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Does Converting to Natural Gas Add Home Value?

Updated: Aug 28, 2021

Should you keep natural gas if you plan on sending your home? Should you add and convert to natural gas if you want to boost your home’s value and sell it for more? What are the cons to making the switch, as well as financially savvy alternatives? What Is Natural Gas? Natural gas is considered a fossil fuel. Scientists explain that natural gas, similar to oil and coal is the result of millions of years of dead plankton building up under the water and underground. It is mainly made up of highly flammable methane gas. Like coal and petroleum, natural gas can be accessed by drilling and fracking. In the home, natural gas can be used for heating, hot water, and cooking with gas ranges. It used to be far more common, or typical in residential real estate before electricity took over. Perceived Vs. Tangible Value Some people may like natural gas appliances if they have the choice. Once connected and set up, at least historically, natural gas has been considered a cheaper supply of energy than some other sources. Some specifically prefer cooking with a gas range than electric or convection style cooktops. However, it is vital for homeowners to understand the difference between appeal and perceived value, versus tangible value. If a home already has a heating and energy source, then converting to natural gas won’t add any tangible value to a real estate appraisal at all. If the current system is not functioning, then adding any type of heat and energy will likely have the same effect on appraised value. If there is no functioning energy and heat in a home, then fixing or adding a system can add real value. In fact, in many cases it may be necessary in order for a buyer to find a lender who will give a mortgage loan on the property. Just don’t expect a conversion to increase how much your home is valued at. It won’t enable buyers to borrow any more money to justify a higher price. The exception here is if natural gas is trending, or really desired by your ideal buyer, and they are able to pay cash, and above and beyond the appraised value. The Costs Of Adding Natural Gas There are several layers of potential costs for adding natural gas to a home:

  • Appliances – you have to have natural gas appliances to use it

  • Connections – you have to be able to bring the gas inside the home

  • Street to home pipes – you have to connect to existing lines and bring it to your specific unit

  • Pipelines to your street – if you don’t have an existing gas line within 90 feet of your property, you may have to pay for extra pipes to be laid

Obviously there are many, many variables, from how much you cook, to how much laundry you do, and how big your home is, how much you shower and brush your teeth, and how warm you like it in the colder months. Though this doesn’t not count all of the costs of making the change, or ongoing repairs, replacements and maintenance of systems or rising energy prices. Of course, you still also have to have electricity for lights and other appliances and charging your phone and laptop in addition to natural gas. Don’t forget inflation and rate hikes, as well as the potential for increased homeowner insurance costs associated with gas, or any new environmental regulations and penalties for using less clean heating and energy methods in the future. The Cons Of Natural Gas What are the potential disadvantages of adding or keeping natural gas? Gas Leaks & Explosions The most obvious downsides are the risk of explosions and gas leaks. These risks may be lower than they used to be, but they still exist. More than the odds of risk, many home buyers and renters just aren’t comfortable with gas. It’s scary. If you are a landlord, then this is an additional risk to your assets and income. You may need to increase and expand your insurance coverage to account for this. Future Flexibility Laying gas lines through your property may also severely impact the ability for you or a future owner to dig or build on the property. This may negatively impact appeal and value for buyers. The Environment & Regulations Fossil fuels are a limited natural resource. Drilling and fracking which powers chemicals into the ground are considered to be highly disruptive and harmful to the environment by many. Even if you do not care about the planet or health impacts, and don’t believe in global warming, there is a strong chance regulators will increasingly try to limit drilling and fracking. This means rising costs for users. Most jurisdictions have aggressive plans to reduce emissions and pollution in the next few years, and some have already reportedly been banning natural gas use in homes, like San Jose, CA. Other Options If you are really set on making energy improvements, need to fix or update an old system, and want to invest to improve the marketability of your home, then also consider:

  • Adding solar power

  • Rainwater harvesting

  • Energy efficiency appliances

  • Energy efficient improvements like new insulation, roofs, doors and windows

  • Restoring wood burning fireplaces or digital fireplaces

  • Using energy efficient mortgages and grants to fund improvements

Summary While some home buyers might like natural gas if they have a choice, many are fearful of it. Don’t expect it to add any appraised value to your home. Though there may be some temporary usage savings if you already have natural gas connected to your property. Get in touch with an UpNest agent today and find out the real value of keeping or replacing your current heating and energy systems, and the best moves for increasing your home’s real value.

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