HVAC

7 Mistakes To Avoid When Buying An AC System

7 Mistakes To Avoid When Buying An AC System

Here are the short answers. See below for the full list!

# 1 – Forgetting The V in HVAC

HVAC stands for: Heating, Ventilation Air Conditioning. Most homeowners have no idea if their ducts are in a row (pun intended). The ducting system can be in the walls (which in most cases will always be fine and can be left alone), however most ducting for homes depending on the region is going to be in the attic.  The attic is a hot, dusty place with spiders so no wonder most of us have no idea what’s up there.

# 2 – Buying A System Online

The online world has brought us many advantages and some disadvantages. Your A/C – Heating system isn’t just a box that blows cold and hot air. It is an integral part of your house and every house/home is different, even in tract housing.

# 3 – Salespeople

Sales are awesome! The world runs on sales, without sales the world would stop. However, it’s the second part of the title here that is the problem “People”. Sales is great but Salespeople” can (not always) be a problem.

# 4 – To Split or not to Split

“It is always recommended to change out both at the same time however very seldom is it required.  Energy efficiency ratings of A/C units can change drastically depending on the type of FAU (Forced Air Unit) that is installed with it”

# 5 – Warranties

Warranties are important, there is always warranties on parts, equipment and labor. Bigger better warranties should NOT be the deciding factor between equipment choices, it should be a metric you look at but not the heaviest one.

# 6 – Bids

Some statistics have shown that over 75% of HVAC purchases are made on one bid/proposal to the home. This is completely acceptable barring a few reasons. See full article below

#7 – Permits & Licences.

ALWAYS ask for your contractors State Lisc. Board # and verify it's good with your state and ALWAYS make sure they pull permits! If they are giving you excuses as to why you don't need it they're setting you up for disappointment!

Full Article:

Top 7 BIG Mistakes to Avoid when buying a new A/C or heating system.

Outside of Kitchen Remodeling, Air Conditioning systems or A/C systems are one of the biggest expenses homeowners can take on.

With this being a large investment that hopefully will be around for 15-30 years or more we should probably be aware of the pitfalls to look out for. (Not necessarily listed in order of importance)

Mistake # 1 – Forgetting the ( V ) in HVAC. 

HVAC stands for: Heating, Ventilation Air Conditioning. Most homeowners have no idea if their ducts are in a row (pun intended). The ducting system can be in the walls (which in most cases will always be fine and can be left alone), however most ducting for homes depending on the region is going to be in the attic.  The attic is a hot, dusty place with spiders so no wonder most of us have no idea what’s up there.

It’s important to have your ducting inspected once a year and absolutely prior to buying a new A/C or heating system, some ducting type is wrapped or insulated with Asbestos (A material known to cause cancer) and others could be just in bad shape. After 2002 most ducting started being sealed better however prior to those years your ducting will most likely need to be replaced.

Forgetting to have your ducting inspected is one mistake you will regret. A/C Systems are not plug n play, it requires a professional to come inspect the system and ductwork.  Which leads us to # 2.

  • Did You Know: Did you know that your ducting is also sized for the system (or at least should be ). If you’re thinking about changing the tonnage of your A/C – Heating system. Make sure your ducting is the appropriate size to handle the new air flow.

 

Mistake # 2 – Buying a AC system online

The online world has brought us many advantages and some disadvantages. Your A/C – Heating system isn’t just a box that blows cold and hot air. It is an integral part of your house and every house/home is different, even in tract housing.

Some sites offer selling equipment directly to homeowners which sounds great other than needing to find a contractor to install the system which most reputable contractors will not touch those systems because once they touch it they own it if something goes wrong.

Other sites give you a great fixed price for installing a system without anyone ever going to your home. That’s like buying a car you’ve never been in on the internet. You like the way it looks but it may not be the most comfortable ride you’ve ever been in; the handling may be bad, and the seats don’t go back far enough. (There’s no returns).

Stay away from online offers that don’t have someone visiting your house first to evaluate your needs and your home. There are way too many variables that can change things like: Asbestos, Electrical Panels, City Code requirements, Equipment sizing, Ducting quality and performance and the list goes on!

