20

tl;dr: would I get my money back if I replaced the leaky old A/C before I sell my house?

The central air conditioner in my house is a little over 20 years old. I just had to pay $200 to add freon, and I had to do the same last year, so I think it's safe to say it's leaky and probably needs to be replaced. But we're planning on selling the house within the next 2-3 years.

So, would it be best to spend the few thousand $$$ to replace it so that we can tell potential buyers it's a new A/C that doesn't leak and uses the newer ozone-layer-friendly coolant, or just keep replacing the expensive ozone-layer-killing freon and let potential buyers know it needs to be replaced and maybe have to knock a few thousand off the selling price?

  • 3
    You could bundle a home warranty with the sale to assuage buyer trepidation about the age/condition of your current unit. That would be a lot cheaper. Though I imagine you'd recoup most of the cost of a new AC unit, it's a nice selling point. – CactusCake Jul 6 '18 at 14:50
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    An alternative to the $200 each year is to just have the technician find the leak. It's easy and dead simple so it should be "cheap". Knowing what is leaking will help you decide what to do. If it's the lines, that might be good; they might be easy to replace. If it's the evaporator, that's not as good... and you still might need to replace the lines. If it's inside the condenser, that's expensive. – Zach Mierzejewski Jul 6 '18 at 17:06
  • Have you checked on whether it can be repaired? I just had a leak in a 12-year-old system. Fixing that, topping up the coolant and some other easy fixes was several hundred dollars from a moonlighting technician. – mkennedy Jul 6 '18 at 17:07
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    only $200? I haven't been able to find anybody that sells R22 for under ~$100/pound... – Michael Jul 6 '18 at 20:46
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    OP: It helps if you tell us if you're in an environmentally-conscious area or not. Also do local buyers care about energy-efficiency? – smci Jul 7 '18 at 22:38
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If you have the means, I would replace it. It's no guarantee that you'll get your money back on it, but it's one less potential item to sour a deal. In some states, if not most/all, you are legally obligated to disclose the issue to potential buyers anyway. Not only that, but if you use your A/C with some regularity, you'll save a fair bit on utility costs with a 20-year newer model in addition to the $200/year Freon spend.

I bought a place with a 20-year old AC unit, it doesn't leak and works pretty well, but I requested a home warranty and offered quite a bit less due to age of all HVAC and roof on the house. If it's just one big item/appliance that a buyer will be concerned about replacing in the near future, that's easy to overlook, when it's 2-3+ aged items many buyers will pay attention. If it's more of a starter home then you could likely find an inexperienced buyer who doesn't realize what kind of costs they're looking at, but taking advantage of that would be pretty low.

Fall/Spring are typically best times to get a good deal on new HVAC items.

Edit: I believe there is still a tax credit available for an energy efficient upgrade on AC, $300 off your new AC unit: https://www.energystar.gov/about/federal_tax_credits/central_air_conditioning

  • 1
    Agreed. To add more fuel to this argument, there is nothing to say that your rate of coolant loss will remain constant. You could need to add coolant in three months from now. Once the systems start leaking, the deterioration in the line will likely grow, increasing the rate of coolant loss. – Pete B. Jul 6 '18 at 15:41
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    Are buyers really that keen on an AC? I wouldn’t want it, even for free. – Michael Jul 6 '18 at 17:56
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    @Michael it depends where you live. Up here in Minnesota, it's still used, but not nearly as big of a deal as down in Arizona or California. – Cullub Jul 6 '18 at 18:03
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    I have purchased houses in Wisconsin, Indiana, Michigan, Louisiana and Tennessee. I am unaware of any law requiring disclosure of anything smaller than "material defect". You must disclose things that are (according to IHCHI) "major adverse impact on the value of the property, or that poses an unreasonable risk to people." Further quoting: "a furnace that works fine but was expected to break down years ago is not considered defective." That's why you (as the buyer) are expected to have (and pay for yourself) a home inspection and a title search. Buyer's claim is with inspector, not seller. – Keeta Jul 6 '18 at 18:11
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    @Keeta It varies by state, but looks like Wisconsin was the first state to require disclosure at sale so surprising you didn't get one there. If you knew of an HVAC defect and did not disclose, you'd be in violation of the law. Hard to prove as a buyer, but if they happen to use the same HVAC company as seller they might learn that it's been filled each year the last two years, which clearly indicates defect. – Hart CO Jul 6 '18 at 18:31
13

