So, you’ve decided to purchase new heating or cooling equipment? People do this for all sorts of reasons.

  • They may be building a new house.
  • They may be selling their existing house, and the buyer may have asked that they upgrade the furnace or air conditioner as a condition of the sale.
  • Their existing equipment may be broken and beyond repair.
  • They may be upgrading their heating or cooling system as an investment to reduce their utility bills.

No matter what your reason, choosing a new furnace or central A/C can be an intimidating process. There are nearly 100 different brands, and thousands of different models on the market. There are budget models, fully featured models and high-efficiency models. There are upflow, downflow and horizontal models. How can you make an informed decision without going back to school to get a furnace PhD? To make matters worse, a furnace is a big-ticket item. You can expect to spend anywhere from $1,000 to $5,000 or more by the time your new furnace is installed and working. And, you can expect to enjoy (or resent!) your furnace for the next 25 years or more!

Many people deal with this decision by simply placing all of the choices in someone else’s hands: they open the yellow pages, call the first heating, ventilation and air conditioning (HVAC) contractor in the book, and ask them to replace their furnace. And, provided you find a reputable HVAC contractor on your first call, this can greatly simplify the process. However, this isn’t always the case.

This article provides an overview of how the HVAC market works, and how to identify reputable HVAC contractors.

How the HVAC Market Works

Upgrading or installing a new furnace, air conditioner or other HVAC product is not a do-it-yourself job. These products are substantially more complicated than other home improvement projects, as they require handling high-voltage electricity, plumbing and gas lines, and in some cases venting combustible gases or refrigerants. Replacing or installing HVAC equipment will require the help of a fully qualified and licensed HVAC contractor. A typical process for selecting a contractor might proceed as follows:

  1. You identify and contact three or more HVAC contractors
  2. You set up an appointment with each of them to visit your home. Ask if they give free estimates, because most reputable contractors do not charge for the initial appointment. At the appointment, they will inspect your existing furnace, and collect a wide range of information about your home, including how many windows it has, which direction they face, how thorough is its insulation, etc. The contractor uses all of this information to do a load calculation, which will determine the correct capacity for the furnace that they will install.
  3. You should receive a written estimate from each contractor. Make sure that the estimate breaks down the different charges that the contractor expects to encounter — i.e. how much will the furnace itself cost? How much in labor? Do they recommend work on your home’s ductwork? While it may be tempting to select your contractor based on a low bid alone, tread lightly. Deeper investigation may reveal that the bid is lower because some costs are omitted or because the contractor has no references to indicate happy customers.
  4. If one of the contractors submits a bid that is dramatically different from the other bids, don’t be shy about asking the contractor to explain the difference — they may have noticed something that the other contractors missed.
  5. You may want to have your lawyer look over the contract. They can make sure that the contractor is properly licensed and insured, ensure that warranties are properly spelled out, and generally make sure that you get what you are expecting at the end of the process.

Some HVAC contractors and companies represent a single brand or furnace manufacturer. Hiring one of these contractors has advantages and disadvantages. On the plus side, the contractor has probably gone through specialized training offered by the manufacturer. Should the job end badly, you may have additional leverage, since you may be able to approach the manufacturer with complaints. On the other hand, this contractor will only offer furnaces from this one manufacturer. If you get estimates from contractors that represent a single brand, be sure to get estimates from several contractors, and make sure they are recommending comparable equipment.

What happens if your furnace isn’t working correctly after it is installed? Will the manufacturer send a technician to solve the problem? Typically the answer is no — the manufacturer expects the contractor who installed the furnace to deal with this issue. This is yet another reason that you need to choose your contractor carefully. Having said this, many people have been able to appeal to the manufacturer for redress of a concern — although this may require quite a bit of persistence on your part.

Most HVAC warranties cover parts but do not cover the labor to replace the parts. For this reason, it is important to ask your contractor if he or she offers a labor warranty on a newly installed unit. Most reputable contractors will offer a parts and labor warranty for 1 year following installation. However, past the first year, you typically have to purchase an extended labor warranty (either from the manufacturer or the contractor), because the manufacturer won’t reimburse the contractor for replacing a faulty part.

