Upgrading your HVAC system will increase your home’s energy efficiency, but it might not draw buyers in the same way other home improvements might.
While 25% of recent home buyers factored the age of the HVAC system into their home buying decision, a new HVAC ranked near the bottom of buyers' priorities when compared with cosmetic features like updated kitchens and bathrooms.
However, according to real estate broker and property flipper Adrian Pedraza, HVAC issues are among the most frequently requested repairs following a home inspection. So while a new HVAC may not boost your home's marketability, a faulty or outdated unit could be a sticking point during buyer negotiations.
On average, home owners can expect about a 30% return on their investment and a 5–7% increase in home value from replacing their current HVAC system with an energy-efficient alternative.[1]
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How much does a new HVAC system cost?
According to Angi.com, buying a new HVAC unit could cost between $5,000 and $12,000 on average, but your actual cost will vary depending on the extent of the upgrade, the size of the unit, and the installation difficulty.[2]
The best way to know the estimated cost of an upgrade is to contact multiple contractors for quotes. They will guide you through what needs to be updated (if it needs to be updated at all) to help you decide whether to make the investment.
You may also want to contact your real estate agent to see if they have insights about upgrading your HVAC. They can help you understand what’s selling and whether HVAC units are a selling point in your area.
Types of HVAC systems
There is a wide variety of HVAC systems, from systems that handle individual rooms to whole-home units that require ducting throughout the house. Each system has its strengths and weaknesses when it comes to cooling and heating efficiency, energy costs, and installation price.
When considering a heating and cooling upgrade, you'll need to consider factors like the size of your home, local climate, and budget. Finding the best unit to meet your home’s requirements while staying within a decent budget is the best way to maximize resale value with an HVAC upgrade.
Here are a few of the most common HVAC systems available, the cost of installing them, and the pros and cons of each:
| Type | Best For | Cost Range | Pros | Cons |
Split system (i.e., separate units for heating and AC) |
Homes in any climate. Works well in hot and cold weather |
$3,900-8,000 |
|
|
Hybrid split system |
Homes with electric and gas hookups in milder climates |
$2,500-10,000 |
|
|
Packaged heating and air |
Homes in warmer climates that don’t need heat often |
$10,000-14,000 |
|
|
Ductless mini-split |
Homes without existing ducts and homeowners who want to control individual rooms |
$2,000-14,500 |
|
|
Hydronic heating (i.e., under-floor heating) |
Heating special areas of your home, such as bathrooms |
$1,700-6,050 per room |
|
|
Geothermal heat pump |
Homeowners wanting a sustainable option |
$4,500-24,500 |
|
|
Source: Angi.com
Does a new HVAC system add to your home value?
The cost of your HVAC overhaul isn’t the only thing you need to consider when contemplating upgrades vs. selling your home as-is. Factoring in the return on investment and potential resale value will help you decide if an upgrade is worth it.
Return on investment (ROI) through higher resale value
Upgrading your home’s heating and cooling system before selling can improve resale value by up to 7%, according to Angi.[3] But this increase in home value typically doesn’t give you a dollar-for-dollar return on your upgrade.
The same Angi research found that homeowners who upgrade their HVAC system should only expect to see around a 30% return on their investment. For example, if updating your unit costs $10,000, you should only expect to recoup $3,000.
Energy savings
Energy-saving upgrades are becoming increasingly popular as a selling point for home buyers. In fact, realtors cite energy-efficient or green home features as one of the top five investments sellers can make to increase their home's appeal among buyers.[4]
While upgrading your HVAC system to a more energy-efficient unit may help you sell your home faster, you should still expect to spend more than you'll get back at the time of sale.
Other energy-efficient upgrades, like Energy Star-rated vinyl windows or upgraded insulation, could be more lucrative if your HVAC system is still fairly modern and not in need of immediate repair.
Tax credits
The Inflation Reduction Act of 2022 put energy efficiency in the spotlight with its tax credits for energy-related home improvements. Homeowners who make energy-efficient upgrades can potentially receive up to $3,200 back in tax credits in a single tax year.
Two eligible upgrades are central AC units — which can net you up to a $600 credit — and heat pumps, which are eligible for a 30% rebate in project costs up to $2,000.[5]
You may also qualify for additional tax rebates from your local government. Before you start your upgrades, you should contact your utility companies to see if any of your upgrades qualify.
🚨 One important thing to note with tax credits is that they may not pay off if you don’t exceed the standard deduction. Understanding whether you'll actually qualify for tax rebates is essential to maximizing what you get back from energy-efficient upgrades.
Should you update your HVAC system before selling your house?
Here’s something to consider when deciding between making major repairs, such as upgrading an outdated heating and cooling system, or selling a home that still needs some work. Getting a new HVAC unit may increase your home’s value by a bit, but you won’t make back everything you invest in the update.
“If a house needs a costly renovation, such as a new HVAC, it’s better to leave the house at its current stage,” says Seth Williams, real estate broker and Owner at Reference Real Estate in Boston.
A faulty HVAC unit might slightly impact your home’s market value, but the buyer may be willing to meet you halfway on the repairs after the home inspection. If you are on the fence about upgrading your system or have a tight budget, it may be best to offer a credit to the buyer for part of the cost and move on.
You can also contact a reliable local realtor to get honest advice on whether your old HVAC system will be a deal breaker for buyers. They can help you understand the best approach and put you in contact with contractors if repairs are necessary.
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