Remodelers Exchange: Successfully selling energy efficiency

There are plenty of challenges facing remodelers who are selling energy efficiency and sustainable remodeling projects. However, it is possible to sell energy efficiency in today’s market. Professional Remodeler’s Tom Swartz talked with Tim Ellis and Don Ferrier about their selling methods.

March 25, 2013

TOM SWARTZ: How would you define energy efficiency in your remodeling business and how does the energy-efficient subject come up with your customers?

TIM ELLIS: We bring it up when we’re defining the scope and the specifications of the project. I will ask them if they are familiar with sustainability and energy efficiency. A lot of times they’ll say, “Yeah, I’ve heard of it,” and sometimes not. A lot of it is the political side of it, such as global warming. We tell them that’s not really what we’re talking about. The three big items we try to bring to the table are reducing water usage, energy efficiency, and indoor air quality. In remodeling or new home construction, with pretty much all of the manufacturers now onboard with green building, you can easily introduce those [concepts] in any project or specification.
One of the questions we get is, “Is that any more money?” We tell them that maybe it would have been five years ago, but not today because almost every manufacturer is already incorporating that into their existing line. For example, foam insulation isn’t really a big-ticket item; that’s just quality construction. The big thing I’ve been using, the National Green Building Standard, is almost like a roadmap to specifications for quality construction. We really don’t try to sell them on the green aspect; it’s the benefit of doing the quality construction of the standard.
With energy efficiency we try to, in all of our remodeling projects, reduce that by 20 to 50 percent at a minimum. That’s what is great about the 2012 National Green Building Standard—there are guidelines that any remodeler can pick up the book and implement those practices in the basement, kitchen, or bathroom and achieve a certification for their client.

This month featuring

Tim Ellis, President
T.W. Ellis Remodel/Build Constructors, Bel Air, Md.

T.W. Ellis was established in 2002. The company has successfully designed and built more than 700 remodeling and renovation projects, including custom homes built to the NAHB Green Building Standard.

 

Don Ferrier, President
Ferrier Custom Homes, Fort Worth, Texas

Ferrier Custom Homes was established in 2004 and specializes in high-efficiency custom homes and remodeling projects. Ferrier constructed many of the early generation energy-efficient homes in North Texas.

DON FERRIER: We have evolved over the years and we’re at a spot we never really dreamed of 20 years ago, where people come to us over and over again saying, “We’re looking for somebody who knows how to do this, not somebody who’s trying to figure it out. You’ve won the awards and you’ve proven that you’ve got a strong track record in this.” They want the high performance product they see we’re remodeling and building, therefore they want to talk. I always say, “Let’s see if we’re a good fit. Let’s see if I’m the right builder for you and you’re the right client for us.” I don’t bring energy efficiency up; the people who look me up are looking for that type of product.

SWARTZ: What are some of the most popular energy efficiency requests?

FERRIER: Folks want air tightness, great insulation, structural insulated panels (SIPs), a reflective metal roof, high SEER AC or geothermal, tankless or solar hot water heater, and/or better windows and doors. Almost everyone that comes to us wants a low-flow or an ultra low-flow faucet. They either want a dual-flush or a low-volume toilet. In the design area, people that come to us are almost always knowledgeable about passive solar—how the sun’s high in the summer and low in the winter. We’re the opposite of Baltimore in that the heat of summer is our biggest enemy of energy efficiency. When people come to us the most common thing they say is, “We want to invest in this. We know what you do is going to cost us more than the average builder or remodeler, but we believe it’s going to be one of the wisest investments we ever make.”
I’ll ask them what their biggest fear is, and it’s usually that we’ll do this and it won’t work as well as they think it will or as we promise it should. It’s about how to pull these hundreds of different decisions together into an intelligent design and balance so that what they hope to achieve is achieved. It’s the whole thing of they don’t want to be overpromised and underdelivered; they’d rather be underpromised and overdelivered, and they’re looking for an expert that can pull it together and make it work. They don’t want it to cost more than they ever dreamed and not achieve the goals they’re wanting to.