How to Find a Reputable HVAC Contractor

How should you begin the process of selecting a contractor? For starters, ask your friends and associates for recommendations. Word of mouth is one of the most important forms of advertising for small businesses. Ask your friends if they have used an HVAC contractor in the past and, if so, who they used. Ask if they had a good experience with this company. Contractors are likely to work harder for you if they know that you have a connection to an existing network with whom they are associated. Stories about bad experiences can travel very quickly through business and friend networks, potentially with a real impact to a contractor’s bottom line.

Once you’ve begun interviewing contractors, there are several questions you should ask to ensure they will provide the support you will need in the future.


Has the contractor been in business for several years? Assuming all other criteria are the same, you will probably want to choose a contractor who has established a successful track record over one who hasn’t. An established record provides three benefits:

  1. The likelihood is that the contractor has made his or her clients happy more often than not.
  2. If the contractor has established a track record, they should be happy to provide you with references who can substantiate that record.
  3. While it’s no guarantee, companies that have a strong history are more likely to be in business several years from now. HVAC equipment requires regular maintenance, so it pays to select a contractor with whom you can build a relationship in the future. Consider asking: Does the contractor offer 24-hour emergency service? How about a service agreement plan?


Always request and check multiple references. In a survey of 2,000 homeowners, we found that only 25% of homeowners checked their contractors’ references. However, the people that did check references were happier with the results than the people that didn’t.

A simple phone call will do. Here are some useful questions to ask references:

  • Can they confirm that they hired the contractor in question?
  • Were they happy with the contractor’s work?
  • Did the contractor finish the project on time and on budget?
  • Would they have any hesitation recommending this contractor to someone else?

Beware of references who are unwilling to discuss a contractor, or who give a lukewarm reference. People are understandably reluctant to give a blatantly bad reference about someone that they may work with again in the future.

Contact your local Better Business Bureau and ask them if anyone has filed a complaint about this contractor.


Ask your contractor how they will determine the correct size of the new furnace. A reputable contractor will provide a load calculation which takes into account many factors which affect how much heat your home needs. They will need to visit your home to collect the data to perform this calculation. Be wary of a contractor who does not perform such a calculation, and uses rules of thumb or simply plans to install a new furnace with the same capacity as the old. Your current unit may have been improperly sized years ago, or there may have been energy efficiency improvements, such as new windows, since the old furnace was installed.

There are two reasons that we recommend that you require the contractor to do a Manual J load calculation:

  • You will get correctly sized equipment
  • Very few hacks know how to complete one. This can be a good strategy to weed out contractors that aren’t really up to the job of installing your equipment correctly.


Is the contractor properly licensed? In the United States, HVAC licensing is typically determined at the state rather than the local or national level. However, not all states require HVAC contractors to be licensed. Your state may have a License Board, a Contractors Board, or some other department (such as the Department of Revenue) may have jurisdiction. The important point is to track down the department responsible for licensing, find out whether your contractor needs to be licensed, and then find out whether they have the appropriate license.

Also, you should check to see whether your contractor is properly insured. A contractor should carry general liability insurance, which protects both the homeowner and the contractor in case of damage or injury caused to the contractor or the home. This is important, because you may end up having to pay for any damage inflicted to your house or property during the installation if the contractor is uninsured. And if an uninsured contractor is injured while working on your property, you as the homeowner could be found liable.

A contractor should also have worker’s compensation, or worker’s comp, insurance for all employees. This covers employees in case of a workplace injury, protects the contractor, and protects you, the homeowner, against liability if an employee of your contractor is injured while working on your home.

Some companies also promote their industry certifications as evidence of their commitment to service. Technicians certified through programs such as NATE (North American Technician Excellence), for example, have invested training time and money for their education and staying on top of the latest industry information.


Do you need to get a permit from the city or town in which you live to complete this work? Call the town clerk in your town or city and ask if you will need a permit for the work you need done.

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