When I sell a house, I do the cosmetic repairs and provide selling concessions (AC, roof, carpet, etc.) because I believe that you don't recover the full cost of money spent on big ticket items. In addition, many people like the idea of being able to select their own decor (carpet, appliances, etc) should they be in need of upgrading/replacement. I've seen homes where the seller put in all new carpet and within a few weeks, it was curbside, waiting for removal to the dump.

If you were selling your home in the immediate future, I'd recommend offering selling concessions. Given that you are talking about selling 2-3 years down the road, you're going to have to weigh the cost of $200 a year for Freon replacement as well as the inefficiency of your old AC unit and try to ascertain which might be more cost efficient.

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    Depends where you are. Here in the Bay Area, if you don't like the carpet I put in, that's fine—put in a lower offer, and I'll just choose a higher offer from someone else. – Kevin Jul 6 '18 at 16:48
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    I have fond memories of the time we did a bunch of work on our house, painted it, put in all new carpet, planted several trees. Then we had a baby and decided we needed a bigger place, so we sold it. I had to stop by the house a few weeks later to drop off some paperwork, and I saw that the new owners had ripped out all our new carpet and replaced it with white carpet, repainted the whole house white, and torn out all the trees we'd planted. – Jay Jul 6 '18 at 17:09
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    @Kevin - Location means nothing. People aren't going to like or dislike the carpet more because you're in the Bay Area. That misses the point. All things being equal, spending on large ticket items forces you to ask more for the house, perhaps pricing it out of the range of some buyers. Selling as is with a concession so they can choose what they want, when they want makes it more likely to sell, IMHO. If you believe otherwise then we agree to disagree. – Bob Baerker Jul 6 '18 at 17:11
  • @BobBaerker You're right that people aren't going to like or dislike the carpet more, but here they just can't offer less because of it if they want a chance for their offer being accepted. It seems you don't understand how much of a seller's market the bay area is. There are no concessions here. Even having an offer conditional on the final mortgage approval is likely to tank an offer. If I spend $2k on a new carpet I can put the house up for $4k more and have it sell for $5k more. Whether or not the new owner is just going to tear it out right away. – Kevin Jul 6 '18 at 17:18
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    @Kevin - If you can make improvements, mark up the home's asking price by double the cost of those improvements and sell the home for an additional 2-1/2 times the cost of those improvements then you should consider putting in a swimming pool, hot tub, sauna, replacing every appliance and maybe even adding another floor to the house. The sky is the limit, eh? – Bob Baerker Jul 7 '18 at 17:07
9

You almost never get back the cost of home repairs or improvements in an increased selling price. If you were planning on putting the house up for sale tomorrow, I'd say no way replace the A/C. No buyer says, "I was willing to pay $150,000 for this house. But they just replaced the A/C? Oh, that's a $3,000 unit, so I guess I'm willing to pay $153,000." That's just not how people think.

This page, http://time.com/money/3703939/home-improvements-return-on-investment/, lists various types of home improvements and compares their costs to what realtors estimate they add to the value of the house. Notice something interesting? NONE of the items pay back 100%. The best increase the sale value by about 80% of the cost.

The only things where you're likely to get your money back are things that are low cost and very visible. Like painting, repairing holes in the walls, maybe replacing stained carpet, that sort of thing.

The far easier and safer thing to do is to be willing to make concessions. If a potential buyer says, "Hey, I like the house, but this A/C unit really needs to be replaced, and that will cost $3,000!" You can always say, "Okay fine, at closing we'll include a $2,000 allowance toward the A/C." You can usually get the buyer to agree to accept less than the full cost.

When I was young I bought a house with a leaky roof. I barely had the cash for a down payment, never mind to reshingle the roof immediately after buying. So I made a deal with the seller that they'd reshingle the roof, but we increased the sale price so that I was really paying about half the cost, and then that increased price was just part of the mortgage. I think that sort of thing is fairly common.

