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Life Expectancy

By Tim McIntyre

Real Estate Agent with Ellicott City Realtor, Catonsville Realtor

September 23, 2009 03:31 AM

Life Expectancy

Real Estate Home Inspections Life Expectancy We all know how home inspections can go. We know there are good inspectors, and some are not so good. A good inspector can explain things to buyers in terms that are very unemotional. Unfortunately, there are some inspectors that inject more than their professional opinion about certain issues.

"Life expectancy" is a term used by home inspectors, generally in reference to certain systems or components of a house, such as a heating unit or roof. Recently I dealt with a home inspection issue regarding life expectancy. I represented a client in respect to a house that has two zone heating. The first floor heat pump and condenser have been replaced and are operating fine. The second floor's heat pump is 21 years old. The "life expectancy", according to the home inspector, is 15 years. The unit is operating fine.

When the heat pump on the second floor needs to be replaced, there is not adequate access to do so, which may mean additional costs for replacement, above and beyond the cost of the unit. As you might guess, the buyer wants a credit of several thousand dollars toward a new heat pump.

Part of this whole business of "life expectancy" has to do with inspectors putting it into their report, maybe so that they are not left open to litigation - but is "life expectancy" really fact? They put it into the report as a generalization, without really knowing how long a unit may or may not last. I have a boiler in my home that is 40 years old - well past any inspectors "life expectancy".

In these circumstances, a seller will generally say, "The unit is working fine. I'll have it serviced and that's all I will do." Sometimes that is enough to satisfy the buyer, and sometimes it is not - usually it depends on how the issue was presented to the buyer by their home inspector.

What my thoughts are is to have the seller purchase a one year warranty. Most real estate companies offer this type of warranty. The warranty would allow for repair or replacement of the unit if needed within the first twelve months. This at least provides some protection for the purchaser.

It's always important for me to calmly and rationally approach a situation from my professional experience, and not so much what I think personally, irrespective of who I represent in a transaction.

What are your thoughts about life expectancy? Have you run into this challenge, whether selling or buying a home?

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David Salvato

David Home Inspection Service Home Inspector San Bernardino - Los Angeles, CA

Hi Tim. I enjoyed your post. I like to read inspection post so I can better serve my Realtors and clients. As a home inspector in the Los Angeles real estate market for the past 11 years, I have to say that litigation is a big thing here. Although I, or the hundreds Realtors that call on me, have never been named in any type of lawsuit. I have heard of many inspectors that have. The reason that many home inspectors go out of business in the first three years is because many find them self in litigation. Or they get a reputation for being a tough inspector and get black balled by many local offices. This whole business of "life expectancy" is real. Manufactures test equipment under extreme and normal conditions in a laboratory. Some manufactures will hire outside testing agencies to do the testing for them. Any item we buy has some sort of self life. Heating and Air conditioning equipment is no different. Rubber seals, plastic washers, motors and burners can only serve a home for so long. More over, failure of a unit is more than the unit not working. I may be a bad burner that is emitting high levels of carbon monoxide. Or that the AC unit now cost four times more to run than it did when it was new. Just two examples of life expectancy. A great Home Inspector will research the life expectancy of a unit on the MFG website or service manuals. Others may not! One should always ask. How did you determine the life expectancy? I will not go into roofs because it should be clear if you have a 20 year three tab roof and it's 15 years old your going to need a new roof soon. But is "life expectancy" really fact? No! No one has a crystal ball to really know when something will fail. Be happy that your inspector is protecting the owner, buyer and you from possible litigation.

Sep 23, 2009 04:23 AM

Anonymous

John Tindale

Tim,

It amazes me, how the life cycle of everything else factors into the sell/ purchase value of everything but single family homes, townhomes and condos.

You wouldn't dream of paying 45K for a 13 yr old Honda just because everyone else in the area bought one for a comparable price- but yet this is the same approach used in determining the value of a home purchase.

I am an HVAC contractor that has worked in residential and commercial HVAC for over 20 years- and we have a rule of thumb for residential systems.

1-3 years: minor repairs, small components, and the occasional fuse. (avg $250 for repair)

3-5 years: small pumps and motors, belts, small wear-and-tear (avg $500-750 for repair)

5-7 years: compressors, larger motors, major components (avg $1,000-1,200) for repairs

7 years and up: due to constant changes in efficiency and system performance, major repairs are usually a "break-even" decision. If a 7 year old 12 SEER system is going to cost $1200 to repair, it might be time to start thinking about putting in a higher efficiency system that will reduce energy costs.

So- if you are buying a house that has a heat pump that is older than seven years, you might as well make sure you have 6-10K socked away in savings to buy a new system in the next couple years.

My final input, buy a home warranty even if the seller doesn't offer one. They cost roughly $450/ year and a year's worth of assurance can be worth it.

Sep 23, 2009 05:10 AM

Tim McIntyre

Ellicott City Realtor, Catonsville Realtor - Ellicott City, MD

David, thank you for the taking the time to comment, and for making the case that the idea of life expectancy is well researched, and important information of which the buyers should be aware.

John, thank you for your comments. You make some very good points about the cost to repair and operate an HVAC unit over time - that is useful information to pass along to buyers and sellers.

Yes, it is possible that a system past its life expectancy may need to be replaced in the next few years - but is it the seller's responsibility to deduct the full cost of replacement from the agreed upon sales price, for a unit that is in perfect working order at the time of the sale? In my opinion, this can be an unrealistic expectation on the part of the buyer.

Sep 23, 2009 08:34 AM

Life Expectancy

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