HVAC effects on appraised value

21 Replies

We are attempting to determine if it is worth it to buy/install HVAC prior to appraisal. How much have you seen HVAC impact appraised value? We are definitely going to get one, it is just a matter of managing cash outlay and timing of refi.

Few houses in the historic district in which the property is located have HVAC systems, rather, most have window units as the houses are relatively small.

Thanks for the help!

But saying that, in Texas with no HVAC, it would be harder to sell in my opinion. I am about to rehab a house and will be adding HVAC. Should cost around 5-7K and I think it makes it more likely to rent or sell.

some areas of the Country just don't need it (eg: Seattle, San Fran), while others it's just plain mandatory (Phoenix, San Antonio).  Where mandatory, it becomes a buyer disinsitive to have it missing - - consider it a marketing must have in TX.

It sounds to me like you're getting an appraisal mid rehab?  That in itself seems premature.  Or was it a cash purchase and you're just looking to cash out refi to help fund the renovation?  If it's just a cash out on an "as-is" property in Dignowity I wouldn't worry about adding the HVAC system, but if your looking to max your cash out on a new appraised value, I'd make sure that system is in before appraisal. 

@Seth Teel

We are 100% finished with rehab besides HVAC. We don't need to max out appraisal necessarily but I am curious about how much the lack of HVAC might affect an appraisal if we wait to install until after our refi.

Thanks!

@Simon Shih

We just paid a bit more than that in Austin.  We had a couple of quotes that were within a couple hundred of each other.  That is why I was asking.  In Austin people were mentioning pricing similar to what you listed and they were not sure it was a complete system.

And this excluded finishes.

That being said, if you are adding a complete system, make sure you locate vents and ductwork.  In our case, there was an existing low roof addition and to fit the ductwork into it we had to create a chase to conceal the ductwork feeding each of the 2 rooms in the addition.  In one chase, we made it into a coat closet since the house did not have one.  

Unexpected costs we had to cover.

In the south, Central HVAC definetly affects the value. The standard Freedie Mac appraisal form (Form 1025, I believe) has a line item for Heating/Cooling.  If your property does not have it and the comps due, it will be a negative, and vise versa.  

Not sure how much, but it will be there.

I would add it, since you already plan on putting it in.

@Isabel Owen I just looked thru a few appraisals, and found one that has a comp to my property without Central HVAC (it had wall units), and the appraiser deducted $5,000 per unit (it was a duplex house), so $10,000 over mine with Central HVAC (my house has Central HVAC in both units).

@Isabel Owen

I disagree with most of these posts.  Your house needs heat in order to not get flagged on the appraisal. 

If your trying to refi this house without ducts and a forced air unit I think you will run into trouble. I've always had appraisers take pics of the furnace

Originally posted by @Hugh Ayles :

@Simon Shih

We just paid a bit more than that in Austin.  We had a couple of quotes that were within a couple hundred of each other.  That is why I was asking.  In Austin people were mentioning pricing similar to what you listed and they were not sure it was a complete system.

And this excluded finishes.

That being said, if you are adding a complete system, make sure you locate vents and ductwork.  In our case, there was an existing low roof addition and to fit the ductwork into it we had to create a chase to conceal the ductwork feeding each of the 2 rooms in the addition.  In one chase, we made it into a coat closet since the house did not have one.  

Unexpected costs we had to cover.

 I'm an hvac Austin contractor and what he paid is about right.   It depends on the tonnage and seer rating.    A 1500 sq ft house with a 14 seer would be around $4500 with no ducting and add another $1000-$1500 for ducting.     If its city of Austin, then you have energy testing to do by a 3rd party which adds another $400 or so.   

most of this is perspective, Id take all of this in, and identify your exit first, appraiser shouldnt be called in until after project finished or before with a contractor explaining SOW

@John Weidner , @Mike Wood @Seth Teel , @Tim Macy , @Russell Brazil - thanks again for you replies here. We just finished the cash out refi process so I figured I'd update here just in case it can be useful for someone in the future.  In the Sales Comparison Report section of the appraisal we were docked $2k for not having central HVAC. So, the appraisal is lower than actual value will be after HVAC is complete but it was worth it for us to wait as we have a lot more flexibility now that we have the cash out from the refi.