Home Buying in 97203>Question Details

Bart Betz, Other/Just Looking in Portland, OR

Replace the Oil Furnace with Gas...or let the buyer decide?

Asked by Bart Betz, Portland, OR Thu Aug 23, 2012

I own a home in University Park that I have remodeled extensively: New Kitchen and bath, new drywall, electrical, insulation in bedrooms and living. The last thing to do is switch over to gas. The home has an underground (675 gal tank) and a big old (working) furnace. Should I pay to switch it out or let the buyer decide. If I leave it, how much is it costing me in the "long run"?

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The mere mention of an underground tank will send buyers scurrying. You should absolutely get the tank decommissioned and convert to gas. You have to do soil testing and such for your underground tank so just get started on it and get it removed. Buyers are happy to see the DEQ certificate and know it is gone.
3 votes Thank Flag Link Thu Aug 23, 2012
UPDATE: Thanks to all for your responses to my original question! Here's what ended up happening:

I went ahead and decommissioned the oil tank which cost me about $900 bucks. No leakage. They cut a 3x3 ft hole in the top, cleaned it out and filled with slurry mixture. Got my certification from the state.

Next I found a licensed HVAC guy through a house flipper, who came highly recommended. He gave me a great deal on a single speed, 95% efficiency gas furnace. We agreed on retro fitting the new furnace to my existing ductwork, as well as running new heating ducts to a back portion of the house. Total cost for furnace, install and haul away: $4600.

I put the house on the market June 7th of this year. I had 4 offers in 3 days. House sold for $13K over asking. Basement needed a radon gas mitigation unit installed ($1500) and some other minor fixes. Whole process went smoothly. Couldn't have asked for a better outcome!

I'm now in a nice, new-er home 10 minutes from work and couldn't be happier!
1 vote Thank Flag Link Tue Nov 5, 2013
I would agree with replacing it. In todays lending world you not only want to make the future buyer happy but their bank as well. If the lender that is giving them a home loan is not happy then it doesnt matter what the buyer wants. I would add to that if you have done extensive work to the house make sure you have the work permitted and documented so the lender wont question it.
1 vote Thank Flag Link Thu Aug 23, 2012
Melina nailed it. Oil sends buyers running away like their hair is on fire. :)
1 vote Thank Flag Link Thu Aug 23, 2012
I say pay to switch it out now. You get whatever tax credit might still be available, you avoid any legal issues if the new owner were to find soil contamination, and you get a marketing advantage by being able to advertise a new gas furnace (with AC if you can). These are big plusses for you. Be sure to use a company that will provide you with the DEQ certificate for a clean oil tank decommission that you can include in your sale documents (and keep a copy for your own records). Your biggest risk, whether you switch it now or not, is that the buyer will discover a leaky oil tank that has contaminated the surrounding soil. Fix it now. I hope this help! Karla Divine, Principal Broker, Divine NW Realty 503-819-6923
1 vote Thank Flag Link Thu Aug 23, 2012
This has come up a lot! If everything else is done, I would have the oil tank removed and replace with a furnace. You'll get more interest - faster - and a higher price. I would say your price can easily increase by the cost of swapping to gas. Why have one thing deter your best buyers?
0 votes Thank Flag Link Tue Nov 5, 2013
There are many questions to answer here. First how old is the furnace. I just had an insurance company decide not to give fire insurance because the house had a 60 year old running gas furnace. When to have an oil tank tested you are responsible for cleaning up the site if there is contamination. If your furnace is old like the old converted sawdust or coal burners you probably have asbestos wrapped pipes and that will cost $1200-$2200 to remove the furnace and all the pipes by code. Now you might be into removing all the pipes and furnace for a cost of $6000-$8,000 if you have asbestos on all the pipes. Many furnaces companies will remove the furnace and just hook the new furnace to the old but they are not doing abatement that way. There is still a tax credit for owner occupied homes installing a new furnace that meets the new code. If your old furnace is only 60% efficient and the new one is 95% you will get a good return just by changing it out. Most buyers like gas because they also like to cook on gas and if you add a gas line you might consider installing a larger line to add water heating and a gas cook top later but the cost is not much to start out with the larger one from the start. Good luck, Tom Ingesby, Broker RE/MAX equity group
0 votes Thank Flag Link Tue Nov 5, 2013
I would suggest having a inspection done on the underground oil tank if you decide not to replace. Ive had multiple buyers ask to have oil tank removed and with state & local codes removing the tank was a complicated issue that was a downfall in selling the home.

If the tank is old and has leaked into the soil then it makes it even more complicated.
0 votes Thank Flag Link Wed Sep 12, 2012
I've seen this question before and I'd say there are a number of educated buyers out there that don't mind oil. But selling your home is a numbers game and for every educated buyer that is okay with oil you'll have 10 who are not. I'd recommend replacing with gas immediately simply because your chances to sell will be much improved. Buyers are looking for (and paying premium for) houses they don't have to do anything to.
0 votes Thank Flag Link Wed Sep 12, 2012
There are lots of folks that prefer heating with gas and there are some that prefer heating with oil. Oil does have its merits. The qualitative, environmental and political concerns are not decisive for either furnace.

If the furnace is damaged and a health hazard I would replace it; otherwise I would not even bring up the subject. Let the buyers chose. Oil could be benefit for some. You would sill have to decide on a gas or oil furnace.

If you do not switch to gas then it's up to the buyer to pay for a tank inspection to see if there is anything leaking. The buyer does not have to get an inspection but any good broker would "highly recommend" they get one. If it is leaking then a report will be filed with the DEQ. Someone is then obliged to remedy that situation, most likely you, which could cost as little as $1000 or as much as $6000 (or more). If you decide to switch you still have to abate or remove the tank, again $1000 plus dollars on top of the new furnace.

Gas is cheaper now but a good oil furnace can be a real workhouse and last for decades with proper maintenance. It can also burn biodiesel. Which may give the owner some flexibility as alternative fuels become more prevalent or you decide to make you own fuel.
0 votes Thank Flag Link Mon Sep 10, 2012
I live in the Portsmouth neighborhood and do a lot of work in North Portland, I see plenty of homes with oil fuel. So, I would have the soil checked first, if there's no leak and no issue with the tank, then why fix something that's not broken? Save your cash. Get estimates for decommission and switching to gas, then use them as negotiating tools if necessary. There are a lot of Portland homes that use oil. In my experience, buyers don't get freaked out about an oil fueled home as long as they are educated about it.

Please call me with any questions, 503-866-6670.

Thank you,
0 votes Thank Flag Link Thu Sep 6, 2012

In order to be proactive, I would probably get estimates to show the buyer what it would cost and help to educate them as to whether they want you to convert it, or leave it for them to do with a potential credit from you.
You can educate your self as well and use as a negotiation tool.

Hope this helps,
0 votes Thank Flag Link Thu Aug 23, 2012
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