How would you negotiate this regarding air-conditioners

Question

I have a house under contract. Pretty turn key. 20 years old. Seller asked $360k. I got it for $350k

Has two a/c units with heat pumps. Both are original equipment.

Inspection says they wouldn't repair them. They may keep working ok or maybe I have to replace immediately.

Probably $12,000 to replace both. I countered with seller paying all closing and prepay - about $7,000 and reducing price $5,000.

They re-countered with paying $5,000 and suggested they didn't haggle in my original offer

What would your next move be?

1) would you put the a/c under warranty and hope and pray and when they eventually fail use the warranty?

2) re-counter to the seller?

3) accept their offer?

3) other?

Account Closed · Answer

Could you not determine that these units were old before you submitted an offer? I despise the practice of tying up a property and ignoring obvious defects and the use the inspection report to reopen the negotiations after the seller has mentally committed to a sale. If I was the seller I would agree to replace the units but I would counter with a new price of 375k!

Steve S. · Answer

Thanks!

Steve S. · Answer

This is an investment property. The issues couldn't be seen without putting gauges on the a/c etc and running diagnostics which I'm not qualified to do nor do I have the tools.

Interesting perspectives though so I appreciate the thoughts as one always learns from each new experience.

Account Closed

Account Closed · Answer

@Steve S. as an investor we need to have the ability to perform a fairly complete, but not extensive property inspection. In a twenty year old home you will find at least three things that need to be replaced or have already been replaced. A standard asphalt shingle roof on a house this age should either be almost new or severely worn and in need of replacement in the very short term. An exception would be where there has been storm damage necessitating a roof replacement so that negates the age of house consideration. A twenty year old house is probably on its second water heater or has a fairly new third one. Lastly it comes down to the heat pump. I guess  some people have gotten 20 years from one but that is very rare. 12-14 years would be considered a normal life expectancy. So a house of that age with a original heat pump is trouble . ALWAYS  figure on replacing it immediately. You can determine the age of a unit by the serial number. You can decode these using the manafacuters web site

Steve S. · Answer

I'm not sure if many 4-plexes in this area that would cash flow at the same rate.

I'm sure they may exist but not in my area for the same cash on cash %.

Anthony Dooley · Answer

@Steve S. Did you accept the counter offer? Can you still walk away from this deal? I probably would because I could literally buy a 4 plex right now for the price you are paying.  I hope it has great numbers.

I'm trying to help you out here. I have nothing to gain by giving you bad advice. Make sure you are not over paying for these A/C units. That is the cost of a commercial sized unit. Best of luck to you.

Steve S. · Answer

The estimate from the a/c repair man was $5000-6000 per unit

Mindy Jensen · Answer

@Steve S. , I am assuming you are talking about a Home Warranty? In my limited experience with those, they aren't worth the paper they're written on.

They "cover" everything except whatever issue you're calling about. I wouldn't waste my money on a warranty.

Is it a good deal even if you have to replace the AC units? Also, my experience with AC replacement is similar to @Anthony Dooley 's costs.

Anthony Dooley · Answer

Sounds like you just need to service them. I hope you are getting $3,000 per month in rent if you expect to make any money. I would think that you could buy three houses for that in your area. Good luck with it.

Anthony Dooley · Answer

I assume this is not an investment property, but for your personal residence. Keep in mind that the seller doesn't have to pay anything toward replacing the A/C units.  You should accept the counter-offer because I doubt it will get any better.  Or you could offer him $355K for the house if he agrees to replace the A/C units before closing.

Also, you need to get actual estimates on the A/C units. I think you are guessing. A new 2.5 ton A/C unit costs about $3500 installed where I'm from.

How would you negotiate this regarding air-conditioners

Most Popular Reply