Home Selling in Media>Question Details

J J Aikens, Home Buyer in Drexel Hill, PA

We have a single family home with an in ground oil tank. How much of a liability is this when selling a home? Do buyers shy away from these homes?

Asked by J J Aikens, Drexel Hill, PA Sat Nov 20, 2010

The tank holds about 1500 gallons. It is in the front yard. Right now we still use the tank for oil heat.
I'd like to know how much of a liability (if any) this poses for resale. Do buyers shy away from these homes with underground oil tanks? What are our options if and when we want to offer the house for sale?

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Answers

12
Many buyers and lenders will not like this! Underground oil tanks are red flags.
0 votes Thank Flag Link Wed Apr 20, 2011
Yes, it probably will be an item of concern for a buyer. That is the bad news and make sure that you disclose it.

The good news is that it is not super expensive to remove an old oil tank. Qualified contractors are around who do this kind of work. I would be glad to refer a contractor to you and other realtors probably have resources also.
0 votes Thank Flag Link Wed Apr 20, 2011
Read Mark Barones detailed answer, but to your general question... .Do buyers shy away from these homes, the short answer is YES, if they can find a property without it....

At the very least you need to get environmental information, talk to an area Realtor and real estate attorney, when putting the home on the market, Disclose it and have estimates from reputable removal companies at hand, either to give the buyer a credit at closing to have the tank removed by the company they trust the most, or offering to remove the tank before closing when you have a sales agreement....

Just some thoughts for you...
Take care and good luck
Edith YourRealtor4Life and Your Chicago Connection
working always in the very BEST interest of her clients
0 votes Thank Flag Link Mon Nov 22, 2010
Yes, buyers do shy away from a home when it has a buried oil tank. It will make the home a harder sale. Also, when inquiring about having an oil tank removed, make sure it is a reputable company that is insured. Price shop for this also and ask for a few past clients of theirs to call and make sure they were happy with the job from start to finish!
0 votes Thank Flag Link Sun Nov 21, 2010
If financially feasible, I'd recommend installing a new tank in the basement and removing the old tank through a licensed professional. Removing as many objections for a potential buyer is a prudent strategy in today's market.
0 votes Thank Flag Link Sun Nov 21, 2010
This question you ask is not uncommon especially in the area of Drexel Hill, Aston, Brookhaven, Chichester where many homes I have sold either have the tanks buried in the ground or have been removed. Before the Seller Disclosure Act of 1996 was passed, homeowners were not required to fill out an extensive disclosure statement listing defects and issues when listing the property. Environmental issues todays have long lasting problems and lawsuits in our indudtry. it is best to consult with your attorney and a professional experienced Real Estate Broker and environmental company like Ferguson/McCann who removes, test soils, etc. Commercial Real Estate poses a greater risk and liability to sellers/buyers since these properties are more common with buried tanks.
There are approximately 607,000 underground storage tanks (USTs) nationwide that store petroleum or hazardous substances. The greatest potential threat from a leaking UST is contamination of groundwater, the source of drinking water for most Americans. EPA, states, and tribes work together to protect the environment and human health from potential UST releases, GOT TO WEB REFERENCES BELOW FOR info on UST. Hope this helps you on your decision. Lawyers may tell you to remove now before taking the chance of an expensive lawsuit later. For more informative discussion, call my office direct at 484-468-1310.
0 votes Thank Flag Link Sun Nov 21, 2010
I consider a buried oil tank a major liability and when I have Sellers who like you have on, I tell them it must be removed. In some states new buyers are unable to get homeowners insurance when there are buried oil tanks in the ground and this means they can't get a mortgage. It's my opinion that this is becoming more and more the norm, rather than the exception.