 

Mistake # 3 – Salespeople

Sales are awesome! The world runs on sales, without sales the world would stop. However, it’s the second part of the title here that is the problem “People”. Sales is great but salespeople” can (not always) be a problem.

Not all are bad but how do you know the integrity of your salesperson. Most homeowners simply go on their gut feeling, however hundreds of thousands of dollars are spent training HVAC people how to “Close” you, how to be friendly and identify within the first few minutes things about you that they can bring up in conversation to try and bond with you and to artificially give you a good “Gut” feeling.

Most of us go with our gut and in and of itself that’s not always a bad thing. However, here is what you need to know:

  1. Time Management:
  1. Salespeople should always be 10-15 min early to their appointment
  2. When it comes to replacing your system a true HVAC professional should take at least 30-45 minutes just examining your current system. 60-90 minutes is preferred. When you call an HVAC company you should block out around 3 hours of time. For multiple systems or very large homes consider more.
  1. Appearance:
  1. Clean clothes – Your contractor or salesperson should not look like they just crawled out of another attic (even though they most likely just did) how you do the little things is how you do the big things. If they didn’t take the time to clean up before meeting you, they will most likely not take the time to clean up after themselves before they leave your home.
  2. Collared Shirts – Tee Shirts with company logos are great for when the work is being done, however if your contractor or comfort adviser did not wear a collared shirt to first meet you they may be lacking some professional training which most likely will translate into sloppy work.
  3. Foot Booties – This is a basic for contractors, these booties are meant to protect your floors. Contractors and salespeople are in and out of attics all the time. (Bird Droppings, Rat Feces, Asbestos) all sticking to the bottom of their shoes. You Don’t want this dragged into your house.  Oh, and putting their foot booties on or wearing them outside really defeats the point of even using them
  1. Check their vehicle –
  1. Is it professional?
    1. Nice wrapped vehicles speak a lot about the professionalism and quality of the contractor.
    2. Is it clean inside? Take a walk outside and look inside, if it’s full of McDonald’s wrappers and trash that’s a good clue as to how your house is going to be left.
  2. Where did they park?
    1. Contractors should never park in your driveway unless it’s the only safe option. It’s inconsiderate and speaks “I’m not a professional” pretty loudly.
  1.  Racing to the bottom!
  1. Cheap things are not good and good things are not cheap! Being the cheapest to install the system is not always the best thing. Think about all the jokes about things that are built or installed by the lowest bidder!  There is always concern. HVAC is having a tremendous amount more involved in doing the job right other than just replacing a box outside that cools the air and a box inside that warms and moves the air.
  2. ACCA(Air Conditioning Contractors of America) state that 90% of the A/C Systems in the US are installed wrong! This is typically cause because of two reasons:
    1. Lack of training and experience from the contractor
    2. Contractor feeling the only way to get a job is to be the cheapest bid and the only way to be the cheapest bid is to hire the cheapest labor (Typically unskilled & Experienced) or not wanted by other contractors for various reasons like (Fired from other employers, Bad background checks etc.) or even worse; cutting things out of the job that the homeowner will never see or know is missing saving the contractor money which increases their profits. These items will typically mean poorer performance and more maintenance on your system over its life.  So basically, you think you’re getting a better deal, but it will cost you, your comfort and your home way more in the long run.
  1. Presentation Material:
  1. Yes, it cost more to have nice marketing and presentation material but remember you get what you pay for. Your contractor should always have something that is professionally printed in color to present to you and you should always have something left behind or emailed to you.
  1. Contracts
  1. Always get a copy
  2. Check your local state for “Right of Rescission” In California for example homeowners have 3 days to cancel any contract without penalty. There are some exclusions to this such as monies the contractor has already spent etc. So, check your state contractors board.

 

Mistake # 4 – To Split or not to Split

Most HVAC systems in the U.S. are Split systems which include an outside unit (Condenser or Heat Pump) and in an inside unit (Furnace or Air Handler). A heat pump system is basically an all-electric system, there is no natural gas or propane feeding a furnace.

