KGCI: Real Estate on Air - What You Need to Know About Mechanicals

Episode Date: August 8, 2024

And welcome to the nerdy agent podcast business tip of the week. It's the time we talk about business tips. I didn't do my business, you can't. You can't. You're the host, I'm the host now. I'm your host, Josh Pederson. My brother and fellow nerd AJ, we're glad you here. Today we're going to continue our audio showing series.

We're talking about the key components of house that we focus on when we do showings, what we're looking for, how much things cost. We're just trying to do our best to educate you on different things that you'll see within a showings so that you can make sure you're going to do the best job possible for your clients. We'll be focusing this episode on mechanicals, which is one thing I've honestly said when I first started in the industry, I thought it was one of the most important things to highlight. Because when I did showings with agents outside of AJ before his previous life, when I was looking for houses, I was shocked to find out then I became an agent that no one ever was like,

hey, here's a furnace, here's how it works, here's how old it is, here's how much it costs to replace. Because personally, I've found that mechanicals can be something that cost you a lot of money and should be something that you are evaluating when you're looking at the price of a house because it can swing it $15,000, but doesn't typically align with the amount of energy placed on them by agents. So with that long intro out of the way, can you walk us through, A.J., a few of the key things that are important to know about them.

What are the key mechanical systems, how much they cost? Why don't we just start with furnaces and go for that? Well, I mean one power move you can do when you're first meeting with a client. This could be a lead. This could be anybody. You're on your first show in. As you could say, let's walk in the house. How about you guys walk around up here?

I'm just going to go down to the utility room and check out the mechanicals. And they are like, what do you mean? It's like, well, you're going to know best about what you think about the layout, the aesthetic, the size, the rooms, kind of how everything works. I'm going to be better at telling you what's going to cost you money now and in the future. And the furnace, air conditioner, and water heater are expensive items. and if they're older, I want to be able to tell you kind of their condition, how long we could expect a typical one to last and all those sorts of things. So what I do when I'm looking at a furnace,

and oftentimes they get down there afterwards and they're looking at it with me. The easiest thing with a furnace, and for those of you that don't live in cold weather states, you don't typically... Yeah, they have heat pumps. They also have two ACs a lot of times. Air handlers. So still similar components.

Yeah. A furnace, the first thing I told Luke when he was getting started is, if you want to sound smart about houses, just look and see if it's high efficiency or not high efficiency. How you know that is a high efficiency furnace has two white PVC pipes coming out of it. One's intaking air into the system. One is blowing the exhaust air out of the system. Because they're so small, your efficiency is a lot greater.

There's a lot less waste. And they're cheaper to run, in theory, on a monthly basis, right? So a low efficiency or standard efficiency is typically 80% here. Those high efficiency ones are 93 to 97%. A standard efficiency furnace has a larger B vent coming on to the top of it, which is the exhaust. And you'll notice the difference on how they're constructed because the front of a standard efficiency furnace has slots in it. There's a fresh air intake pipe that people don't really know what those are. They're bringing air from outside.

It's getting sucked into the front of that furnace. and then it's exhausting through the roof line. Whereas a high-efficiency furnace is actually direct intaking through one of those PVC pipes, air outside, burning it up, heating your house, cooling your house, whatever, and then exhausting out the exhaust pipe on the outside. So those are the two differences between high efficiency and standard efficiency.

We got some fans. They love furnaces. I love that. So a standard efficiency furnace, depending on the size of your house, is probably going to run you anywhere from like $4,000 to $6,000. The high-efficiency ones, especially as the house gets bigger,

can get more expensive than that. The one cool thing about a high-efficiency furnace, if you get the right one, like a three-stage, is they will actually run the fan at three different speeds. And so as you're getting closer to your preferred temperature, they will slow down the fan. Not only does this, again, talk about the name, high-efficiency, make them more efficient.

It also makes them less with less, like, noise. So the fan doesn't blow as hard. So you have less air being blown out, less air being sucked into your returns. They just run a little bit better. The one caveat on high efficiency furnaces is because they don't have a lot of waste, they create a lot of water. So you end up with a lot of water in your unit.

Your condensate line will run a lot more water out of it. Or if you have a pump, it'll pump a lot more water. So something to look out for, you know, as you're looking at your own furnace, but also at a house with one of those furnaces, are all of those components operating properly? Yep. And then you said age. One of the important things about age. So high efficiency furnaces are sometimes harder to figure out.

If they don't have the serial number easily accessible, but one trick, most furnaces have a serial number on the inside of the unit. So it'll say serial pound sign. The third and the fourth number are typically the year that the unit was manufactured. That's not always the case with every unit. So you could honestly just easily Google Goodman, Lennox, whatever brand that furnace is and say serial number, whatever, and it'll probably spit out the age of that unit. for you. Yep. I usually try to eyeball a furnace and just say like new middle of life, closer to end of life, just to at least give people a rough sense that I can't open it up and look at that number. But these are all good points. The other thing, if you want to like

cheat while you're trying to figure out the high efficiency, low efficiency thing, most furnishes have got a yellow sticker on them somewhere that says a number on it. 80 is low efficiency. 93 or higher is high efficiency. So if you want to be like, I'm looking at the pipes and I can't quite figure it out, but I want to make sure I use this point. Look at the number on there and see what you can say. Yeah, and you could run into ones that are kind of a hybrid too where they direct intake through like a smaller hole on the top and then they exhaust outside. So there are some, you know, caveats to that.

