Last month in this space, I reviewed a series of market projections for 2014 from Harvard University as well as the industry’s leading associations.
Selling green remodeling in today's market
Is it possible to sell green remodeling in a down market? What are the challenges and opportunities presented by sustainability and energy efficiency? Professional Remodeler’s Tom Swartz talked to remodelers Matt Hoots and Todd Lincoln about how they do it.
Tom Swartz: Sometimes I think the term is overused, so how do you define green remodeling?
Matt Hoots: You’re correct. Green is overused. It’s something that people use without knowing exactly what it means.
Green is being a good steward of your resources, whether financial or environmental. When applied to construction ... just apply any of the re- words: reduce, reuse, recycle. You can apply it to your business and be a green contractor.
Our clients contact us because we can offer a more sustainable project.
Swartz: When you say “offer a more sustainable project,” what do you mean?
Hoots: It really depends on what the client’s asking for. We offer all of our clients the same thing, but we only sell them on the points that are important to them. For instance, every one of our clients, we are going to apply methods that make their indoor air quality better, we’re also going to make their homes more energy efficient.
Some of them may not even care about that, but we do it anyways. We’re part of many rebate programs … so some people come to us specifically for renewable energy. Some people come to us to reduce their energy bills. Some come to us because they want to make their homes more comfortable, and others have allergy problems.
It really depends what the state of their house is. We use things that don’t necessarily have a higher impact on the cost, but just make for a healthier living environment. The clients don’t have a choice — it’s just something that we offer automatically because it doesn’t necessarily cost more.
Swartz: [Matt] said it doesn’t necessarily cost more. It sounds to me like it does. Is there a cost increase when using green procedures?
Todd Lincoln: I don’t typically see it as an additional cost. I think most of our clients come to us with a predetermined set of wants that they have and are willing to pay.
Hoots: There are some things that do cost more, but there are many things that cost less. We start with the things that cost less. On a large remodeling project, we’re able to recycle and grind up all the wood that’s left over on the jobsite and use it for erosion control.
On one project, we’re able to save — between dump fees and erosion control costs — $5,000 to $10,000, just by recycling some of the waste that we have on the jobsite into the ground. Advanced framing techniques — a way of using less wood and increasing the amount of insulation. If you’re using less wood, you’re saving money on the cost of materials.
These are ways that are standard on our jobsites that save clients money over typical construction. Waste is very high on jobsites. If you can eliminate waste, you can have savings.
Swartz: Today, home appraisals are tougher than ever. Have you had any experience with getting the appraisers to recognize or give weight to green features of a house?
Lincoln: I haven’t had that experience. My customers are typically cash customers, so they’re not relying on banks to finance their projects. I am getting ready to do some new homes and that’s a concern for me.
Hoots: Usually when you’re doing green, it’s going to be on a higher-end house anyways. Most of our clients … they’re bringing so much money to the table, the bank doesn’t really care.
For people that are just doing spec houses or tract housing, it is an issue for appraisals. That’s why here in Georgia, what we’ve done is work with our local MLS to get them to list green on the multiple listing services. So now we have data we can take back to the banks, showing that green houses sell closer to their asking price and also sell faster.
Swartz: When you are dealing with a customer, how does green remodeling come up? Is it the customer asking you or is it you presenting the green options, features and benefits?
Lincoln: Green is not really a word that I use a lot. We talk more about sustainability and responsibility. Our customers are typically already buying into that.
I’m in a pretty unique market. Our green building council here, they’ve marketed themselves well.
If the conversation of green really comes up, it’s typically coming from the customer side. Their concern is about energy usually. That’s where the green subject will come up.
Hoots: We’ve been marketing ourselves as the green remodeler in Atlanta for about 12 years now. We are top-of-mind when someone is looking for green.
The best way to actually make sustainable construction work is to make it part of the culture of the company. The culture of the company can be seen in all aspects — articles that you write, interviews that you’re a part of, case studies that you do. A discerning clientele can see right through it. They’ll know if you’re the real thing or not.
If you are going to claim to offer these solutions, there’s a lot of education, there’s a huge learning curve. It’s a different way of thinking.
Swartz: Does it take special training for sales, production and trade contractors so everyone’s on the same page?
Hoots: Yes and no. If you don’t hire correctly in the first place … that’s where we’ve made the mistake in the past. If it’s not part of their current thought process or lifestyle, or if they don’t even believe in it, it’s not going to work at all. You have to hire correctly in the first place. There’s training for people that are willing to be trained and capable of being trained.
Lincoln: What it all boils down to is a mindset. You can all have the education and everything else that seems relevant to this, but if you don’t live the lifestyle … those people are not really approachable when it comes to green. They just don’t get it.
Swartz: Are there any other objections [to buying green remodeling] besides price?
Lincoln: Not typically that we’re seeing. I think that some of the consumers have already researched it so much, they pretty much know what they want when we get to them.
Hoots: People always assume it’s going to cost more, but once you show them what the costs actually are, it’s not really that difficult. Usually, those costs can be broken up by component, and I can take that one component and show you what the return on investment is going to be. What we do is give our clients options and show them what the payback will be.
Swartz: I like that. You’re not telling them what to do. They’re making the decision themselves based on the information you’re giving them. Now let’s talk about the marketing part. What’s your typical customer — and I’m asking this because I have to define who I’m going to market to.
Hoots: Everybody is willing to go green now. Everybody wants to save money. You have to ask the right questions of the right people. You have to understand their belief system and phrase the questions around their personal philosophy. For some people, you say “Do you want to reduce your carbon footprint?” while for some people you ask them if they want — for the same solution — to reduce their tax burden. If you use the same language for everybody, it’s not going to work.
But I want to take a step back from that. If a contractor wants to start marketing these options for his clients, they really, instead of spending a lot of money on their message, they’ve got to practice what they preach first. If you haven’t done these things on your personal house, they’re not going to believe its something you believe in.
Swartz: Are there tax credits available and how do you use them as a selling point?
Lincoln: There are tax credits available. I personally don’t believe in them. Somebody has to pay for those credits, but I believe that if our clients are savvy, it’s a good thing for them to take advantage of.
Hoots: They are a big selling point. I’m kind of with Todd. Before the tax credits we were doing quite well selling green. When the tax credits came into effect we had quite a few contractors flock to green remodeling because of the credits and rebates. In Georgia, we have the federal credits, we have state credits. On the state side we have a 35 percent tax credit for renewable energy. We also have [city and local utility] rebates. The city and utility rebates have helped increase business for us, because it’s a rebate that comes back to them immediately.
Comments on: "Selling green remodeling in today's market"
More like this
- Remodelers Exchange: Positioning for the expiration of energy retrofit tax credits
- Remodelers Exchange: Positioning for the expiration of energy retrofit tax credits
- Should you let remodeling clients buy their own materials?
- Remodeler's Exchange: Energy Retrofits
- Remodeler's Exchange: Under 40 remodelers' critical advice to young owners