The Misconception That Buyers “Don’t Care” About Home Performance

I just had a meeting with a builder EnergyLogic is working with and I felt like I was having a déjà vu moment. Our conversation seemed straight out of the early 1990’s. That being said, the reality is that there continues to be a perception that consumers do not care about home performance.  Here is the punch line of our conversation: “Buyers simply don’t care.  All of our specifications are better from insulation to HVAC and windows.  From what I see they (the buyers) gravitate to lower cost vs. higher performance.  Our Sales staff is selling what we are doing, so why should I continue.”

My concluded thoughts were “Wow – where to start?” As I see it, there are four main issues that need to be addressed from a statement such as the one above.

  1. What is the disconnect between what the data supports vs. what we are seeing in the field?
  2. Do we understand how building and expectations have changed in our market and in our country?
  3. The mentality of “if we offer an option, they will buy it, and that will demonstrate that they want it” works for aesthetic options but does it work for performance/efficiency base options?
  4. We think we are educating buyers, but are we really?

Let’s dive into each of the main issues mentioned above:

1 – What is the disconnect between what the data supports vs. what we are seeing in the field?

Data from all sectors disproves that buyers do not care. For example, The National Association of Home Builders (NAHB) released a study titled What Home Buyers Really Want; an excerpt regarding the purpose of the study states that it is “a study which outlines home buyers’ preferences for home type and size, room layout and design, kitchen and baths, windows and doors, accessibility and outdoor features, electronics and technology in the home, energy-efficiency and choosing a community.”

So what do homeowners want?

“First and foremost, energy-efficiency. Some of the most wanted features involve saving energy, i.e. energy-star rated appliances and windows, and an energy-star rating for the whole home. Nine out of ten buyers would rather buy a home with energy-efficient features and permanently lower utility bills than one without those features that cost 2 % to 3 % less.” Additional key findings of the NAHB study is available here.

According to the U.S. Department of Energy:

  • A typical existing resale home in the United States scores 130 on the HERS® Index system and would have utility costs of approximately $200,000 over a 30-year mortgage.
  • Utility costs for a home that scores 100 on the HERS Index would be 30% less, saving $60,000 in operating cost
  • Utility costs for a home that scores 65 on the HERS Index (which is approximately the average score for new homes in Colorado), would be approximately half, saving $100,000 in operating cost over 30 years.

This data is meaningful to home buyers and has been shown to influence buying decisions.  There are many reasons why homeowners buy the homes that they do – location, quality, price, amenities, and other factors play into those decisions. In the past, energy-efficiency was believed only to have played a small role in particular home-purchase decisions, but studies like the NAHB’s are supporting that in our modern world, energy-efficiency provided by a high-performance home is now in the mix when making a new home-buying decision.

2 – Do we understand how building and expectations have changed in our market and in our country?

Today’s modern consumer expectation has not directly followed the evolutionary path that our buildings have.  For example, the NAHB study also indicates that today’s buyer wants a bigger house on a smaller lot, more bedrooms, basements, garages, luxury master suites, etc. Builders have responded to these desires, but the way homes are being built has also evolved which has shifted buyer’s expectations in an interesting way.

Building materials and systems have changed dramatically over the course of the last 25-30 years. As an example, when I started in the industry working for a regional production builder, my task was to research how to bring new “green environmental” building materials into the production building arena.  These materials included things like I-joist, OSB, and blown fibrous insulation. These building materials are the “norm” found on construction sites today.  Straighter, more dimensionally sound manufactured lumber, blown insulation, and all the other modern construction materials improved the structure and performance of our homes.  Pure and simple, these materials made our homes tighter and more efficient by themselves. We can utilize them in different ways to get even better performance, but the main point is that the expectations of homes have changed because we build differently than we did in the past.

In conclusion, over the course of 25-30 years, people have moved into a new home and been more comfortable, paid lower utility bills, and have begun to associate modern expectations with new home purchases. Most of these expectations are never spoken out loud and many of them have been passed down from generation to generation outside of the influence of the building industry. Now most buyers believe that just because it is new, it will perform according to these unspoken expectations. Durability, efficiency, and especially comfort, are the hallmark of these expectations and are the ones that lead to the increase in builder warranty issues.

