When you’re getting ready to put your Ontario home on the market, you might not give your rental furnace a second thought. However, selling a house with a rental furnace is tricky. Depending on the contract, type of arrangement, and buyer pool, it may hinder the sale significantly. If you’re wondering how selling a house with a rental furnace can impact your home sale, here’s what you need to know.
Challenges of Selling a House with a Rental Furnace
Selling a house with a rental furnace can come with challenges. Here are a few critical points to consider.
Liens Against the Property
With a rental furnace, the rental company registers a security interest on its equipment that’s placed in your property. That creates a lien, protecting the rental business if there’s damage to the equipment or the house sells.
The problem is that buyers find houses with liens less attractive. Mainly because, liens stay with the property, not the previous homeowner. If a buyer sees the lien, they may choose not to move forward with a purchase.
Additionally, many mortgage lenders won’t support sales if there are liens. Instead, a clean and clear title is a requirement. We have seen situations where the furnace lien is registered on title in the first position and a lender will demand that it is paid off before a mortgage is put on the house. In those cases, buyers might have no choice but to look for another property, as their lender won’t allow them to get a mortgage for that home.
Rent vs. Rent-to-Own
Most rental furnace arrangements aren’t rent-to-own. Instead, the rental company maintains ownership, leaving them in control over the furnace in a broad sense.
While that may not seem problematic at first, it can be an issue if you’re selling your Ontario home. You may not be able to simply transition the furnace to a new homeowner. In that case, anyone interested in your property may have to deal with acquiring their own furnace, which could make your property less attractive.
In most cases, prospective buyers are going to have expectations regarding the furnace. Most buyers expect to own the furnace in their new home. They won’t necessarily be interested in transitioning a rental contract into their names. Instead, they’ll want the seller to buy out the rest of the agreement and get the rental removed. If it’s a rent-to-own arrangement, they may need the seller to pay off the furnace, leaving it with the property.
Since dealing with a rental furnace isn’t ideal in many buyers’ eyes, they may expect a price reduction. Buyers usually base their offers on more than the current Ontario housing market; they also factor in any perceived work they’ll need to do.
In many ways, a rental furnace is an issue the buyer has to address. They’ll either need to agree to transition the existing contract or convince the seller to buy it out. In some cases, they might have to find a new furnace to install, too, depending on whether the furnace was rental or rent-to-own.
Handling the situation can take quite a bit of work on the buyer’s part. Since that’s the case, they won’t offer top dollar simply because of the perceived inconvenience.
Benefits of Selling a Home with a Rental Furnace
While selling an Ontario home with a rental furnace comes with challenges, there are also benefits to it. With a rent-to-own furnace, you can install a newer model and pay it off over time. It’s a way to improve a critical aspect of your house a bit before you sell without having to cover the entire cost right away. As long as you pay it off before the sale closes, you’re in good shape.
Additionally, you may be able to use proceeds from the home sale to pay out the rental furnace. Often, you can make that arrangement with the rental company in advance. If you do, you won’t need cash upfront to address the contract.
How to Sell Your House with a Rental Furnace in Ontario?
If you’re going to sell your house with a rental furnace, you need to use the right approach. First, determine if there is a lien in place. If so, you’re going to need to address that if you want access to the largest buyer pool. Will you pay the furnace off before closing or will you expect the buyer to pay it off?
Second, determine what it’ll cost to end the contract and buy out the furnace. If you’re rent-to-own, the payoff figure is typically pretty straightforward. While it may be a bit higher than you’d expect, the fees aren’t usually ridiculous.
With rental agreements with a buyout option at the end, it might be more complex. The fees for canceling the contract early can be pretty high. Then, you have to add the buyout price in, pushing up the price tag even more. To find out, you’ll also want to speak with the company you rent from.
If you can buy out the furnace contract and assume full ownership, moving forward can make the sale easier. Just make sure that the lien is removed once you pay the required amount.
If you want to sell with the rental contract in place, be upfront with prospective buyers. Make it clear in your property listings that a rental furnace contract needs to transition with the property. By doing that, you’re more likely to find buyers who are open to that arrangement.
Are You Selling a House with a Rental Furnace in Ontario? Let GTA House Buyers Make It Easy
If you need to sell your Ontario house stress-free, GTA House Buyers can make the process easy. We’ll buy your home as-is, all while helping you avoid many of the expenses you encounter with typical home sales. We’re flexible and we can buy with the rental furnace in place or arrange to pay it out on closing. If the furnace gets paid out on closing, you don’t need to pay anything in advance, you can use the funds from the sale of your house. We’ll make sure it’s easy for you.
Plus, GTA House Buyers can close fast. You’ll get a fair price in less time, allowing you to move forward without delay.