A.B., Both Buyer and Seller in 10514

For a home with oil heating and an underground oil tank, is removal always the recommended action?

Asked by A.B., 10514 Mon Oct 4, 2010

Would most buyers require that it be replaced with an above-ground tank or would they accept it provided it has been tested and is insured against leak damage?

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13
Celia Szieber, , Toms River, NJ
Mon Oct 4, 2010
A.B.,
Most buyers prefer that the tank is removed. You may want to check if your state offers any grants to remove the tank. I know in NJ, they offer removal of the tank for $750 with $500 back after the removal is completed. The requirements in NJ are that you have to make under $250,000 a year and have under $500,000 in assets.
If your state provides this service, it is worth a few phone calls.
Good Luck,
Celia Szieber
Crossroads Realty-Executive Office
732.597.0060
CSzieber@crossroadsrealtynj.com
1 vote
Dylan Hanna, Agent, Silver Spring, MD
Mon Oct 4, 2010
Hello,
Hard to say what most Buyers would do. I have found that depending on local laws and regulations Buyers may want to get the tank tested for leaks; in fact for many lenders today require proof ofthis BEFORE they will underwrite a loan.
This can be accomplished with a pressure test ; which involves pumping Nitrogen into the tank for a period of time ( about 1 Hour ) and measuring the pressure readings taken from the fill nozzle to determine if in fact the tank is holding pressure, indicating no leaks. These tests vary in expense but commonly in the range of 700 - 900 dollars. It is up to the parties involved to negotiate wether the Buyer or Seller picks up this cost.
I can not imagine allowing any existing test data to be used if i was REPRESENTING a Buyer. Obviously if I was the LISTING agent I would argue to allow any recent test data that was favorable to be suffcient.
I have never heard of any type of insurance against leak damage fora tank.
I can cost about $4500 to remove a small tank ( under 400 gal.) but up to 5 times as much to clean up a leaking tank, with proper documentation and following EPA regulations.
If there is any doubt about the soundness of the tank, if you are the current owner and thinking of placing the home on the market < I would recommend have the tank tested by a reputable company, and supply the test data results as part of your online SELLERS DISCLOSURES to anyone and everyone that was interested.
Hope this helps,
Dylan Hanna, Realtor in Maryland.
1 vote
Barbara O'Co…, Agent, Yonkers, NY
Mon Oct 4, 2010
If the tank is still in use you have a few options. You can remove the buried tank and move it into the basement if there's room. You can remove the tank and convert to gas. Or, you can have it tested and it's not leaking and no ground contamination, you can leave it in place. I would advise you take out an insurance policy against any future contamination, if you can get it. A potential buyer would have the right to test as well, at his or her expense.

That being said, buyers may be discouraged from buying your house with a buried tank or may require you to remove it before closing. Removing it is not a difficult task although it can seem daunting to a buyer or seller. Your real estate agent should be able to help you with the process. If you are trying to sell your house and a a potential buyer wants it removed, the paperwork and approval process can tie up the sale. In most cases you will have to wait to close until the town or village issues you a certificate of completion.

Whatever you decide, testing or removal, make sure you use a reputable company. And check with your local building department to see what the guidelines are for abandonment or removal. I still believe it's best to remove the tank. It will make the selling process much less complicated.

Barbara O'Connell
Licensed Real Estate Salesperson
Margot Bennett, Inc.
914-548-1628
1 vote
Scott Miller, Agent, Boca Raton, FL
Mon Oct 4, 2010
Hmmm.... just one more note on this subject. We'd all have to be hibernating in a cave not to know that there's an enormous GREEN movement throughout the United States and most of the rest of world, for that matter. The idea of building, eating, manufacturing and recycling GREEN has already reached critical mass and beyond. It's attained momentum to sustain itself. We're not going back to 'the way things were'.

So no matter what anybody says about oil tanks in-the-ground, your question was whether or not removal was the best action. Yes, removal is the best action.

Scott
1 vote
Jeanne Feeni…, Agent, Basking Ridge, NJ
Mon Oct 4, 2010
Yes, my experience is consistent with Scott's - in my area there remain some underground oil tanks, and while they may have been accepted in sales even 5-6 years ago, no more. Even with insurance and testing, buyers are advised to get them out of the ground. The fact is this, if a buyer accepts it, when they go to sell, they will face the likely insistence that the tank come out as a condition of a sale.

My suggestion to you is that if you have an underground tank, get ahead of it and get it removed and either replace with an above ground, or if gas hook up is possible, consider that. But get the tank out with all proper certs and permits/approvals. Otherwise, it will very likely delay or worse yet, derail a good deal.

Good luck to you,
Jeanne Feenick
Unwavering Commitment to Service
Web Reference:  http://www.feenick.com
1 vote
Andrew Rogov…, Agent, Rye, NY
Tue Oct 5, 2010
AB,
You are getting some good answers here and should take it all into consideration. However I would also tell you to look at where some of your responses are from and keep location of agents in mind. Yes oil tank issues are the same no matter where you live but what is considered "acceptable" for a buyer may be different based on location.

In Westchester County I would say most buyers I have dealt with would prefer either gas or an above ground oil tank. This is based on several things but the largest factor is people are generally worried about the impact that an oil leak may have to enviroment as well as there pocket. That being said it also the reason that people have an oil tank inspected. I have found that if tank passes inspection of a pro, that most buyers will continue going forward with the purchase. However keep in mind if a tank is inspected and it fails, the tank inspector must report this and you will not be able to sell your home with clean title till that oil related issue is resolved.