I expect to be able to walk from room-to-room and from floor-to-floor in my underwear and be comfortable. If that comfort level is lacking and does not meet my expectations, I will call the warranty department.  These expectations need to be included in the buying and selling process and builders need to double-down on creating and understanding that just because it is new, all homes will not perform equally.  Some new homes perform better than others, but all will perform better than a 1980’s house.  The trick for builders is to demonstrate that my new home is better than the competitors.

3 – The mentality of “if we offer an option, they will buy it, and that will demonstrate that they want it” works for aesthetic options but does it work for performance/efficiency based options?

The mentality of “if we offer an option they will buy it which demonstrates that they want it” mentality works for aesthetic options, but does not work for performance/efficiency-based options.  Granite counters, hardwood floor, additional bedrooms and other aesthetics are options builders can offer. Levels of performance are integral to how a home is constructed that is either there, or is not.  Consumers already expect the home to perform, so a performance option makes no sense and experience has demonstrated over the years that they don’t sell.  When you try to sell efficiency as an upgrade, aren’t you saying that your base house is not as efficient?  Why would a buyer want to buy an inefficient home from you when it appears that efficiency is included with your competitor’s home? What ends up happening is the option is not sold which is interpreted as meaning the public is not interested.

Thrive Home Builders has the best-documented case demonstrating this fact.  They offered their version of a zero-energy home as an option, which resulted in only selling a few of these homes. They then moved to include it as a standard feature, including the additional $30,000 price-tag, and have had no problem selling the new package no problem.  They, therefore, have made zero-energy and indoor air quality standard features of their package offering, which has been the number one differentiator between themselves other market competitors.

4 – We think we are educating buyers, but are we really?

If our sale techniques are not working to sell what we believe to be the best product, is it a correct conclusion that our buyers don’t want what we are offering, or does it say something more about our sales technique? Transitionally, in the Colorado market, builders have given away the performance measures in their homes rather than selling them. I believe that a buyer’s research extends to the following; location, schools, floor plan, and aesthetics.  They visit a specific community so they have already made a location and school decision. Now the salesperson presents and sells the architectural layout and configuration of the home and the aesthetic options.

The majority of buyers don’t ask more than superficial questions about the performance and efficiency of the home. Therefore, it is up to the salesperson to bring it forward in the conversation, because within any given community location, schools and for the most part, floor plans and aesthetic options are the same for most builders.

Here are four things that can help sales personnel bring the conversation forward and arm your prospect with questions to ask your competitors:

1. Research the HERS® Index score.

  • Are you rating your homes? Do you know your average HERS Index score?
  • Can your salesperson explain the HERS Index score in three sentences?
  • Do you have a display that describes the HERS® Index and the actual rating of the model home in the model home?
  • Do you run the HERS Index video on a loop in your home?
  • Are your salespeople challenging your prospects to see if the other builders they are looking at are rating their homes to compare average scores?

2. Create a comparison checklist to hand out to your prospective buyers. Pick four meaningful value-propositions so that buyers can compare you to others. Use those four things to highlight how you will meet their unspoken expectation of comfort and efficiency. Be sure that they leave your model home with an understanding that all new homes are not created equal, even though they might look that way.

Great Homes Builder ______ Builder ______
Average HERS® Index 65
Third-Party Quality Assurance Inspections X
Above Code Compliance X
ENERGY STAR® Certified X

 

3.  Consider partnering with a program. Programs such as ENERGY STAR® not only help to ensure that you are building the high-performance home that you think you are, but offer tremendous resources to help market your homes. ENERGY STAR marketing collateral is offered at no cost.  The ENERGY STAR label has over a 90% recognition rate amongst consumers. Branding your company with a program brings tremendous value and instant recognition. Most builders do a poor job talking about the great things that they build into their homes. If you can be a little better and consistent with your message, you will see success.

4. Consider including an economic message. The cost of ownership is often as equally important to buyers as the cost of buying a house. Monthly utility bills are the largest controllable portion of the cost of ownership. A simple way to estimate what the average utility cost would be is to take the annual cost from the Home Energy Rating Certificate and divide it by 12.  In the case below $1,817/12=$151.42 per month.  In addition, if you take the annual savings number from below and multiply by an average of 30 mortgages you get $49,620 savings.  These are two quick economic messages that talk specifically to the cost of ownership and savings potential.

