Choosing a Contractor

Choosing the right furnace contractor is crucial

Contractors say the first step in buying a new furnace is choosing the contractor who'll install it. Deciding between brands and models is a second step. Contractor brand choices are ideally based on the quality and reliability of the products, but may also be influenced by manufacturer incentives like cruises or cash rebates. All but one contractor we interviewed said finding a qualified contractor to install the furnace is more important than the specific brand. The dissenter said the two considerations are equally important.

If you don't already have referrals for several contractors, the starting points are your local gas utility and local or state government. Some gas companies and government agencies certify contractors or maintain a referral list. Qualifications vary by company and jurisdiction. Call or check the websites of your local organizations for more information. While you're doing that, you can also find out about local rebates. Many utilities and states offer rebates or tax credits for buying furnaces (and other appliances) that meet specified energy efficiency standards. For example, New Jersey offers a $300 rebate if you buy a 90% AFUE or greater furnace (and if you meet certain conditions). In addition to rebates, many public or regulated organizations also offer low-cost financing and heating assistance grants to low-income families.

If you're considering buying a furnace from a big box store such as The Home Depot, find out how the store/chain screens its installers and which party is responsible for the installation warranty. We didn't find any sources that recommend buying from a big box store.

Contractors agree that referrals and references are the most important selection criterion. They recommend calling references, preferably people who live near you. Otherwise, references could be a contractor's mother or best friend. As with any service business, you can check several neutral resources to identify a public record of testimonials and complaints. Those include the Better Business Bureau, Angie's List and regional professional associations (such as a homebuilders' association). Contractors should be licensed (if your state does that), bonded and insured.

Make sure that the contractor is certified by the North American Technician Excellence association (NATE). You can also check manufacturers' websites for premium installers who have met certain requirements and additional training designated by the manufacturer.

When you've narrowed your choices, contractors mention several other important screening tools. Ask how long the company has been in business. Find out how many years of experience their technicians have installing furnaces, and how many technicians they employ. An average of five to ten years experience is recommended. One contractor suggests that marketing materials are another indication of stability. At the least, a professional brochure implies that a contractor is making a long-term investment in the business.

Several contractors stress post-sale considerations. They are critical if you choose to buy a service contract, but also potentially important if you have a warranted hardware or installation problem. Some contractors offer some form of 24-hour service and many promise same-day service for a furnace emergency (no heat).

Experts say you should solicit free estimates from three furnace contractors. Each contractor should inspect your current furnace, including insulation, vent condition and vent configuration. Contractors determine the amount of BTU (British Thermal Units) your home will need by completing a Manual J Spreadsheet with computer software. This calculation takes into account the size of your home and its condition, as well as the climate where you live. The resulting figure (usually between 25,000 and 150,000 BTU) determines the furnace size. This is important, since an undersized furnace will not heat properly, and an oversized furnace, "besides raising purchase cost, will result in weaker energy efficiency due to excessive on-off cycling," according to the Department of Energy. If your insulation and/or windows have been upgraded since the last furnace was installed, chances are that you could get by with a much less powerful (and less expensive) furnace. A recent New Jersey study shows that most furnaces are significantly oversized, according to the state.

A good contractor will evaluate your entire heating system, and make appropriate recommendations, starting with whether to repair or replace the existing furnace. House and duct insulation, window upgrades and other energy efficiency improvements could make a bigger difference than a new furnace. Alex Walter, owner of Alex Walter Furnaces, A/C, & More in Aurora, Colorado, suggests that buyers of new homes bring in an HVAC contractor to inspect heating and cooling systems in addition to hiring a general inspector.

The Air Conditioning Contractors of America (ACCA) has established new standards for furnace installation. Some tips for consumers include making sure that the contractor furnishes proof of insurance, is knowledgeable about state and local building codes and ensures no more than 20% total duct leakage. The new guidelines are necessary because "there isn't a recognized level of quality installation across the entire industry," says Glenn Hourahan, vice president of research and technology at ACCA.

Contractors insist that prices are commensurate with the quality of service. Even within a region, we found that prices range from $2,100 to $6,000 for the same-brand furnace in an average sized (2,000 square feet) house. In any urban area, you'll have no trouble finding competing installers that sell the same furnace brands. Expect to pay less for a Goodman (Goodman, Janitrol and Amana brands) furnace than other brands. Contractors say they are cheaper to buy (even those who defend the brand), and some maintain that installation costs may also be lower because Goodman is less selective about its authorized installers than other manufacturers are.

Hardware warranties may vary on paper, but in reality, contractors say they are administered pretty much the same way by most brands. Installation warranties vary up to lifetime in length. Service contracts also vary, and are not normally included in the purchase price. Some include parts, labor and maintenance, while others just cover labor or maintenance. Experts recommend annual furnace maintenance. Maintenance-only contracts commonly cost about $100 per year, which is a little cheaper than paying per service. So, with the exception of the installation warranty, service after the sale isn't usually much of a factor in furnace/installation pricing.

Manufacturers refuse to disclose estimated installed costs. Experts agree that prices vary by region, and possibly even within a region. If you live in a development where multiple houses have the same floor plan, your neighbors may be the most accurate guide to good pricing. Make sure bids include all costs, including any government fees (such as permits) and disposal of the old furnace unit.