When you’re preparing to sell your home in New Hampshire, you’re likely focused on the big numbers: the sale price, the commission, and the taxes. But there is one “hidden” credit that often puts hundreds of dollars back into a seller’s pocket at the closing table: The Fuel Proration.
If your home runs on heating oil, that tank in your basement is essentially a holding cell for cash you’ve already spent. Here’s how we make sure you get that money back.
The Myth of the “275-Gallon” Tank
If you look at the tag on a standard residential oil tank, it will say 275 gallons. However, in the world of real estate math, we never use that number as the “full” marker.
For safety reasons and to allow for proper air expansion, oil tanks are only filled to about 90% capacity. This means a “full” tank is actually closer to 250 gallons. If you calculate your credit based on 275, your numbers won’t align with the actual fuel levels on closing day.
Accounting for the “Sludge” Factor
Over years of use, heating oil tanks naturally develop a layer of sediment at the bottom, affectionately known in the industry as “sludge.” This is a mixture of condensation, rust particles, and fuel byproducts that settles at the very bottom of the tank.
Because this sludge isn’t usable fuel and can actually be harmful if pulled into your burner, we don’t ask the buyer to pay for it. To keep the transaction fair for both parties, we typically deduct 10% of the tank’s reading to account for this unusable buildup.
The New Hampshire Proration Formula
To calculate exactly what the buyer owes you at closing, we use a simple, transparent formula. It looks like this:
Seller Credit=(Remaining Gallons−10% Sludge)×Current Market Price
Let’s look at a real-world example: Imagine you’re closing on your home and your oil gauge shows the tank is exactly 1/2 full.
- Usable Capacity: Based on the 250-gallon safety fill, 1/2 tank is 125 gallons.
- The Sludge Deduction: We subtract 10% (12.5 gallons) for sediment.
- Net Fuel: You have 112.5 gallons of “sellable” oil.
- The Payoff: If the current market price is $3.75/gallon, you receive a $421.88 credit at closing.
Why This Matters for Your “Net Profit”
At Nick Ponte Realty, our goal is to help you understand your true Net Profit. While many closing costs are “debits” (money leaving your pocket), the fuel proration is a “credit” (money coming back to you).
In a New Hampshire winter, when oil prices are high and tanks are kept full, this can be a significant boost to your bottom line. We work closely with local fuel providers and title companies to ensure the reading is accurate and the market price is current.