Another economic message that can be used is to take advantage of an Energy Guaranty. For example, EnergyLogic’s Built-In Savings Guaranty will pay the homeowner the difference between the predicted annual costs plus 10% and the actual cost. In this way, in partnership, we and a builder are stating that we have such confidence in our process of modeling, building, and providing quality assurance that we will stand behind it with a guaranty.

Building a home is not a simple task.  Building a home without a sound, applied building science and systems-thinking approach lead builders toward a path of excessive builder risk.  Therefore, to recoup value from sound building methodologies, builders need to become better marketers and stronger promoters of the great work they do! Many of the tools are right at their fingertips and my hope is that I was able to help bring them into your grasp.

If you have any questions, please email Robby Schwarz.

Robby Schwarz (faked)

Who to Contact:

Robby Schwarz
Principal, Director of Builder Relations

Email Robby
720-838-0677

2018 ENERGY STAR® Sustained Excellence/Partner of the Year

This is our 7th time being named an ENERGY STAR® Partner of the Year – Sustained Excellence Award winner!

As we meet our clients where they are and engage them in the journey of building better homes, this type of recognition continues to energize our focus and the work that we do every day. It also confirms that our work makes a difference in our industry, in the environment, and in the lives of all the people who will live in every house we’ve touched for many years.

Here are just a few of the accomplishments that helped get us across the finish line for 2018’s award:

  • We verified 1,785 ENERGY STAR certified homes in 2017 for a cumulative total of 32,496 homes verified since 2006.
  • We inspected more than 5,927 homes in 2017 for code or program compliance, quality assurance, and builder risk with 30.11% of total inspection work completed for ENERGY STAR requirements.
  • EnergyLogic works with 90 rater partners who have verified 474 of EnergyLogic’s 1,785 ENERGY STAR Certified homes in 2017.
  • We trained and informed national production builders and several regional builders in 2017 on ENERGY STAR’s requirements and sales strategies.
  • We influenced developments to implement ENERGY STAR community-wide standards as an active partner through vetting, development and on-going dialogue to help grow the ENERGY STAR for Homes program.
  • We presented on behalf of the EPA at national meetings.
  • We partnered with ENERGY STAR through the creation process of ENERGY STAR’s Data Collection App.
  • In 2017, EnergyLogic has integrated QA GenieLite software into our internal and external quality assurance program to ensure the quality and consistency of the RESNET® HERS Index verification which is critical to the certification of ENERGY STAR Homes program.

2018 Utility Builder Incentive Programs

2018 Builder Utility Programs

On the front range of Colorado there are three utility builder incentive programs that have been renewed, and in some cases revised, for 2018.

Let’s get acquainted (or reacquainted) with Xcel Energy, Black Hills Energy, and Colorado Springs Utility (CSU) builder incentive programs.  These programs offer incentive payments directly to builders, and in some cases are offsetting the additional cost of implementation of the program by providing companies, such as EnergyLogic, with an administrative payment.

Xcel Energy’s ENERGY STAR® New Homes Program

The Xcel Energy New Homes Program is not really an ENERGY STAR® program, which means that you do not have to build an ENERGY STAR home to qualify for an incentive payment.  The program will not be changing for 2018, although you do not have to certify and label your homes as ENERGY STAR, you do, need to use and adhere to the ENERGY STAR Thermal Enclosure Checklist. In addition to the mandatory checklist requirement, this program offers a tiered rebate incentive payment to builders who build a specific percentage above the code of the jurisdiction in which they are building.  Therefore, a builder may receive a higher incentive payment in a jurisdiction that is on the 2015 IECC than a builder that is building in a jurisdiction that is on the 2009 IECC.  See the reference chart below.

Xcel also offers an incentive payment for ENERGY STAR appliances and if the home is labeled with the ENERGY STAR certification. See the reference chart below.

To learn more about the Xcel incentive program, please click here.

You may also learn more about eligibility requirements by clicking here.

Black Hills Energy New Construction Program

Black Hills Energy is offering a revamped New Construction Incentive Program for 2018.  They are sticking with their basic structure of offering a prescriptive path and a performance path for the program, but there are some significant changes to the prescriptive path which EnergyLogic feels will encourage additional participation.

