Can Upgrading My HVAC System Increase the Value of My Home?

April 2, 2022
Home Equity in Detroit, MI

If you’re considering selling your home, most real estate experts recommend that you make at least some upgrades in order to increase the value of the property and make it more appealing to prospective buyers. The only problem is that it’s often difficult to know what types of upgrades are actually worth it. Specifically, you’ll want to determine whether or not the cost of the upgrade will be practical in terms of how much value it adds to your home. With this in mind, here is everything you need to know about upgrading your HVAC system and how it will impact your home’s value.

Why HVAC Upgrades Are Always a Smart Financial Decision

Things like repainting the interior or exterior of the house are usually safe bets since they are relatively inexpensive and will definitely make the home more appealing. If your roof is old and needs to be replaced, this also usually makes sense since otherwise the cost of the new roof will usually be deducted from the value of the home. On the other hand, there are many other upgrades that may not pay off in the end.

For instance, let’s say you decide to remodel your old, outdated bathroom or kitchen. The average bathroom remodel costs close to $11,000, and kitchen remodels will typically cost $25,000 or more. Both of these upgrades can definitely make your house more appealing to buyers. Nonetheless, there is no guarantee that either one will increase your home’s value by as much as you spent on the remodeling project. For this reason, it’s important that you carefully consider what types of upgrades you make, or you could end up spending more in the long run.

This is one reason why HVAC upgrades almost always makes sense. Whenever you install a new furnace or air conditioner, the total cost of the new unit will generally be directly reflected in your home’s appraisal. The value of the home’s HVAC system is always taken into account when performing a home appraisal. Nonetheless, the appraisal doesn’t just take into account the cost of the equipment but also its age and condition.

Obviously, the older the equipment is, the lower the appraised value will be. However, if the equipment is more than 10 to 15 years old or in poor condition, it could actually lower the overall appraised value of the home. In this situation, it is likely that the new owners will need to replace the existing HVAC system. As a result, the price of the new system will potentially be subtracted from the total value of the home just as it would if the roof needed replacing.

Compared to other types of upgrades, installing new HVAC equipment is almost always the smartest financial decision. As long as the job was done within a year or so of selling the home, you should be able to recoup all of the money you paid and potentially even turn a profit.

How HVAC Upgrades Can Make Your Home More Appealing

In addition to increasing the value of your home, a new HVAC system can also make it much more appealing to prospective buyers. This can drive up the value of your home above your original asking price, especially if the local housing market is extremely competitive. In this situation, those HVAC upgrades could potentially end up making you far more money than what they originally cost.

Buyers will always be more attracted to a home with a new HVAC system since there is much less chance that they’ll need to replace any of the equipment. Still, the bigger benefit lies in the increased energy efficiency you’ll get with the new equipment. Compared to equipment that is 10 to 15 years old, a new furnace or air conditioner can potentially lower your annual energy costs by anywhere from 30% to 50% or more. This is obviously a major selling point considering that energy efficiency is a big concern for most home buyers.

What Types of Upgrades Provide the Most Value?

Generally speaking, replacing your old furnace, air conditioner, heat pump or other HVAC equipment will always have the greatest impact on your home’s value. This is especially true if you opt for higher-efficiency models instead of going with the bare minimum. For furnaces, you’ll generally get the best results by choosing a high-efficiency unit with a rating of at least 95% AFUE (annual fuel utilization efficiency). Similarly, air conditioners with an efficiency rating of at least 20 SEER will usually provide the greatest benefits.

That being said, there are also many other upgrades that can have an impact. For instance, having your ductwork repaired or resealed can help to overcome issues with uneven heating and cooling as well as energy waste. This will result in lower heating and cooling costs, which can make your home more appealing. Even something as seemingly minor as upgrading to a smart thermostat can have major benefits.

Ways to Save Money on HVAC Upgrades

Prior to 2022, many new furnaces, air conditioners and other HVAC equipment qualified for federal tax credits as long as the equipment met certain energy efficiency requirements. Unfortunately, these tax credits expired on December 31, 2021. While there is talk that Congress will pass a new bill and reinstate this program, there are still a number of ways that you can potentially save money on your HVAC upgrades even if that never happens.

Many electricity companies in Michigan and elsewhere offer their own rebate programs on qualifying air conditioners, heat pumps, ductless mini-splits, electric furnaces, and other HVAC equipment. Many also offer rebates for other major household appliances like water heaters. Some gas providers provide similar rebates for gas-powered furnaces as well. Generally, the exact amount of the rebate will vary based on how efficient the new unit is. Depending on this, you could potentially be eligible for a rebate of up to a few hundred dollars. While this may not sound like much, it can still be a huge help by offsetting some of the costs of your new heating or cooling equipment.

Most major HVAC equipment manufacturers also periodically offer specials and discounts on new AC units, furnaces, etc. Deciding to replace your old furnace or air conditioner before it completely dies gives you a huge advantage in this regard. In this case, you can take your time and shop around in an effort to find the best deal possible. In addition, this could also potentially save you some money on installation costs. HVAC companies tend to be extremely busy during the middle of the summer and middle of the winter. As a result, some companies charge more during these peak times than they do during the slower parts of the year.

Trusted Heating and Cooling Experts

At C & C Heating & Air Conditioning, we have been providing professional heating and cooling services to customers in Roseville and the Detroit Metro area for more than 70 years. Whether you’re looking to upgrade your existing HVAC system or are in need of repairs or maintenance, our experienced HVAC technicians are ready to help. We carry a range of systems from top manufacturers like Carrier, Lennox and Trane, and our technicians work on all makes and models of furnaces, air conditioners, and other heating and cooling equipment. We also work on ductless systems, water heaters, air filtration systems, whole-home humidifiers and more. Give the professionals at C & C Heating & Air Conditioning a call today if you have any questions or want to learn more about the benefits of upgrading your HVAC system.

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