More and more buyers are coming across homes with underground oil tanks and more and more sellers are starting to realize that buyers do no want anything to do with an underground oil tank. Not only are buyers becoming more concerned but the first thing a buyers agent asks me about my listings with oil heat is “where is the oil tank.?” They often ask this question before they even book an appointment to show the house.
So what is the big deal? The buyer pays for an oil tank inspection, soil test and if everything turns out okay they just move forward with the purchase. As long as the oil tank is not leaking and passed the oil pressure test, the oil tank is in working condition the seller is not responsible to remove the tank and replace with an above ground oil tank. Now lets talk reality…..
An underground oil tank can make a home harder to sell or worth less to a potential buyer. It can also increase the chances of complications with getting to the closing table and the home sold. Mortgage lenders are increasingly wary of buried oil tanks and may refuse to lend on a home with an underground tank. Its also getting harder to find insurance companies that will provide homeowners insurance on house with an underground oil tank.
Many home buyers in this current real estate market want nothing to do with an underground oil tank. They do not even care if all tests come back okay and will often refuse to test it and want the tank removed before closing. I have had a lot of deals lately where the buyers submit an offer with the removal of the oil tank being part of the terms. If the owner refuses then they move onto another house. What does this all come down too? In reality about $3,500-$4,000 give or take to remove an old buried tank and put a new one either in the garage or somewhere outside close to the house.
What should a seller do about a buried oil tank? Some homeowners will actually remove the tank before listing their home so there are no concerns or issues at all with any prospective buyer with regards to the oil tank. Some homeowners will list the home and just wait to see if a buyer has an issue with it. Most buyers will test the tank and soil and if no issues will move forward with buying the house. As I previously mentioned some buyers will insist it be taken out in order for them to buy the house. In that case the seller and buyer go to contract, after the buyer receives the mortgage commitment from their bank the seller has the tank removed. In some instances a buyer will just take a credit at closing from the seller for the cost of the removal. Most sellers prefer this as do their attorneys; let the buyer deal with it when they move in.
My opinion for any homeowners with a buried oil tank, if you can afford to remove the tank before listing your home it is money well spent. If you are considering removing your oil tank or would like an estimate feel free and contact me, I would be happy to share the companies my clients have used with great success.Posted by Michael Trinchitella on