To qualify for an incentive payment using the prescriptive path a builder must choose from a list of prequalified measures.  The total incentive depends on the measures selected.  New in 2018, a builder can receive an incentive payment for just one item on the list or for multiple items. Basically, the prescriptive program includes a limited a la carte list of items and incentive items that a builder can use to pick and choose to create their own incentive package.  For example, if a builder is installing R-19 batts at the rim joist, they can receive an incentive payment of $0.10 per sq. ft. of the insulated area up to $50.  This may be the only incentive payment the builder chooses, or it can be bundled with other options such as tight and tested ductwork or windows with a U-value of .30 or lower.

Black Hills Energy requires that a HERS rating is performed on the house to document and report on the measures that are implemented on the home. They also offer an administrative payment to companies like EnergyLogic for the time it takes to gather and report information to Black Hills Energy.

Black Hills Energy Performance path is structured similarly to Xcel Energy’s New Homes Program. “The Performance Path allows builders full flexibility to determine the natural gas savings measure they would like to install. The only requirement of the Performance Path is that builders are able to verify that the home has natural gas savings 10% above the local code as verified by a HERS rating. The total incentive in the Performance Path is $900 per qualifying home.”

Black Hills Energy Construction Program information can be found by clicking here.

Colorado Springs Builder Incentive Program

Colorado Springs Utilities (CSU) revamped their builder incentive program in 2017 and have made some additional changes for 2018, making it the simplest and most straight-forward program available on the front range.  CSU decided in 2017 to move away from an ENERGY STAR based program to a HERS Index-based program.  In 2018, the program will begin by offering a $350 incentive payment for any home that achieves a HERS Index of 70.  The incentive also offers an additional $25 per HERS Index point, up to a maximum of $2,100.  For example, a builder could receive $2,100 for building a HERS Zero (a zero on the HERS Index scale – 2,100-350 =1750)/25=70). The lower the HERS Index, the more efficient the home with a HERS zero, which means that annually, the home produces as much energy as it uses.

Incentives for Colorado Springs Builders do not stop there.  An additional $350 is available for builders who certify and label their homes as ENERGY STAR. Therefore, the total possible incentive payment would be $2450. That is an incentive to inspire builders to make a change!

Each of the incentive Programs requires that documentation be submitted to the program in order to receive the incentive payment. Xcel and Black Hills Energy offer an administrative fee of $75  or ( or $100 to companies like EnergyLogic) to gather information, report, and submit on behalf of the builder for the incentive. Black Hills Energy and Colorado Springs Utility require an annual application which must be completed and returned directly from the builder.  Once the application submittal is complete, EnergyLogic will ensure that the builder receives the eligible rebate for each specific home based on the incentive program the builder has chosen.

Colorado Springs Utility Builder Incentive Program documents can be found by clicking here.

If you have any questions, please email Robby Schwarz or Rusty Buick

Robby Schwarz (faked)

Who to Contact:

Robby Schwarz
Principal, Director of Builder Relations

Email Robby
720-838-0677

EnergyLogic, Thrive Home Builders and USGBC Strengthen Their Synergy by Completing the First Two LEED v4 Certified Single-Family Model Homes in Westminster, Colorado

Through the new Department of Energy Zero Energy Ready Home Alternative Compliance Pathway (DOE ZERH ACP), two of Thrive Home Builders Hyland Village model homes achieved LEED Silver certification, raising the bar and bringing something new to a compact, mixed-use development community.

Many builders have completed LEED certifications, but this newest alternative pathway enables production builders to use the Environmental Protection Agency’s ENERGY STAR® and Indoor airPLUS programs, as well as the DOE ZERH program as tools to achieve LEED certification.

As the largest Zero Energy Ready home builder in Colorado, Thrive Home Builders has achieved well-deserved recognition for focusing on areas beyond traditional energy efficiency such as materials and resources, location and transportation, and occupant health and comfort. LEED v4 is a tool that allows Thrive Home Builders to bring its various programs together into one holistic certification that will easily be recognized by consumers, as well as easily identified homes in the Hyland Village community recognized for building above and beyond standard code requirements.

“LEED has made significant inroads in the commercial sector, but has yet to catch up in the single-family home world,” said EnergyLogic’s Principal and Director of Builder Relations, Robby Schwarz. “LEED’s commitment to create a program that is not only meaningful but also is workable in the production home building environment should be applauded. EnergyLogic is pleased to contribute to the development of this new avenue for homes to be certified under the LEED for Homes program.”

“Thrive has been the perfect partner to work with, as their commitment to sustainable construction for their buyers aligns perfectly with what EnergyLogic and the LEED for Homes program are trying to achieve,” said EnergyLogic’s Schwarz.