There are some units which are “package units which have the A/C and heat all in one unit (normally on a roof) so for the purpose of this article we will only focus on split systems.

For split systems, your outside unit is connected to your inside unit (could be in a closet, garage or in the attic) by a copper line-set which is what carries the refrigerant to and from the unit outside.

There is an evaporator coil that is attached to the inside unit and this is what takes a standalone central heating system and makes it an Air Conditioning system as well.

There is only a very small amount of times when you are required to change out your inside unit when you A/C system needs to be replaced.

Doing your furnace or air handler later can save you money off your A/C system now however here are some things to keep in mind. Prices go up every year, waiting till next year or the year after will not be cheaper to install a furnace.

It is always highly recommended to change out both at the same time however very seldom is it required.  Energy efficiency ratings of A/C units can change drastically depending on the type of FAU (Forced Air Unit) that is installed with it and leaving your old outdated one can drag your shiny new A/C unit down.  Not changing out your furnace and A/C at the same time can be a mistake especially when you’re going to higher efficiency units.

To Side note there are several high efficiency units on the market that that require specific types of furnaces/Blowers and it would be required to change out both.

Mistake # 5 – Warranties

Warranties are important, there is always warranties on parts, equipment and labor. Bigger better warranties should NOT be the deciding factor between equipment choices, it should be a metric you look at but not the heaviest one. Many contractors push their Bigger Better warranty as the golden reason for choosing their product, many times these warranties are bigger and better because they need to be due to product failure history

Most homeowners are not aware that most warranties on HVAC equipment will require that they have a “qualified or certified” company come out once a year to do a maintenance on the equipment.

Once a year for the furnace/air handler and once a year for the A/C Condenser / Heat Pump.  Failing to have this routine maintenance can cause your warranty to be voided.  Huge Mistake, however many contractors use this a “IN” with you.

While there are big advantages to using the same company every year to do your certified maintenance, however if your HVAC company is not taking care of you, don’t hesitate to start shopping for this maintenance yearly or when it’s needed, since HVAC contractors consider maintenance customers “Gold” there is a chance you can get better deals each year.  Now you know why so much is spent on advertising their A/C Tune Up packages.

Mistake # 6 – 3-Bids

It’s a common knowledge that most seasoned homeowners feel they are always supposed to get 3 or more bids, but let’s face it, when it comes to HVAC if you’re following the other rules like having the home evaluated by a person most of the contractors will spend up to 3 hours in your home. Statistics have shown that over 75% of HVAC purchases are made on one bid/proposal to the home. This is completely acceptable barring a few reasons.

Think about this list.  If you can comfortably check of items know that your contractor is professional, on time, with a great appearance, they were detailed, honest and took their time. If their proposal is within your budget, then feel confident in your decision. One of the easiest ways to test out your contractor is to check their Contractors license with you state, check review sites like Fairbids.com, Yelp, etc. Which leads us to # 7

Mistake # 7 – Permits and Licenses

Did you know in most states it’s required to have contractors state license to do HVAC work? You should ALWAYS ask your contractor for their state license number and look it up to ensure its valid and they are still in good standing with your state. In California for example the website is https://www2.cslb.ca.gov/OnlineServices/CheckLicenseII/CheckLicense.aspx

Did you also know that most states require a permit to be pulled to do your HVAC or ducting replacement? Don’t just have the contractor tell you they will pull the permit. It must be on your contract and you want the permit number once they pull the permit. I would get this before allowing any contractor in my home.  This is a cost that the contractor will have to pay, and you can loose out big if they don’t pull one.  Some contractors wont pull the permit because sometimes it could mean saving them thousands of dollars so the can be the “Lowest Bidder” getting them the job, oh and they have the added benefit of no one coming in behind them checking to make sure they installed everything correctly!  Don’t be fooled, NO PERMIT and you lose!

Right Size Contractor

Choosing The Right Size Contractor

Right Size Contractor

Is there really a difference between Small & Big Residential Contractors? Outside of the obvious answer of yes! (Based simply on size) There can be several Pro’s & Con’s to each size that many homeowners may not be aware of.

