How Much Does Replacing Your Furnace Improve Your Home Value?

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When sales are slow, real estate agents give advice to help homeowners make their homes more attractive. Not all improvements increase the value of a house, however. Investigate the value of any contemplated changes before spending money that you may not recover from the sale. For example, the value of replacing a furnace is based on several issues, not just its cost.

Improvements vs. Maintenance

  • A furnace, like any other part of the existing physical plan of a house, must be replaced periodically as part of general maintenance. If you choose to replace a 20-year-old oil-burning furnace with a new oil-burning furnace, you haven’t made an improvement. You’ve just practiced good maintenance. Well-maintained homes help get the best sale price, but it doesn’t improve the house. In this case, buying a new furnace adds about half the purchase price of the furnace to the value of the house, which means it adds about as much value as patching the roof or replacing siding that was scorched at last summer’s neighborhood barbecue.

Upgrading

  • The Italianate marble bathroom, stained-glass entryway, and second story of great room windows that your neighbor added didn’t return as much as he had hoped they would. Upgrades that result from personal tastes often don’t. Upgrades that improve energy efficiency, though, may bring dividends. Change that old oil burner to an energy-efficient natural gas furnace and the upgrade not only saves you money on your energy bills, the combination of savings and the upgrade may recoup 80 to 100 percent of the purchase price when you sell, according to the QualitySmith website.

Location

  • Just as with massive outdoor kitchens, certain heating, ventilation and air conditioning, or HVAC, improvements sell better in some areas than others. A heat pump will recoup its investment in the desert, but buyers in areas where the temperature stays below freezing for months at a time are not likely to perceive it as a reason to pay several thousand dollars more for a home. Solar heat will pay for itself in Houston, where the sun shines most days, but it adds less value in a home in Seattle or another area where the skies are often cloudy. Home buyers in North Dakota are more willing to see a new furnace as an asset than those in Arizona, where a furnace is often an afterthought. The value of any improvement can vary up to 20 percent, depending on climate or whether it's a metropolitan or rural area. It could even depend on the values in comparable neighboring properties.

Other Considerations

  • Buying a furnace that produces a lot of BTUs will not impress a home buyer, and one that is undersized will not be efficient. An unimpressed or worried buyer is not likely to agree that the furnace is worth a premium sales price. Rather than spend money on a furnace that may be too big, invest in a new duct system or air handler. New furnaces and other system upgrades may also qualify for tax credits for you or an Energy Efficient mortgage for your buyer.

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