Thrive Home Builders CEO Gene Meyers relates that Thrive has been excited about the possibility of building LEED-certified homes for a long time. “With this new certification path, the U.S. Green Building Council (USGBC) has paved the way for large-scale adoption of the LEED program in residential home construction, and we intend to lead the way in that adoption.”

USGBC is committed to transforming the way buildings are designed, constructed and operated through LEED — the top third-party verification system for sustainable structures around the world. Every day USGBC is helping to advance spaces that are better for the environment and healthier for us to live, work and play. Through its community network, continuous collaboration with industry experts, market research publications, and LEED professional credentials, USGBC remains a key driving force in the green building sector.

“The USGBC has achieved a remarkably high level of public awareness for the LEED program due to the inroads they’ve made in large-scale commercial construction projects. With this new certification path, there’s now a practical way for production homebuilders like ourselves to certify significant numbers of homes in the program,” said Thrive’s Myers.

“The residential sector is responsible for 21 percent of U.S. carbon dioxide emissions, making it a real contributor to climate change,” said Mahesh Ramanujam, president and CEO of USGBC. “LEED-certified homes like Thrive’s Hyland Village model homes are a measurable and impactful way individuals can make a difference for the environment, and this project serves as an example to the community of the benefits of doing good by living well.”

About EnergyLogic

Berthoud, Colorado-based EnergyLogic is a software and building consulting company that provides expert resources, education, and support to new home builders and energy raters involved in the construction of high‐performance homes. EnergyLogic serves as a resource to other organizations that are influential in creating energy-efficient housing across America and also built the system that analyzes and detects fraud in all of the country’s residential energy ratings. For more information, visit nrglogic.com, and connect on Twitter, Facebook, and LinkedIn.

About Thrive Home Builders

Thrive Home Builders has been a leader in the design and construction of energy-efficient homes since 1993. Founder Gene Myers is recognized as a pioneer in zero energy building, and the company is repeatedly recognized by industry associations for its sustainable construction of single family homes and rowhomes. The company continues to lead the homebuilding industry into the next frontier by building well-crafted homes that promote both energy-efficiency and homeowners’ wellness. Its award-winning, DOE Certified Zero Energy Ready and Zero Energy homes are available throughout Denver and its suburbs. For more information, visit thrivehomebuilders.com.

About the U.S. Green Building Council

The U.S. Green Building Council (USGBC) is committed to a prosperous and sustainable future through cost-efficient and energy-saving green buildings. USGBC works toward its mission of market transformation through its LEED green building program, robust educational offerings, an international network of local community leaders, the annual Greenbuild International Conference & Expo, the Center for Green Schools and advocacy in support of public policy that encourages and enables green buildings and communities. For more information, visit usgbc.org, and connect on Twitter, Facebook and LinkedIn.

For the original version on PRWeb, visit: http://www.prweb.com/releases/2017/03/prweb14158919.htm

EnergyLogic is in the news, helping to support the importance of the ENERGY STAR® program

EnergyLogic was happy to participate in Grace Hood’s Story on the importance of the ENERGY STAR® program. Grace Hood is an Energy and Environment Reporter with Colorado Public Radio. ENERGY STAR is on the list of 49 programs proposed to be cut within the Environmental Protection Agency.

Want An Efficient Colorado Home? The Program That Certifies That May Face Cuts

Denver is ground zero for Colorado’s construction boom, especially when it comes to building to accommodate a swelling population. In a North Denver development called Midtown, construction workers are still putting finishing touches on Energy Star-rated homes, a program that’s existed since 1995.

There’s many elements invisible to most people: special building materials and features help these new homes achieve up to 30 percent energy savings. Steve Eagleburger, who works for an independent company named EnergyLogic, is someone who reviews and certifies some of those unseen elements. Today, he’s checking a home to make sure the attic is insulated.

“This one is not insulated at all,” Eagleburger notes before moving on to the next thing — a checklist of dozens of items.

EnergyLogic CEO Steve Byers said this home won’t get the Energy Star seal of approval until the builder fixes the insulation and any other issues his company has flagged.

“The Energy Star brand has brand recognition on par with Coke and Pepsi,” said Byers said. “This is a very successful program. I don’t know what more one could want out of a government program.”

Read the full Colorado Public Radio story here