But yeah, typically just looking at the pipes, if you can figure that out, is good. But I do the same thing where I'll say, yeah, this looks like it's probably eight to 10 years old even before I open it up and look at it. Yeah. But it's important to note, he said $4,000 to $6,000 or more. So this is an important piece of equipment that if you have the same house, but one has got a brand new furnace and one has a super old furnace

which if there's an old furnace there's probably an old AC too you might be talking about $10,000 difference in terms of the value of the property but we don't always assign that when we're talking about negotiations yeah and I think when you talk about ACs

like it's kind of the same sort of exercise Yep one thing here in Minnesota that makes things tricky is if we are below I want to say 60 degrees you can damage your air conditioning unit by running it so you may not even know other than a seller's disclosure

telling you that it works if it actually does work when you get to a temperature when it is over 60 degrees, which there's four or five months when people are closing on homes here in Minnesota when we don't have that temperature. So same thing. You can look at the serial number. It'll kind of tell you. One other trick that I use for any appliance or any permit is in Minnesota, you can type in city name, e-permit lookup into Google, click the link, type the address in.

A lot of cities have adopted an e-permit system, and you will see when that furnace was actually installed, who installed it, how it was inspected, all that kind of stuff is right there online for you in a lot of cities in Minnesota. Do we want to talk a little bit about alternative heating cooling options? Boilers? We can. I mean, quickly, like boilers, like sometimes we have very, very old boilers here in Minnesota.

I will say there are a lot simpler than a furnace is because all they do is heat. So your furnace is handling not only the heating for your house, but it's also running the fan that's going to use the air conditioning coils to cool your house. So they have a lot more components inside of them and they're a lot more complex. And so they can break and they can be very expensive to even fix if they're broken. I have a three year old high efficiency furnace that's been fixed twice already. Five year old now. But at three years, I had fixed it twice. So you can run into these problems. Like I said, because there's a lot of water in the unit. You can have gascets go bad. You can have mine shook too much. It was running too much. And a wire came loose on the

motherboard and zapped the whole thing. So it had to get all replaced. They're more complex as things like cars. As they get more complex, they get more expensive to fix and stupid stuff can happen. Boilers, I've seen boilers 100 years old in houses that still work fine. They literally are just heating a flame and heating up water that's running through your house. I think they heat home significantly more efficiently than a furnace ever could. But again, in Minnesota, we have 100.

degrees today and in six months it's going to be zero. So having a unit that does heating and cooling kind of all together is is a really good way to, you know, heat and cool your home. Yeah, I think the one thing to look for, if you're looking at older houses that have boilers, because most of the time boilers aren't going to likely be found in a newer house unless you're doing something unique with an addition or whatever. Yep. So if you're finding like a 1915 house and you go downstairs and you see a boiler, first thing you should put into your brain is, okay, I need to make sure I look for air conditioning because oftentimes, even if someone's hiding their window units that they're taking out for the showing or whatever, you're not going to tend to see ACs,

to A.J's point, because a boiler is pumping just heat, they have to do a separate system that would run air conditioning through that house. So you have to then put ductwork in your house to do that. And so at certain price points, it just doesn't make sense to add air conditioning when you've got a boiler from an old house. So just something to look for if you haven't, you know, we would advise due your diligence on the front end to check if a house has AC, before doing a showing. But if you're there and you're having that, oh, shoot, moment of, does this house have AC or not? And you see a boiler, make sure you're then scoping out to make sure there's AC in that house.

The last thing that you talked about was water heaters. Yep. So the one caveat on furnace and AC versus water heaters that I will say, oftentimes in inspections or when buyers move in, they're like, this furnace is super old. Should I replace it? My comment is almost always, you're going to save a lot of money by buying three space heaters for your house. and waiting until it totally putters out. Now, if it's not safe, that's obviously different. Yep.

If it's spitting out CO. But if you're just concerned because it's old, I would not just replace it just because you're going to want to wait until it actually no longer functions anymore. A water heater is a little bit different than that because it holds 40, 50, 60, 70, 80 gallons. So think about a gallon of milk times 40, 60, 70, or 80 in this water heater. Well, what can happen sometimes, especially on older water heaters, is they can start to rust and fill up with sediment, and the bottom of that water heater can actually rust through and start to leak. And in a worst case scenario, you can leak really, really badly, and you can have water all over your basement. So if you have an unfinished basement, not great to have water everywhere, but not the end of the world.

It can go down the floor drain. You can mop it up, whatever. But if you have a nicely finished basement, I would really not encourage you to wait until that thing, falls out the bottom and there's water everywhere. Yep. I would think about if you start hearing noise or sediment build up or those kinds of things in that water heater, you might want to think about swapping that out. Those are typically in the $12 to $1,800 range for a standard one, maybe $2,000 for a power

vented high efficiency unit. So something that you want to consider and advise your clients on. But lower costs, too, compared to furnace and AC as well in the front end. And they last about half as long on average, right? So 10 years, probably in a furnace, you could say. you know 15 to 20 hopefully but we've replaced eight year old furnaces 10 year old furnaces like I said mine broke after three years so like stuff can happen yep absolutely and that's all we've got for you today on the nerdy agent podcast business tip of the week it's the business tip

of the week bye bye now