Finally you mentioned that it would be "insured aganist leak damage" Do you have insurance on the tank that is transferrable to the buyer? It is very hard today to get tank insurance so if you do have it and the new buyer can keep it, that would be a major plus. Good luck with your sale.

Andrew Rogovic
Associate Broker Better Homes and Gardens Rand Realty
914-263-2743
0 votes
Tammy Benkwi…, Agent, Somers, NY
Mon Oct 4, 2010
Your question was "Would most buyers require that it be replaced with an above-ground tank or would they accept it provided it has been tested and is insured against leak damage?"

While I personally agree that removal is a good thing to do, that doesn't mean most buyers will demand it. I am surprised to actually find recent construction with a buried tank. I have spoken with tank experts who have found leaks in new buried tanks because the ground shifted.

A common cause of leaks can occur a pipe that leads to the tank. Sometimes the pipe needs to be fixed or replaced without pulling up the tank.

Even if you tested the tank and provided proof, a buyer may still need to test it himself again depending on how long ago you tested it.

So the answer is no, most buyers will not REQUIRE it. In fact I just verified with a mortgage professional who said that FHA will still back loans for homes with buried tanks. Every house is different and so is every buyer.

Good luck.
0 votes
Barhite and…, Agent, Bronxville, NY
Mon Oct 4, 2010
A.B.,
I suggest a resource you consider is the Westchester County Health Department because they have authority over underground fuel oil tanks. link is shown below.

Things to consider:
Tank Size and Market Perception.

If it is over 1100 gallons, the rules are legislated and were changed in 2010. Still, smaller tanks fall under the rules for leaks. A leak can be quite expensive.

As for perception, handling a storage tank whether above or below ground is a natural part of consideration during the transition of ownership. Doing your homework to know what is involved in changing from the use of an in-ground tank makes you an informed Seller. Questions to consider: are the records in order? Can the tank be tested? What type? What is the remaining usable life expectancy of the tank?

Helpful information on addressing storage tanks and the environmental issue can be found at the New York State Department of Environmental Conservation, http://www.dec.ny.gov/chemical/32263.html.

I am confident you will find helpful information using these two informative resources.
0 votes
Anna M Brocco, Agent, Williston Park, NY
Mon Oct 4, 2010
Depends--are you converting to gas or want to replace the tank with an above ground--if so the tank need not necessarily be removed, when empty it can be filled with sand or other materials and left in place.
0 votes
Scott Godzyk, Agent, Manchester, NH
Mon Oct 4, 2010
Most buyers are asking for underground tanks to be removed even if newer or showing no signs of age becuase in teh future they may, then it will be your responsibility to deal with, fix it or remove it. If you have the option of asking the current owner to remove and replace with an above ground tank, you should take advantage of it
0 votes
Christopher…, Agent, Tarrytown, NY
Mon Oct 4, 2010
Hi A.B., it is a toss up between oil and gas with buyers. A lot of buyers do prefer gas because it burns cleaner and is a lot easier to deal with. With that being said, having oil should not inhibit the sale of your home. Just keep your documentation proving the tank has been tested and is insured. The tank does not need to be removed from the ground unless there is a problem with it. Typically Underground tanks have a life span of about 15-20 years. I've sold homes in Mt Kisco that had underground tanks and they were tested and insured and all was fine. Most banks will require testing and insurance in order to fund the buyers loan because it is added risk.

The testing of tanks has changed a lot and they aren't as intrusive to the tank as in the past. Tanks cannot be abandoned either so if there is a conversion to gas the tank must be removed just fyi. Lastly, if there is a leak NY State law requires the seller to clean up the contaminated soil and fix the tank.

Sincerely,
Christopher Pagli
Licensed Associate Broker
Accredited Buyer Representative
GREEN Designated Agent

Legends Realty Group
914 406 9023
0 votes
Scott Miller, Agent, Boca Raton, FL
Mon Oct 4, 2010
Hi A.B. If I were looking for a home to buy in your area, I would not consider a home with an underground heating oil tank. I think they are long-term hazards for contamination of your home, the basement, soil, etc. Oil is OUT, natural gas is in.

If I were you, I'd call my local gas utility and ask them how much credit they'd offer me if switch my service to natural gas. Many utility companies now offer incentives to switch to cleaner gas. Oil sometimes gives off foul odors and like you wrote, the tank is always at risk for a leak and possible contamination.

If you want t your home to SHINE when you put it up for sale, have the tank removed, switch to natural gas and do a soil test if you see signs of a leak where the tank was buried.

GOOD LUCK.

Scott Miller, Realty Associates, Boca Raton, FL
p.s. i removed an above-ground tank when i rehabbed homes in Philly. make sure you have a professional perform this work.
0 votes
Gail Gladsto…, Agent, 11743, NY
Mon Oct 4, 2010
Sometimes testing causes leakage. You do not need the tank removed....usually the companies will fill it with foam or sand and replace it.

In most instances, the entire process can/should be done for $1500-2000 and you will receive a certificate that goes with the sale.

It is not a lot of money to remove anxiety off of the buyer and issues away from the sale.
Web Reference:  http://GailGladstone.com
0 votes
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