(First and foremost, I want you to gather your last two years worth of HVAC service tickets and hold onto them. We will go over them in a moment.)
Your heating and cooling system cuts on and off over 25,000 times each year, and in a typical Richmond Summer, your air conditioner runs the equivalent of your car driving 150,000 miles. And yet, you are surprised every single time it breaks down on you.
You call a service company, they send a technician out, he assesses the system, diagnoses the repair, gives you the repair cost, and then asks you the ultimate question that you were hoping you would go your whole life without ever hearing, “Would you like for me to repair it, or would you like to replace it?
("Why is he doing this to me? Why do I need to make this decision now? I have kids in college, and I am about to go on vacation, I cannot think of this now. I will take the easy way out, the cheapest way. After all, it’s just a heating and cooling system!")
Let’s face it; nobody likes to be in that position. And you're right, it is just a heating and cooling system; it is not that exciting. It doesn’t play our favorite songs at a touch of a button. You can’t go 0-60 in 6 seconds with the top down. Or hit a 300-yard drive off the tee into the wind with it. And it doesn’t even have a 50” high-def screen with digital Dolby surround sound. It is just a heating and cooling system. Or is it?
We overlook the true value that our heating and cooling system provides us on a daily basis. We don’t complain about our heating and cooling system when it IS working. We relish it when coming in from a 95-degree day. Your heating and cooling system is probably the most expensive equipment in your home. Plus, it’s responsible for keeping the temperature constant. It also supplies your home with “air exchanges”, like breaths for you and I, to keep the air fresh, moving, and healthy. And it is required to do all of these functions simultaneously. Winter or summer. Day or night. Automatically, all year long, and we just expect it to do it forever.
So, you are at that point of decision; Repair or replace? When weighing the costs and benefits of repairing or replacing older equipment with more efficient HVAC equipment, keep the following points in mind: 1) Age of Equipment. 2) Fuel Costs. 3) Indoor Air Quality. 4) Length in Home 5) Return on Investment.
One of the most direct points to consider regarding replacement of your HVAC system is simply its age. Do you have a system that is more than 10 years old? Even if it still runs dependably, you still might be better off with a new one. The physical life of HVAC equipment, similar to personal computers, can often be longer than its economic life. Plus, older heat exchangers are more likely to develop cracks or rust holes that could cause an unhealthy environment for you
As energy supplies dwindle and production costs and demand rise, the cost of electricity and gas are bound to go up per unit. Fuel costs tend to go up more than down over the long run. I know, tell me something I don’t know. As fuel costs go up, are electricity and gas bills from cooling and heating straining your monthly budget? Knowing that we, as homeowners cannot control the cost of fuel, we can however control the amount of kilowatts used within our home. When looking at a repair in comparison to a replacement option, you must weigh the amount of current Kw’s used per month/year with the existing equipment against the potential energy usage reduction a newer, more efficient system could provide. A low-cost repair of $300 on an 8 SEER system will not provide similar energy savings from a new 13 SEER minimum system. Also, the monthly savings continue after you reach the “break even” or “pay back” period on the new equipment.
Dirt is the number one cause of system failure. Now you know the reason why we tell you to change your filter once a month. Your heating cooling system is responsible for circulating the air within your home. Today’s homes are built tighter than ever before. Since 1990, the Environmental Protection Agency (EPA) has consistently ranked indoor air pollution as one of the top five environmental risks to public health. The indoor air quality in your home today directly affects your heath, comfort, productivity, and overall quality of life. Temperature and humidity play a role in our health because levels that are too high or too low can contribute to illness as well as discomfort. Air enters your home each time you open your doors or windows. With that air comes dust, dirt, pollen, smog, and other parts of the "outside" that you would prefer to keep there. A minor 10% leak in your HVAC system's ductwork can introduce pollutants into the living environment, especially if the ductwork is located in a damp and musty crawl space or in a hot, dusty attic. A repair to an existing system only perpetuates an under-performing air system, which is responsible for the overall health of everyone inside. If you notice problems with in your home now, i.e. sneezing, constant headaches, stuffy noses, dry throat and nasal passages, hot and colds spots, etc, then consider the investment to a newer system for your health and comfort. And, make sure that your ductwork is inspected and, if any leaks are apparent, then get them sealed immediately.
Do we ever really know how long we are planning to stay in our homes? In today’s housing market, I am staying put. Of course, my wife has been planning on moving for the last five years. The average repair cost for a compressor is around $1,000. After, you have weighed the age of the system against the repair, and then you want to determine your residence expectancy, and Repair Cost Ratio. Take those service tickets that I told you to get, if you do not have them then try and estimate in total dollars how much you have spent on HVAC service repairs over the last two years and how many service calls you have made. Now, add up the total cost of all of the repairs, and then divide them by 24 months (Or the duration of months from your first ticket). For example, if you have 5 service calls that total $1,200 in total service dollars spent in the last two years, then you take the $1,200 and divide by 24 months and you see that your Repair Cost Ratio is $50/month. Now, I want you to simply take the duration of 24 months and divide that by the number of service tickets (5) or calls. This number indicates on your own historical averages, that you will make a repair once every 4.8 months. This information is important to know when making the decision to make the repair today, because if you do then, you will know that you will be paying an additional $50 a month until the next repair, and that the next repair is coming less than 5 months from now. Lastly, will you be in the house for another two years? Five years? Take your Repair Cost Ratio and add the extra expense of today’s repair during that time frame. How does the picture look?
Most HVAC contractors use the term “payback” when talking to a homeowner about a new heating and cooling system. The length of time in months and/or years it will take for a new system to pay for itself in energy savings. Most consumers do not have everyday thinking about payback while, on the other hand, we are exposed to Return on Investment information, from our banks, investment portfolios, and the news. Simply put it is the money returned by an investment, divided by the investment amount. For example, if you invest $100 and receive $3 interest, then the ROI is 3%. In HVAC terms, the investment is of course the total amount of a new system, and the estimated annual energy savings represents the interest or return. For instance, if you were to invest $6,500 in a passbook savings account you might get 2-3% return, or a 3-5% return in a CD. But these returns are taxable! That means that the net return on investment will be the initial ROI less the customer’s tax rate. But if you invest the same $6,500 into a new system replacement price, and depending upon the weather conditions, utility rates, and customer usage the annual energy savings might be $350. Then the ROI would be $350 divided by $6,500, which would yield a 5.3% return. The ROI is all net to the customer. Pretty darn good.
When consumers decide to buy toaster ovens, televisions and DVD players, the process is typically to go out, check prices and buy the product with the best price. Price shopping makes the purchase easy. The price tells us which manufacturer to choose. But, when it comes to buying a heating and cooling system, price may get you into deep trouble. You don’t need the weatherman to tell you that it will soon be hot in Richmond. And it feels great to come inside from summer’s heat and feel the cool, dry air from your air conditioner. But what will you do when it breaks? You can only take off so many clothes before it is considered illegal. The unfortunate thing is that an air conditioner usually “breaks” when it is running the hardest, or when you need it most. And on those 90-degree days, these same homeowners would gladly give their right arm for air conditioning NOW! And, it is at this moment, as the house begins to heat up, and the extra humidity swirls around you, and you have the technician salivating at ripping open your system, a homeowner needs to be as calm and cautious, as ever, before they make that decision (hopefully a good one!) that will last for the next 1 to 15 years. For more information, take our “Repairvs. Replace Quiz”. You will not believe your eyes.
