Are You Buying a New AC Unit? – Check Their Contractors License, You Need to Look Deeper Than You Thought You Did!
I’ve owned Magic Touch Mechanical in Mesa, AZ for over twenty-years, since I founded the company in 1997. I am the Qualifying Partyfor all three of the Arizona contractor’s licenses Magic Touch operates under and have been since the beginning. In other words, the buck stops with me personally when it comes to everyone in the company’s workmanship and contracts.
What most homeowners don’t realize is that the Qualifying Party for a contractor’s license in AZ not only may notbe the owner of the company, they can actually be any employee of the company.
This loophole means; not only is it perfectly legal for company owners, managers, and shareholders, to have absolutely no experience in the trade, they are not even the ultimate responsible party for the workmanship the company puts out.
The reason I call this rule a loophole is, this has led to companies “renting” someone else’s contracting license. The qualifying party (who does not even need to be a full-time employee) can leave the company (or be terminated) at any time. The company is then given a grace period before needing to go rent another qualifying party.
Why You Should Care Who Holds the Contractor’s License in an Air Conditioning Company
A few days ago, one of our employees gave a perspective new client a proposal to replace an old split heat pump system at his request. After reviewing our price book, the customer pointed to a particular model and proceeded to pull out estimates from three other competitive companies here in Phoenix.
One of the quotes he received was a whopping $2,000 less than all the other quotes he had gotten! The quote looked very professional, was computer generated, and not only listed all the same model numbers everyone else had…they were also “throwing in” a longer warranty and maintenance plan than everyone else.
What the customer was not aware of (and we couldn’t share as it would come across as unprofessional and disparaging), was that this company’s currentcontracting license had been obtained only three weeks prior. In the company’s eight-year history, this company was already on its 4thlicense holder for air conditioning and heating. The three prior qualifying parties licenses the company was doing business under had all left the company – a sign that the company is unstable to put it kindly.
Don’t get me wrong, having run a contracting business in Arizona for the last twenty-years, I can tell you firsthand it’s not easy. There’s good reason home services businesses have the second highest failure rate of any business category after restaurants. I certainly don’t wish failure on this company, there’s more than enough work to go around in Phoenix which is now the 5thlargest city in the U.S., and thelargest HVAC market. I do however feel badly for the homeowners who choose these companies and wind up holding the bag, often losing way more money than had they done their due diligence. When a company’s price is that far below fair market value, its usually out of desperation. While you may think that’s to your advantage as the customer, and you stand to save thousands, usually what happens is you wind up with an AC system riddled with problems that breaks down regularly and doesn’t perform as it should. Then, when the company is bankrupt and out of business, you are far down on the list of people that can’t collect on the promises and warranties.
Luckily, in this case, the customer did realize something was amiss and chose Magic Touch Mechanical!
How Can You Protect Yourself?
Review the AZ Registrar of Contractors website and really examine all of the details of the contractor’s licenses. If you see multiple Qualifying Parties over the years, this is usually a red flag and you should proceed with caution. Remember, this is a perfectly legal practice but a sign that something is unstable about the company.
Online reviews alone are not enough! Yes, they matter, but they are not an indication that the company is financially or structurally sound. Reviews unfortunately can also be manipulated, and even purchased on some websites. In the case of this company, they look great at first glance based on review scores alone but you have to dig deeper than that.
Here’s a list of resources to check out before choosing an air conditioning contractor in Arizona
Arizona Registrar of Contractors Website
- What year were they first licensed? Do they have history demonstrating the business will still be in business for the length of your warranties?
- Is one of the business owners the responsible qualifying party? In other words, is it their name on the line?
- Is there a history of too many qualifying parties? In other words, are they renting licenses?
- Are there any complaints on their license? Note this history is only public for two years.
Better Business Bureau
- What year were they first accredited?
- Do the people listed as business owners/managers names match those listed on their contractor’s license?
- Are there an unusual number of complaints compared to the size of the company? Note: Air conditioning companies receive more complaints than every other category according to the BBB. There are two sides to every story, so it could simply be a misunderstanding. Concentrate on the quantity of complaints in the last three years – if there are dozens, it’s another red flag.
Say what you will about Angie’s List paid membership model, one thing they have gotten right is the fact that it would be difficult to manipulate their reviews (unlike other sites that are completely anonymous and are easily faked). Angie’s List has been around for twenty-years, any company that has been around a long time should have hundreds of reviews – read them, don’t just look at the overall grades.
- Do they have a good number of reviews?
- Have they won any Super Service Awards?
Google is Your Friend
Google the company name and go several pages deep – read all the good and bad things you can find about the company you are considering to install your new HVAC equipment. Keep in mind that internet trolls are a nuisance and some are even scam artists that use internet reviews in an attempt to blackmail companies. See what the majority has to say about a company.
On the subject of reviews; look for patterns and similarities in reviews (especially positive reviews). I won’t name them because I’m not the air conditioning industry police, but I know for a fact several companies right here in my market that have hundreds of fake positive reviews. At a quick glance these companies look great, but unfortunately, it’s not difficult to purchase reviews. In the case above, the company’s reviews look great and had the customer not dug deeper, he very well may have chosen a company that most likely won’t even be around next summer.
This is just a small sampling of the due diligence you should do to protect yourself before handing over thousands of dollars to an air conditioning company when shopping for a new AC unit. Of course, if you are within about 30-miles of Mesa, AZ., you’ve already stumbled across one of the top-rated air conditioning company’s in the country! We’ve been here for twenty years under the same HVAC licenses and are well set up to be here for the next twenty!