ELLIS: To really achieve energy efficiency, there’s nothing really sexy out there—like granite or hardwood flooring—because the majority of it is insulation, air sealing, and things of that nature. So for products, you can maybe do some bamboo flooring or cabinets made from recycled material, but I try to not let them focus on the product because that’s not the main ingredient that makes the soup; the main ingredient is the means and methods—making the envelope tight, using the proper windows for U-factor and solar heat gain coefficient, insulating, and air sealing properly, keeping all the ducts inside the house. It’s those things where you don’t walk in at the end of the remodeling project and see it glittering at you. That’s where you’ve really got to sit the client down and get their expectations set right because they won’t see the green building that you did. They get to experience through their first four or five electric bills, or if they’re on public water their water bill is down; it’s not the instant gratification they’ll get from seeing the granite or the nice color faucets. Green isn’t an aesthetic feeling, it’s an operational usage feeling over the long-term. Either of us could build the most tight, energy-efficient home, but if we don’t sit the client and tell them it’s only halfway done and now they have to operate it the way we built it, everything we did and all the effort we put into it is irrelevant.
It’s neat to see a dual-flush toilet, don’t get me wrong, but if they’re not using it properly, we can put all the dual-flush toilets we want in and it won’t make a difference.

SWARTZ: Does energy efficiency, or going green, cost a lot more?

ELLIS: The best value, I think, is proper insulation and air sealing. That’s not a big-ticket item by any means. You want to make the envelope extremely tight and seal all exterior penetrations. For us, a low-flow toilet might be a couple dollars more, but again, looking down the road, I see many manufacturers realizing this is going to be the standard, so all of them are going that way in their product lines.
We’ve never really done a cost analysis on it; we really just sit down with them, go over the pros and cons of each and if it sounds like it’s a good investment for them, they’ll do it. We don’t tell them, “This ultra low-flow faucet is $220, but if you go with the low-flow it’s $380.” We just give them the pros and cons of each and why it’s beneficial for them to do that. It might have a first cost, but looking at lifecycle cost and operating cost, it just makes more sense.

FERRIER: I completely agree with what Tim says; there are basics that you do. Architect Peter Pfeiffer has a pyramid, and we use it with our prospects and clients. The base of the pyramid is the most important part, and that’s where you do the same thing in every project—you’re doing air tightness, you’re adding greater insulation. In our climate, I say our top three rules for energy efficiency are: control the hot summer sun because if it’s streaming in, you’re committing energy efficiency suicide; you want great air-tightness—and I’d rather have great air-tightness than insulation if I had to choose; and you want great insulation as well.
Those are the kind of things that cost no more or just a little bit more down at the bottom of the pyramid. Then as you move up, the next level you go from, say, a tank-type hot-water system to a tankless hot-water system or maybe a heat pump water system. So you’re looking at the things that use money. Our biggest cost is the cost to cool the home; our second-biggest cost is the cost to heat a home during the cold months. How much water you purchase makes a difference. Therefore if you’ve installed low-flow or ultra low-flow faucets; if you’ve installed a low-flow or a dual-flush toilet, they may spend some extra money on those, but in the long run, it helps save them money. Also, we’ve have a water shortage here in Texas, so it helps with that situation, too.
One thing we do on almost every remodel is an energy audit. We’ll go in and take a baseline of the house before we start any work, then do a blower-door test to see how leaky the home is—and that’s not usually a pretty picture—and we’ll run some diagnostics on the air conditioning, hot-water heater, and appliances.
Let’s just say they’re considering a 16 SEER air-source heat pump, or even going up to a 20 SEER. We’ll compare that to where they are now and we’ll give them the cost of that new unit through our suppliers. It’s a broad-brush stroke; it’s not an exact science, but it gives them a range of costs that are close to accurate. They may have an 8 SEER right now, and going to a 16 SEER may pay for itself in three years.
The score is part of the process, but it’s much more than that. Almost always, the biggest bang for your buck is getting the house tighter. You can R-100 in the ceiling and R-60 in the walls, but if it leaks badly, you’ve just shot yourself in the foot. Air tightness is so important, adding insulation is the second thing. We have remodels where we see that just the air tightness can pay for itself in a year or a year and a half. It gives you something to sit down with and talk about options so we can make intelligent decisions.
Nearly everybody that’s come to us has a list of 30 or 40 things they want to do, and then in the conversation I’ll ask what their budget is; if they give me a number I’ll probably say that we’ll get to 15 of those items on that budget. 