You should look into having the tank removed before putting your home on the market.
0 votes Thank Flag Link Sun Nov 21, 2010
Good morning, J.J. Since a good portion of my business comes from sales in DH, it has been my experience that having an oil tank in Drexel Hill is not uncommon, especially, but not limited to the Drexel Park section. About 23 years ago, before I got into Real Estate, when we bought our home in the Aronimink section of DH, there was no such thing as a sellers disclosure. Our home inspector did not pick up the fact that there was an underground tank because the home owner had cut the fill pipe to below the grass line. It was in the front yard as well. We didn't have it tested. We just had it removed after discovery. It turns out it was rusty on the bottom and very close to leaking. I have listed many homes with oil tanks over my 19+ years in Real Estate. Some of them had been abandoned , and a new tank was installed in the basement prior to having me in to list the house. A few were actually still operational at the time i listed them. I can only remember ONE case where the buyer purchased the home without asking the seller to remove the tank. Home inspectors, not wanting any liability after the inspection, will go into detail both verbally and in writing about what to do when an underground tank is found. Buyers may elect to have the tank tested at their expense, but, more often than not, they will request that the testing be done by the Sellers. They don't want to spend a good deal of money for testing on a home that they may not purchase because the inspection issues cannot be worked out. So it's a case of do it now or do it later. If you have the tank and the system tested prior to listing, you will be aware of what is involved -- and the cost. You can then elect to have it removed, giving yourselves and the buyers a sense of relief that it is no longer an issue. You can stay with oil, or even convert to gas, if conditiions allow. Or at the very least, you will know the cost and be able to make decisions when the time comes when you have a buyer. Having it evaluated will give you paperwork that you can pass along to the buyer via the sellers disclosure, letting them know the exact condition . If all is well, you will have it documented. If there is reason to have it removed ,you will know the cost. When you get an offer, you can negotiate that offer with the cost in mind to better get you to the net price you want or need from the sale. I have worked with a few experts over the years. I would be happy to pass their names to you. My cell is 610-574-6203. I wixh you luck.
0 votes Thank Flag Link Sun Nov 21, 2010
I agree with the others, you can have it inspected and insured, but the better choice is to have it removed. If it is currently insured you will be protected should a leak be found, if not have it inspected and insured right away, You will probably have to wait one year before you can have it removed after the insurance policy is put in place, but you can transfer the insurance policy to a new owner and they can then choose to have it removed or not. You may also want to check with an oil tank removal company to see if there are any funds or grants available to help you with teh cost. Here in New Jersey we have a grant program that refunds up to $3000 to homeowners when they have their inground bank removed and replaced with an above ground tank. I understand there may be federal monies available to help with clean up as well. A good oil tank removal company will know which programs are available in your area.
0 votes Thank Flag Link Sun Nov 21, 2010
Morning JJ, I just sold a house to a couple and it had an underground tank. We asked that it be removed prior to settlement. I would highly recommend that you have it removed and put above ground, they will test the soil for any contamination. This will then give buyers peace of mind. I really do feel that buyers in todays market are concerned when they see underground thanks, best of luck with everything.

Regards,
Lesley
0 votes Thank Flag Link Sun Nov 21, 2010
Hi JJ,

The problem with underground oil tanks is that they can leak and that leak may eventually get down to the water table. If they leak, then the tank and the surrounding dirt needs to be removed. This can get quite expensive since the dirt is contaminated and the word EPA comes to mind.

Some people don't care since they probably remember changing the oil in their car and going to the back of the yard and dumping it. Others are totally scared about it. I tell buyers that even if they don't care about the tank, if they have to sell the home, it may become an issue that they will have to deal with in the future.

Typically, if a home is purchased with an underground oil tank the property inspector is going to recommend that you get a professional out to make sure the tank is not leaking. In some cases, the buyer may request that the tank be removed. Just like radon, electric power lines, and mold these tanks have become a buzz word for Buyer Beware.

You do have to disclose the underground tank when you put the property up for sale.

Regards,

Joe Finnerty
484-241-1641
Long & Foster Real Estate, Inc.
Lehigh Valley, PA
610-865-7776
0 votes Thank Flag Link Sat Nov 20, 2010
Hi JJ you can have it inspected and then insured this will help greatly with a sale. The other suggetion would be to remove it and install ann above ground though it's much more expensive.

All the Best
Dave & Lisa
Web Reference: http://www.urhomerealty.net
0 votes Thank Flag Link Sat Nov 20, 2010
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