5 Benefits /

Here are 5 Benefits or “Pros” to Large and Small Contractors while there are many more this is just a sampling. Please feel free to leave comments below with your pros and cons suggestions!

Large Contractor Pros:

  1. Large Contractors tend typically have a large staff or team that is capable of handling your calls, questions & Most importantly concerns.
  2. Complaints are generally handled faster
  3. Large contractors tend to have a greater range of products and/or services to offer however not always.
  4. Large contractors normally have been in business longer than small contractors (Being in business a long time and not having growth could be a sign of a un-healthy business / contractors) Having a longer work history also lets you see more reviews of the contractor and their work. See our other post Top 7 Mistakes To Avoid When Buying A New A/C System
  5. A larger contractor has a greater chance of staying in business to service or maintenance your project if needed (This is not a automatic rule however because if a large contractor changes things or raises prices too drastically they may find themselves quickly reducing in size or going under!)

Small Contractor Pros

  1. Small Contractors tend to be more competitive with pricing. They just do not have the overhead that large contractors have however there is a fine line between quality and price.
  2. Small Contractors are normally referred more by family and friends.
  3. Small Contractors are normally willing to bend more when it comes to negotiating or changes to the project.
  4. Small Contractors are highly dependent on your project success, one failure here could really hurt this company vs. a large contractor not caring as much.  This could give you an advantage
  5. Small contractors tend to be more personable when communicating with them. (Not always the case however there is a more “I’m your friend” attitude vs the “You’re interrupting our Money Making Machine” attitude you get from large companies that think you are there to serve them!

5 Concerns

Here are 5 concerns or “Cons” to Large and Small Contractors while there are many more this is just a sampling. Please feel free to leave comments below with your pros and cons suggestions!

Large Contractor Cons

  1. Large Contractors Tend to be A lot more expensive and unless they are giving you completely different equipment or products they are not offering more value, just higher prices to help with the expensive budget!
  2. Large Contractors tend to have a loss of “Culture” where many are improving in this area it’s easy to get lost as a customer with these companies, you’re just a number!
  3. Larger Contractors Tend to put more pressure on their sales teams to “Close” or “Pressure” customers to buy because they have to “Feed The Money Machine”  Having a lot of full time staff is a big drain on a budget and demands a lot of New Sales. You normally do not get that kind of pressure from smaller contractors.
  4. Large Contractors can make more errors since they are juggling more jobs and can be more prone to mistakes.
  5. Larger contractors have the money necessary to train their salespeople how to manipulate the conversations and or presentation to overcome your objections and “Close you”  Sales itself is not a bad thing, the world runs on sales however using tactics to get you to buy now without being informed of other proposals is shady!

Small Contractor Cons

  1. Small Contractors may or may not be in business to service or maintenance your project. Even being in business a while if the company is still small after 10+ years in business that may be a sign that they are an unhealthy business!
  2. Small Contractors may have to cut a lot of corners to get you that lower bid price!
  3. Small Contractors Can be shady! Beware of small (or large) contractors that will not pull permits or provide you with their insurance information!
  4. Small contractors typically underbid large contractors, many times this is done by cutting corners on the jobs! FairBids.Com is a great resource to use when evaluating sizes of contractors!
  5. Small Contractors normally don’t have the staff to take care of you and your concerns. At least when they are busier.
risk high

PACE Loan

PACE Loans – Property Assessed Clean Energy

To borrow or not to borrow – That is the question

Like most things in home improvement there are Pros & Cons with financing. One of the biggest upsets when it comes to PACE funding or “Property Assessed Clean Energy” is the lack of understanding of how it really works.  in 2016 there was a undercover news team that did an piece on a PACE provider who was scamming elderly homeowners. While we don’t think the PACE company was to blame for this terrible act of deception by the contractor there is quite a bit of confusion and misconceptions about PACE that are important for every homeowner to be aware of. While PACE has proven to be beneficial to thousands of homeowners it’s important to do your due diligence and find out completely about the project.  Talk to your FairBids.Com representative for more information.  Watch the special T.V. Report Below.

