That scenario is starting to change, however, as more home buyers are asking builders for upgraded mechanical systems and IAQ options. In addition, builders are becoming more comfortable in letting HVAC contractors work directly with consumers to explain upgrades such as zoning, better filtration and ventilation, and programmable thermostats, which can drastically improve the level of comfort inside a new home.
APPOINTMENT REQUIREDThe residential new construction market has slowed down all across the country, but in Eastern Pennsylvania, there has been a demand for new communities for people who are over the age of 55. These adult retirement neighborhoods provide a perfect opportunity for Jay Murphy, vice president, Quality Air, Quakertown, Pa., to sell upgraded equipment and IAQ accessories to new home buyers. “The 55-plus is a strong market right now. That’s good for us, because we have buyers who have built many homes in their lifetimes, and they often know what upgrades they want,” said Murphy. “Many are looking at these houses as being their last home, and they want the equipment and accessories necessary to keep them comfortable while saving money on their energy bills.”
“If you have the ability to sit with a customer, you have the ability to sell upgrades,” said Murphy. “We give the builder the lowest price possible, and as long as we have the ability to meet with the customer to sell upgrades, we can usually make that back up. The builders are also happy, because we give them 30 percent of whatever upgrades we sell. They see they’re getting a low price on the installation, plus the opportunity to make more money on each house.”
In the residential new construction market where the gross profit is usually below 20 percent, upgraded equipment sales can make a big difference. For example, the gross profit on a house with upgrades may be 40 percent, which more than makes up for those houses that don’t have upgraded equipment. Home buyers benefit, too, because their new homes will be more comfortable and energy efficient, and they can roll the cost of the equipment right into their mortgage.
What is interesting is that home buyers who initially state they don’t want any options often end up buying an upgraded package, which can include equipment that offers better efficiency, IAQ, comfort, or a mixture of all three. Quality Air’s Comfort Package includes zoning and a humidifier; the Efficiency Package includes a two-stage variable-speed furnace, two-stage air conditioner, zoning, and a humidifier; and the Indoor Air Quality package comes with an electronic air cleaner, humidifier, and UV light. The top-of-the-line Platinum Package includes all the equipment from the three packages, plus a longer parts and labor warranty.
An advantage to being in a slower market is that Quality Air’s Comfort Consultants can spend more time with customers, educating them about the benefits of upgraded equipment or accessories such as zoning or humidifiers. For those home buyers who want to continue researching their options at home, Quality Air’s Website has links to manufacturers such as Aprilaire and Arzel, where more information can be obtained.
The slower market also means that builders are downsizing the homes they build. Instead of a huge house with two systems, more builders are constructing smaller homes with one system, which can make selling upgrades such as zoning even easier.
HEARTLAND STILL GOING STRONGWhile the outlook for residential new construction may be gloomy in many parts of the nation, the Wichita, Kan., market is still doing well. In fact, the strong local economy has resulted in a continued demand for new housing, although the Wichita Area Builders Association predicts that new housing starts will be down 8 percent in 2008. That’s not bad when you consider that the 2007 annual total for residential building in the United States was down 24 percent from 2006.
Robert Freeman, president, Fenix Heating and Cooling, Wichita, is thrilled that the residential new construction market is still going strong in his area because he relies on new home building for over 80 percent of his business.
“The builders send the customers to us, we upgrade them, and the builder makes a profit,” joked Freeman, who offers builders a percentage of every upgrade sold. “Basically, we do all the work, and the builder makes some money.”
While it’s not mandatory for home buyers to meet with Fenix personnel, they get a free humidifier for making an appointment. “The free humidifier gets them in the door because every homeowner is interested in humidification,” said Freeman. “From there, we talk to them about better air filtration systems. We can do anything from a MERV 10 filter to a Lennox PureAir system. If the customer has children with allergies, they usually end up spending $3,000 or $4,000 in accessories, so they can get the best IAQ possible.”
Freeman believes his success in selling upgrades can be attributed to several factors. First, he took the time to educate his builders about the importance of higher-efficiency equipment and IAQ accessories. Second, the green movement has spurred home buyers to look for better efficiencies and higher levels of comfort. And third, customers are becoming much more demanding than they were five or 10 years ago. Access to information on the Internet has led them to ask more questions about upgrades and IAQ equipment, even though they may not understand what they’ve read.
“We deal with a lot of customers who are confused by what’s on the Internet,” said Freeman. “We have come up with a presentation that explains all the benefits and makes the equipment very easy to understand. We don’t use any high-pressure methodology at all, and when we upgrade the efficiencies, we’ve got the computer readouts to back it up. If we tell you you’re going to save $100, you’re going to save $100.”
While it’s not possible to show a cost savings as far as IAQ is concerned, Freeman uses Air Advice monitors to show customers how much their air quality is improved. “We test the house before we install anything. After the IAQ accessories are installed, we start everything up, and set up a monitor. It makes a dramatic difference, because the homeowner can see we’re telling them the truth.”