SWARTZ: Do windows play a part in some or most of your projects? If so, what is a good energy-efficient window that you would recommend?

FERRIER: Windows play a very important role in every project. If you’ll remember, my number one rule for our hot climate is to keep the hot summer sun out of the house. So the most important role windows play in my world is in their placement. On remodels, we want statically placed high-performance windows. On additions and new homes, we often use SIPs, and about one-third of the people that come to us do so because we use SIPs. We want windows and lots of natural daylight so you don’t have to be turning on lights in the daytime. But their placement is critical; the most critical aspects in the energy efficiency of a home in our climate. The west sun’s the worst and the south sun is next, but for the south sun—with a passive solar orientation, with overhangs for porches or trees—you can shade those areas.
Our projects range from using vinyl windows to a Marvin Integrity window that combines recycled material and fiberglass. Weather Shield windows are the most common wood window we’ve used. We’ve used Andersen, Pella, Marvin, and several others successfully. But with windows, it is the energy efficiency of the glass. U-value is the inverse of R-value, so with U-value the lower, the better. I don’t put windows with a U-value over .30 in any of our homes. Most of ours are closer to .27; some of them are down to .21. Each one of those drops is significant.
The other important factor is the solar heat gain coefficient (SHGC). At some point, you’re going to have heat coming through those windows in the summer, and the SHGC gives you an indication of how well the window stops that heat gain.
Beyond the glass, there’s more and more being done to other areas that transmit heat and cold through a window. Typically double-pane and triple-pane windows have a metal spacer between that is very conductive. We’ve known of low-E for quite a while; now they’ve got soft-coat low-E and they’ll have a triple coat or double coat. You’ll have argon gas or krypton gas. These are the kinds of things where people come to us and say, “Help! We don’t know which one to choose.”

ELLIS: The only thing that I can really add is that windows should be specified or chosen based on the climate that the structure will be built in. My window specifications—U-value, SHGC, placement—might be different than, say, Don’s. So the molder of the manufacturer working with the client should really sit down and look at the climate that the house is going to be built in.
Of course, aesthetics always play into the selection of a window; but function is just as important, as well as placement. In so many cases, when I go into new homes built by track builders, it’s amazing that the windows that they’re putting in these houses are cheap, vinyl windows. It’s always frustrating for me that when you show the client the dollar amount allocated for the windows—and for a pretty good-size house, it can be $11,000 to $18,000—sometimes you can catch them saying, “Well, Tim, let’s lower that to a lesser window so I can afford the granite.” In that case, the builder should be telling the homeowner, “I know it’s pretty to see that granite, but you’re going to be replacing these windows in about five years.”
We’re reluctant at times to truly educate a client about what’s really important because the other guy is trying to sell them on the pretty things. I have to stop the homeowner and say, “Look, I know you think it’s just a hole in the wall filled with glass or glazing, but it’s much more than that.” Like Don said, we won’t put anything with a U-value less than .30. We need to re-educate the client on what they’re getting ready to purchase.
I know this lady who just bought a new home, and she’s spending over $600 a month on heating, which she never anticipated in her budget. This has thrown her budget off because so many people do the calculation of the purchase, the interest rate, what my monthly payments going to be, they throw in a little number for some groceries and other things—but when she first got that energy cost on that monthly statement. That’s almost $8,000 a year that she’s spending to heat and cool this thing. That was never anticipated.

SWARTZ: What advice would you have for the remodeling contractor on getting into green?

FERRIER: McGraw Hill came out this year with their third or fourth study on green building, funded by the NAHB and Waste Management. In this down economy, the only part of home building—whether new or remodeling—that has grown has been the green/sustainable/energy-efficient construction. Read that report and follow their recommendations.

ELLIS: Every builder or remodeler has a copy of the International Residential Code, they have a copy of the International Builder Code. They should also have a copy of the 2012 National Green Building Standard. With that standard, they can go to clients and inform that they’re going to give them the best product that’s out there simply by following that standard.|
There’s a path for them to certify remodeling projects and also new home construction. It will allow them to differentiate themselves from the other 96 remodelers that are just doing the same old, same old. You’re able to make money doing this and you’re getting a good product and service to your client.  PR

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