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VOL. 42 | NO. 35 | Friday, August 31, 2018

Old HVAC: The discount that just keeps on taking

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All the products fit for human consumption that line the shelves, refrigerators and freezers of grocery stores have expiration dates. When the consumer purchases these items, they see the date clearly marked along with a price and when the buyers check out, they pay the price and take the food home with no argument, bargaining or negotiation.

If the milk expires in a month and the eggs in a week, they do not ask for a reduced price for the eggs because they will be unfit to eat in eight days. No one would pay extra for Fruit Loops that expire next year.

Appliances cannot have expiration dates since their lifespan can be determined by the maintenance performed by its owners.

Similarly, a central heat and air system that is serviced twice a year with the filters changed each month will live longer than system that is ignored. Yet, when a home is inspected, the inspector cannot and will not give bonus points for the good behavior of the owner.

The same goes with human beings. Those who care for themselves with exercise and good diets will live longer than those who do not, Keith Richards being the exception.

When the inspector reads the serial number and interprets the date the unit was manufactured, that date and that date alone will determine the lifetime of the unit as far as the inspector is concerned. And inspector’s words are the gospel in the opinions of the buyers while they are fake news to sellers.

When an inspector learns that an HVAC system is 16 years old, he will say it is nearing the end of its expected lifetime. That goes for those that have been well maintained and those with the original filters.

Even if it has had the condenser and the heat exchanger replaced, it is nearing the end based on the manufacture date. Hospice should be called, and palliative care arranged. It’s going down.

This sets the table for the triple discount reserved mainly for roofs and HVAC systems. Here’s how it works:

The listing agent meets with the seller, discusses the price and evaluates the home based on comparable sales and condition. The condition has to do with the age of the major components, focusing on those that are the most expensive.

If the HVAC system is 20 years old, even if it is functioning well and has been spit-shined regularly, it will be seen as old. The agent might suggest a $10,000 to $15,000 price reduction so that the buyer will not be dismayed by the age.

If the house is worth $450,000, the sellers agree to sell for $435,000, and the listing agent discloses to all that the price has already been reduced due to the age of the HVAC system.

Eventually, an offer comes in from a buyer’s agent with the argument that the house should be reduced due to the age of the HVAC. The listing agent explains that the house has been reduced by $15,000 to account for that, but the buyers will have no part of it. They are paying $420,000 for a house, and that house should have a good HVAC.

Through tears, the sellers reluctantly agree, and the house is sold, now twice reduced for HVAC age.

Enter the inspector, who tells the buyers that the HVAC is nearing the end of its expected life. At 20 years, it has actually surpassed that age. She should be pushing up mechanical daisies.

The buyers are now incensed and feel that they have been sold a bill of goods. In their minds, they need a new system today and, like many buyers, they have little cash in reserve. They demand the seller replace the unit.

The seller knows HVAC systems and knows they don’t make them like they used to. He is right in this regard, since it is not legal to make them like they used to due to tougher standards. But that’s a subject for another day.

Nonetheless, the seller is not going to replace a perfectly functioning unit.

The buyers proclaim they are walking if there is no consideration, and the seller’s agent explains to the forlorn owners that they have lost valuable marketing momentum and feels the next inspector will say the same thing.

Therefore, their only option is to let these people terminate and then replace the unit before placing the home on the market again or try to work a deal to keep these buyers in the mix.

They agree to pay $10,000 of the buyer’s closing costs, thereby freeing some cash for the buyer to replace the unit. The house closes, and the sellers were hit three times for the elderly system – the original price, the negotiation of the contract, and the extortion following the inspection.

Three years later, the house comes on the market again with a functioning 23-year-old HVAC system.

Sale of the Week

Pilkerton Realty’s Brett Sheriff has been championing the Belmont-Hillsboro neighborhood for most of his professional life, and his real estate partner, Theo Antoniadis, has joined the movement, as evidenced by the sale at 2010 Linden Avenue.

Listed by Antoniadis for $1.399 million, the house sold for more than the list price at $1,426,083, or $314 per square foot with Brett Sheriff representing the buyer.

Antoniadis noted that the house is an “Allard Ward designed foursquare,” meaning the home is a brainchild of the David Allard and Michael Ward, two architectural geniuses whose partnership has graced the Belmont area with its most stunning renovations and new construction throughout the years.

The house, Antoniadis stated, is on a “generous lot,” an intriguing, provocative description that stimulates the imagination and brings buyers willing to pay list price or more to own the home.

He also noted the house had “tons of space for modern living and entertaining.” There he goes again. “Modern living,” a good one. What would be the opposite of modern living? Perhaps old-fashioned living or antiquated living.

The sellers had paid $929,000 in 2011 for the 4,544-square-foot four square with four bedrooms, four bathrooms and a powder room and sold for $1,426,083 seven years later. Since it was a new home, there was little expense in maintenance. I wonder who held out for the $83.

Not to be overlooked is that there is room for outdoor living for the modernistic buyer with a screened porch and a flagstone patio.

Richard Courtney is a licensed real estate broker with Christianson, Patterson, Courtney, and Associates and can be reached at richard@richardcourtney.com.

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