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The Web site combines photos, explanatory text, warranties, mortgage impact, and a “live” operating cost comparison to give the buyer an online interactive system that educates them about what heating and cooling equipment and accessories are available, how much an upgrade will add to their mortgage cost, and more importantly, how much energy savings an upgrade will provide to offset and reduce the added cost.
The HVAC contractor that came up with the idea is Howell’s Heating and Air Conditioning Company, Ashland, Va. The concept was conceived by Richard D. Krider, CEO of Howell’s, and Michael Wyatt, president.
Richard Krider, Wyatt, and Josh Krider developed the idea into its final form. An outside software company helped them build the Web site, called www.myupgrades.com. A separate company called Environment Solutions LLC was set up to administer the site and Josh Krider was appointed system administrator.
“My role is to oversee the program and sell it to builders and also dealers,” said Josh Krider. “What makes this Web site unique is that it was developed and is maintained by people who understand the interaction and challenges of working with homebuilders, new homebuyers, and subcontractors.”
An Idea Is Born“The idea was conceived in the fall of 1998,” stated Krider. “We wanted to create a tool that would allow the builder to offer their homebuyers a choice on what went into their new home.
“Since heating and cooling equipment is very technical and is changing regularly, we knew that the builder’s sales agent couldn’t, and through trial and error wouldn’t, effectively sell HVAC upgrades. So the goal was to build a selection program that was simple enough for the average homebuyer to understand on their own, but had enough information for them to make an educated decision about what they wanted in their new house.”
The system helps sell the homebuyer by showing that an HVAC upgrade will not add significantly to his or her monthly house payment.
“One of the most important pieces of information we provide to the homebuyer to assist in their decision is the energy savings of the selected upgrade over the standard system compared against the mortgage increase of the upgraded system,” Krider said.
“The comparisons are based on the new home’s size of equipment, average regional utility costs, regional weather data, and standard building construction. The software allows the buyer to adjust the interest rate and length of the mortgage to match their situation. In many cases the upgraded system will save the buyer more money per month on their utility bills than it costs them on their mortgage.”
In reviewing the Web system and going through a sample energy savings calculation, The News found that an upgrade to the “best” heating and cooling system for a sample home in the Midwest would increase the monthly mortgage payment by $19.95, but would bring the homebuyer $18.00 per month in energy savings. Therefore, our sample buyer would only have to pay an additional $1.95 per month to get the best system.
Going OnlineThe decision was made to put this system online for several reasons, noted Krider. “It allows the buyer to view, educate themselves, and select their system on their own time, regardless of geographic area and without the assistance of the builder or HVAC dealer.
“Since we are on the Internet, there isn’t any software or hardware for the builder/HVAC dealer to purchase, lease, or maintain to participate. The only requirement we have is the builder/dealer must have an e-mail address to receive the buyer’s selections and they must offer better and best equipment options.”
Development of the Web system was completed late in 2001 and it went into operation in December 2001. The first builder to use the system was Boone, Boone, Loeb & Pettit, Inc., Richmond, Va. (a Howell’s customer).
“Right now, we have a handful of builders actively using the system and are adding to that list on a regular basis,” Krider remarked. “The first customer to choose an upgrade on the site was a homebuyer in New Jersey who was building a house in Richmond.”
Fred Napolitano II of Napolitano Homes commented, “Our customers love the program, and our agents do not have to get involved with anything technical.” Tim Smith of Smith & Keene said, “It truly is a program, which benefits all parties — the manufacturer, the builder, the contractor, and most importantly, the consumer.”
A Customized SiteThe site is customized for the particular builder/dealer. “Once a builder and HVAC dealer decide to use the system, we ask the dealer to provide what the standard equipment is going to be and what he would consider a better package and best package and any accessories he wants to offer,” said Krider.
“The dealer provides the builder with what he is charging for the upgraded systems and accessories. The builder applies his markup and forwards it to Environment Solutions. We take this price and add a hosting service fee to get a total upgrade price for the systems and accessories.
“Once the builder gets a signed contract on the house, the sales agent has a form that he or the buyer fills out and faxes to us. We take this form and build an account for that buyer with the appropriate equipment upgrades and prices. That same day we send out a welcome letter (paper or e-mail) to the buyer with the Web site address and a password to access their account along with a selection deadline. (Once the deadline arrives they can’t access their account so as not to slow production).”
Once the buyer visits the site and places an order, an identical e-mail is sent to the builder, HVAC contractor, buyer, and Environment Solutions listing what they selected with prices. The builder gets final buyer approval and then notifies the HVAC contractor.
Are Homebuyers Upgrading?So does it appear that the system is bringing about more upgrades? “We have seen a number of homebuyers choose to upgrade their equipment as well as add air cleaners, humidifiers, programmable thermostats, and many more accessories if given the opportunity,” Krider declared. “Around 60 to 65 percent of the homebuyers that go to the website upgrade one system and one accessory.
“To give you an idea of the impact it can have, one dealer that is using our software has sold a total of 125 pieces of upgraded equipment and accessories in the first nine months on the site with only one of his builders.”
The system is designed to support national participation by builders/dealers, said Krider. It was originally limited to Virginia for testing purposes. “We are starting to allow dealers and builders from around the country to try it out. Any HVAC dealer can get together with their builders and go to the site and look at it themselves by using the ‘Demonstration’ link and go through it to get a general idea of what their buyers would see.”
Krider believes the system will change how the new residential building industry treats HVAC upgrades. “We offer easy setup, very low builder involvement, and no upfront cost. This program creates a win-win situation for everyone involved.”
Publication date: 01/27/2003