cost for them.

  • How much does a warranty like that cost? – hellyale Oct 23 at 17:52
  • Depends on the house, but usually around several hundred dollars, maybe a bit less. Usually the buyer can renew the contract if desired. However, sometimes old AC units can keep on working for years and years, long enough that the money paid to the warranty company exceeds the cost of replacing the unit. – WBT Oct 24 at 14:54
  • And if everything works for a year, you can reasonably assume the transaction was not shady. Any failures after that would be cost of ownership. – Jammin4CO Oct 25 at 14:05

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