I found this great article written by another Realtor, Ray Chesher from Georgetown Ontario. I felt it would be one worth sharing with any of you considering replacing your furnaces or air conditioning units with a rented one. Please read this story below, it is very true to how I feel about this disturbing trend that is seriously affecting value of a home on the market. The story below illustrates a very similar story I have gone through both on the selling side and buying side of a home sale.
Local utility companies have have long realized the financial benefits of having their customers on long term rental and lease contracts. Gas companies, specifically Reliance Energy is now promoting to their customers an option to lease their furnace and air conditioner for a monthly fee rather than purchase the equipment outright.
I received a call this week from a client who needs to replace their furnace. Their repairman told them a good option was to lease this equipment for a monthly fee. The lease would include the installation and ongoing maintenance. Since they were planning on selling their home in the near future they could save several thousand dollars by leasing the equipment and passing the equipment on to the new buyers. The repairman told them it would be an advantage in selling their home because they could advertise a new furnace and air conditioning system and the monthly fee covers all maintenance.
I don’t install furnaces for a living and don’t dispense advice on the type of furnace or a/c system someone should install but I do sell houses for a living and I cannot be more emphatic when I say please do not do this. As a Real Estate Broker I can assure you that this will adversely affect the value of your home. Most buyers view a furnace as a fixture that is included in the purchase price much like the windows or the roof are part of the house. A furnace and a/c system are basic systems included with every house. No-one wants to pay extra for them and they won’t.
If your home has a piece of leased equipment (furnace and a/c unit) expect in most cases for any competent Realtor or Broker to write into an Agreement of Purchase and Sale contract a clause that requires the Seller to buy out the contract on the equipment so that the new buyer will own it outright. We had this exact situation arise 2 months ago on the sale of one of our listings. The Seller received an offer on their home and had to pay over Ten Thousand Dollars ($10,000.00) to buy out the contract. They had only installed the equipment six weeks prior and the company would not let them out of their lease. This was over double what the equipment was worth and the unit was over-sized for the house.
We also had this situation last year where the Seller had leased an air conditioning unit and they had to buy out the contract as part of the sale of their house. In this case the buyout was over $4100.00.
So what may appear to be a great convenience because of low initial cash outlay and service included can be a very costly mistake and affect the value of your home. If you are a Seller and are not willing to buy out the contract then offer on your home will come in lower to compensate for this addition expense to the buyer. Or worse, your home may be ignored by potential buyers because they don’t want the hassle of dealing with these issues.
Once again, if I haven’t been completely clear - don’t rent or lease furnaces and air conditioners.
Thanks again to Ray Chesher for this great article about this growing problem. Please feel free to email me anytime any of your questions or concerns about adding or renting items to your home.
Hope you are all enjoying this weather and great Spring market,