Now you say you're not planning to sell for another 2 or 3 years. So then the question becomes, how much benefit would you get for yourself from a new AC unit in 2 or 3 years, added to any increased sale price. Presumably you'd save the cost of freon re-charges. Maybe the AC would work better and the house would be more comfortable. It's very difficult to put a price on that.

I make improvements to my house based on the perceived value to me. I generally count $0 for increased sale price. I figure I'll probably live here at least another 5 years, so will I get my investment back in 5 years? Most of it is intangible, like I recently had a new bathtub put in because the old bathtub was ugly and disgusting looking. It doesn't save me any money, but it just makes the house nicer to live in.

  • 1
    In my area, energy efficiency upgrades are hip and many buyers are stretching to buy, so they'd rather pay a bit more than be faced with looming expenses, if appliances are mid-life they won't think much of it, but most inspectors will point out EOL HVAC/appliances. I agree in general though, I wouldn't upgrade just to sell, but with 2-3 years I would. – Hart CO Jul 6 '18 at 17:34
  • @HartCO That's why I'd say to be willing to make a concession. You want a $4,000 AC replacement? Ok, let's add $4,000 to the selling price, and then at closing I'll give you $4,000 cash, or I'll get the upgrade done before closing. – Jay Jul 6 '18 at 20:18
3

Don't install something you don't know if the buyer wants. Especially white carpet.

First, as a seller, you're not motivated by quality of living, because you won't be living with the choice. To you it feels like a financial transaction, spend X, hope to get Y more at close. You are driven by the motivation of saving money, because if X>Y, the entire point is lost. So it is imperative that X be as cheap as possible, and that leads to poor choices.

There's nothing worse than wanting a house with Feature W, and finding out that the fool owner just installed a brand new, cheap X. Which he damn well expects you to pay for, full boat, at closing.

Classically, your customer would find a brand new, value-priced A/C from a low-tier brand, when at the least he'd want a higher quality unit with much better LEED rating, and more preferably, a heat pump.

  • When I bought my current house, the seller had just had the roof replaced, but apparently went with the lowest bidder, because the job was done simply incorrectly. I got a five-figure concession for that and other issues, and once I owned it had the entire brand-new but incorrectly installed roofing torn off and replaced. She wasted a lot of her money. – stannius Oct 31 '18 at 17:40
2

Selling a home, like anything else is marketing. I would focus on things that will attract Buyers. While I try to do much of the home maintenance myself, My wife is a property manger now. I am astounded at how often things get replaced rather than repaired now, just to keep tenants happy. I think a new furnace would make sense in a hot market, that might make the difference for some people. However, I don't know that it will or should get mentioned in the listing. But make sure the mfg warranty is transferable.

0

As Jay and Harper said, do not spend a lot of money overhauling this. Central AC is almost always highly overpriced, and buyers are not going to be willing to pay what you will have paid for it.

Instead, buy a can of R-22-compatible stop-leak product and add it to the system; you can get it for $30 or so on eBay, and possibly can get it with a pound or two of R-22 for $100-150. As long as your leak is small enough that the system holds refrigerant and works for a few months (or even weeks) after you charge it, the stop-leak is a near-permanent solution.

-1

If you are selling the house now and you do not live in why just not throw away the AC? I mean it would be cheaper to just remove the AC and sell it as is.

Also it is not too expensive to just buy a new AC, in Greece where I live it the cheapest one costs about 264 Euros (310 USD in xe.com) so it is not too expensive in the long term compared to the freon placement. Also you can replace it with a second-hand with inverter from one and buy it for cheap.

And if you are woried to the price you can just add 300USD dollars to the house's retail price (assuming thew price range is not too big between US and Greece).

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    It sounds like you are talking about a window unit. A central AC unit for the whole house can easily cost $5000 - $10000 (USD) depending on size and brand. – Michael Jul 6 '18 at 20:48
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    They really don't do window air conditioners in Europe. – Douglas Held Jul 6 '18 at 22:37

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