Will retail buyers pay more for a brand new HVAC and efficient ductwork?

5 Replies

Our company redevelops properties in the Orlando vicinity. We look for broad market properties like 3/2 in good school districts. We have one in an old neighborhood and we want to bring it back to the top of the market. We have a decision to make. 

For sure we will put brand new HVAC units. The decision is to either patch the current ductwork or replace it with brand new and more efficient work. The difference is like $2K which is not a deal breaker in any way, but the issue is you never know where else you will need extra spending. 

2 HVAC technicians said, you have to put brand new ductwork. If we do, and we rearrange some of the returns and vents we can actually reduce the tons of the units from 3 to 2.5. 

2 HVAC technicians said, just patch the work, the ductwork is good enough. Also, they said to keep the 3 ton unit. 

So the question is, as a retail buyer, will they care to pay a premium for brand new insulated ductwork with a brand new unit?

We are responsible investors and we want to do the right thing, we just don't want to leave profit in the table. 

Thoughts?

Then based on what you are saying you should just spend the extra few bucks to get new duct work.  If you did the patch job a home inspector might find that and red flag it.  

@Geo K.   If it is only a 2k difference I say do it the right way and get new ductwork along with the new system.

It is not worth taking the risk and then having to deal with it during inspections on the back end. Especially if you get a FHA buyer, there are a lot of inspection hoops to jump through

You can use this to your advantage.

You could market all new ductwork and energy efficient heating and air. The selling point in a buyers mind is it's brand new so will not have to worry about replacing it for a long time. That is a huge motivator as buyers are stressed coming up with a down payment and paying for moving costs and utility deposits.

The energy efficient gives them peace of mind to save on heating and cooling costs going forward. Buyers can handle some carpet, paint etc. It's the big things going out that they do not have cash to fix after buying that they worry about.

Also you could put in a special hepa filter system etc. Not every buyer will want one but some with allergies or needing cleaner air it will be a selling feature. If you pay for it definitely market it.

No legal advice.  

At a minimum you can always just patch the ducts.  This will certainly be picked up by any inspector.  If you want to put in a more efficient system the question is, "Can I make a 50% return on your $2000 investment?"  ff you figure that a mortgage will go up at a rate of about $6 per $1000, their payment goes up by $18 per month.  You can sell it to your new owner and justify through your marketing that they will most likely save that $18 in their utility bill.  If you are competing with similar houses in the area this may be the thing that gets a sale over another house.  I vote for the new system.

If I were shopping, it would certainly be a "plus" feature over another property with older, less efficient mechanicals that might possible need repairs. It also gives buyers the idea that you've been thorough with your rehab. $2K isn't much to create a good first impression - put in the new stuff!

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