The nation’s leading remodelers participated in a variety of sales-related seminars in the late summer and early fall of 2013.
Special Report: More Remodelers Opt for Green
Fourth survey shows growing popularity of green remodeling, but challenges persist
Remodelers are selling more green than they did just a few years ago, but a significant lack of consumer demand and the higher cost of many green materials is keeping it from being more widely adopted.
Energy efficiency is easily the most common category of green remodeling, and continues to grow in popularity, but other improvements that don’t provide an obvious and quick return on investment are lagging, according to the latest Professional Remodeler green research.
We’ve been surveying remodelers about green since 2007 and while there have been marked gains in the acceptance of it by both remodelers and homeowners, many continue to be skeptical as well. After surveying our readers, we went in depth with a few more remodelers to get more of their opinions on green.
No silver bullet
Green is a better selling tool than it was in the past, but still not a big boost for most remodelers.
Less than half of remodelers (about 45 percent) say that green features help them sell remodeling projects. That’s about the same as in 2010, but up from 33 percent in our first survey in 2007.
Only 39 percent of remodelers market their companies as green. Many remodelers in the survey say they remodel using green practices because they think it’s the right thing to do, rather than a tool to improve business.
Steve Shinn, founder of Homework Remodels in Phoenix, echoes that sentiment.
“I’m doing it because I want to do it,” he says. “If you asked me, ‘Would you be OK if you quit?’ I would say, ‘Yes.’ It’s not about my survival.”
Oftentimes, it’s about the words a remodeler uses. Green, like organic for food, has become an overused term to which many consumers have become numb.
“The term ‘green’ has been overused and abused, desensitizing consumers so they don’t know who to trust anymore,” says one remodeler we surveyed, in an opinion shared by many other respondents.
Obstacles to green
Most remodelers agree consumers are interested in green — at least in theory. Without an almost immediate return on investment, though, most clients aren’t going to close the deal, especially in the current environment.
“Everyone says they love green until they see the upfront cost,” says one remodeler. “People want to see the savings now.”
The unwillingness of consumers to pay extra for it was easily the top barrier to green remodeling, according to the remodelers we surveyed. Fifty-four percent say it is the top obstacle and 77 percent rank it as one of the top two. That is up drastically from a year ago, when only 31 percent of remodelers said that was the top obstacle to green and 61 percent ranked it as one of the top two reasons.
“Clients want green if it will help their bottom line,” says a design/build remodeler from Pennsylvania. “They like the idea of saving the environment but they aren’t willing to pay more for it.”
Insufficient return on investment and lack of consumer demand, both chosen by 16 percent as the top barrier, were next on the list of obstacles to more green remodeling. The number choosing lack of consumer demand was steady from a year ago, but the insufficient return on investment seems to be a growing concern. Only 24 percent of remodelers cited it as one of the top two concerns last year; 41 percent did so this year.
“Consumers are interested in the concept, but not willing to pay more if the ROI is longer than two to three years,” says one remodeler we surveyed.
“It’s about feel good versus payback,” says another. “Energy efficiency sells but other concepts are not embraced.”
Nearly all remodelers we surveyed (94 percent) say that incorporating green features into a remodel adds to the cost. Fifty-one percent say it adds 6 percent or more to the project cost and 86 percent say it adds at least 3 percent to project costs.
Despite their concerns about homeowners being unwilling to pay more for a green remodel, most remodelers say they will pay at least a little more. Seventy-one percent of remodelers say the average client will pay a premium for green remodeling — about the same as 2010’s 70 percent, but up significantly from the 22 percent who said that in 2007.
On the other hand, most remodelers don’t think the homeowners will pay enough of a premium to cover costs. Only 13 percent say homeowners will pay at least 6 percent more, compared with the 51 percent who say it costs at least 6 percent more to incorporate green features. And only 46 percent say clients will pay at least a 3 percent premium, compared with the 86 percent that say it adds at least that much to project costs.
Other potential obstacles — that it’s too complicated, availability of products, reliability of vendors and performance of green products — were not seen as significant roadblocks to the growth of green remodeling by most remodelers.
Not surprisingly, remodels that focus on energy efficiency are the most popular, according to the survey.
More than half of remodelers reported installing energy-efficient windows on all of their remodels in 2010 and more than 90 percent of remodelers installed them on some of their projects last year. Other popular features were energy-efficient appliances, high-efficiency HVAC systems, enhanced insulation and water-saving fixtures and fittings. High-ticket items like solar panels and geothermal systems continue to be installed by only a small group of remodelers.
“The biggest focus this year has been improving people’s energy performance,” Shinn says. “Most of the green projects we’re seeing right now are very practical.”
Those that are successfully selling green are doing so by getting past the hype and focusing on that return on investment — and most of the time that means energy.
Judy Mozen, president of Handcrafted Homes in Roswell, Ga., addresses that by getting to the details with her potential clients. Homeowners she works with may not be coming to her because of her reputation for sustainability, but they are interested once she starts talking to them. Green is a key part of her sales process from the first meeting with a client.
“I bring it up and say things like, ‘I would like to talk to you about your indoor air quality, your energy efficiency,’” she says. “They immediately want to talk about it. Every one of them is interested in discussing it, and not just on the surface — in depth.”
Like other remodelers, she faces the challenge of the higher costs, but she has made the decision that this is something to which Handcrafted Homes is going to commit.
For any remodeling project that is large enough that the company can make an impact on energy use, they’re now conducting an energy audit as standard procedure.
“I’ve taken the attitude that from here on this is how we do business,” she says. “It’s just a normal thing, like getting a permit. I’m no longer giving that choice to my clients and I haven’t been balked at yet.”
Gary Altoonian, president of Altoonian Remodelers in West Chester, Pa., has tried to incorporate as many green methods as he can into his standard remodeling projects. So whether clients ask for it or not, Altoonian is including practices such as using low-VOC paints and two-stud corners to save energy.
When he tells clients about that, they’re often interested in going further, at least conducting an energy audit.
“We can give them a pretty good estimate of what it’s going to take to correct that problem,” he says. “People see the value and we can move right into those types of corrections.”
Conducting the audits and the follow-up projects also allows homeowners to take advantage of federal tax credits, as well as local and state incentives, something that Altoonian says helped him sell some projects, especially last year. (It was important to most other remodelers, too, with 68 percent of them saying at least some of their clients took advantage of government incentives last year.)
Shinn is also using energy audits to reach out to more clients. He says in his Phoenix market there is not as much demand for green remodeling as his colleagues in other cities see. In almost all cases, his green remodels are going to be about saving energy and he has to deliver that information in an easy-to-understand way.
“That’s largely why I got into the energy performance analysis, because it is a way to bring this stuff down to a very practical level,” he says.
Many clients think they need to make big (and expensive) changes to make a difference. The energy analysis helps show them easier ways to make a significant impact.
“We can take this person who wants to do something, but wasn’t going to because of money and help them improve their house,” Shinn says. “It’s a very green thing to take their homes and make them work better.”
Mozen agrees that often the littlest things can make a big difference in reducing utility bills.
“It’s important to get educated as remodelers and for us to educate the homeowners,” she says. “Money is an obstacle to big changes, but not everything costs money. We can do things that will significantly help, just because of our knowledge of green, and make a difference in energy cost and indoor air quality.”