See The Video Here

What is PACE?

Property Assessed Clean Energy (PACE) is a means of financing energy efficiency upgrades or renewable energy installations for residential, commercial and industrial property owners.

PACE is simply a finance option where you take out a loan through your property taxes, there is principal, interest and FEES, that you need to be aware of. This is a loan that your property taxes are committed to paying back. PACE is NOT a FREE government program. It is a LOAN that as long as you own your home you are committed to paying back with interest. If you default on this loan your house may be seized and/or auctioned off to pay off the debt since it’s tied to your property.

There are Pros and Cons to using PACE. The best protection you can have as a homeowner is your knowledge of how the program really works.  Normally hearing it from a contractor / salesperson that is trying to get you to use it is not the best source. They have a vested interest in getting you to use that program because PACE normally does not charge any “Dealer Fees” to the contractor to use the program which means more money in the contractor’s pocket compared to other financing options.

However in California it has been reported that HERO. (Home Energy Renovation Opportunity) or Renovate America is offering reduced interest rates to their “Channel Partners” customers for a dealer fee.  So basically those contractors have to pay a fee to offer you a “Reduced Interest Rate” loan through HERO.  This makes them more appealing as a contractor over others that cannot offer those rates. Basically HERO is allowing some contractors to buy a more appealing program to present to homeowners.

What Are The Benefits

PACE does have some benefits. Since your property taxes are assessed annually depending on the time of year that you sign up for and complete a PACE approved project your property taxes may not change until November of the following year. This is very attractive to some homeowners because of the delay or deferred payment.

However a pitfall to be aware of is that there are heavy county fees involved in using PACE and you will be charged interest up until your first payment.  Many times if you compare the monthly amount your PACE loan will come out to compared to a conventional loan at a higher interest the monthly amounts may be close to the same.  Most likely due to the fees and all the interest you have to pay.

Other benefits can include possible tax write offs on the interest. As you can imagine tax laws are changing every year and as of the writing of this blog in 2017 the IRS was allowing certain cases of the interest to be written off with your taxes.  Always consult your accountant or tax professional if you have questions or concerns.

PACE reports to have another benefit of not touching your credit.  Make no mistake, there will be an inquiry of your credit to establish you and your homes eligibility. There is no such thing as a “Soft” pull of your credit. A inquiry is an inquiry and will be a hit to your score.  However, if you complete a PACE loan project the amount will not be reported on your personal credit score as a loan that you have which could be beneficial if you are really concerned about your buying power in the future.

Pros & Cons

One of our homeowners reported that there was massive differences in the “lump” sum payment required at the first assessment as well as “no where near” the reported monthly costs to increase in escrow. This ultimately caused the homeowner to pay several thousand dollars more out of pocket than expected and instead of an increase of $560 a month to their escrow an increase of $1000 + was added.

You can image the shock and awe the homeowners went through. It was reported that this was in California and run through the HERO (Home Energy Renovation Opportunity) which is also aptly named Renovate America.  Our Homeowner reports that after contacting HERO for help they were told to basically just fight and argue with their bank/escrow company over the issue and that it was the banks fault and not HEROs. PACE loans are not for everyone and it’s extremely important that you do you due diligence.

FAQ’s

Does It Affect My Equity?

Yes! Although we have heard may contractors and even some PACE providers like HERO have made statements that it does not affect your equity it most likely will. While it is not considered an equity loan, more than likely any bank you deal with when it comes to refinancing or selling your home will count it against your equity.  Call your bank and just ask!

What is Subordination and does PACE Subordinate?
Is PACE Tax Deductible?

In  June of 2016 The IRS updated its information on deductible taxes as it relates to PACE Funding. It includes language that clarifies the issue which had been a source of extreme confusion & arguments among several groups that deal with PACE including accountants.

The argument used to be whether or not all or a portion of a property owner’s PACE payment may be deducted from one’s income tax. The IRS clarified that subject to various restrictions, the interest portion of a PACE payment can be treated as a deduction to personal income taxes when applicable.

Here is the actual IRS article.

https://www.irs.gov/taxtopics/tc503.html