Home-performance contracting was certainly a scorching hot topic throughout the HVAC industry just a few short years ago. Here at The NEWS, we covered it with headlines such as “Home-performance Contracting: Our Next Great Opportunity” and “HVAC Taps into Home-performance Contracting Trends.”
The energy and excitement was certainly present among contractors across the nation, and while it has waned for some, many still see great benefits and potential in the home-performance marketplace.
“When it’s done right, home performance can generate additional revenue,” said Jeremy Begley, consultant, HVAC 2 Home Performance in Cincinnati. “Contractors were certainly excited at the prospect. However, since the government stopped giving out free money to participating homeowners, the number of interested contractors has decreased. Contractors pursuing those contracts were equipped with the wrong motivation. Weeding out those contractors will only help the market experience true and healthy growth.”
One question contractors have trouble answering is whether the actual demand for home-performance contracting has peaked.
Nate Adams, founder of Energy Smart Home Performance, a home-performance consultant based out of Mantua, Ohio, believes home-performance contracting largely stalled before it ever got off the ground.
“We [home-performance contractors] are at the end of the runway about to slam into the trees,” he said. “Contractors are focusing on the wrong thing. Energy savings matter from an integrity standpoint — if we track, it shows we care. We want our work to deliver predictable measured results, but we also need to solve more pressing homeowner problems like temperature differences, poor IAQ, ice dams, etc. Until the focus changes to placing the needs of the consumer first instead of the needs of the programs first (and contractors second), we are not going to get this tub off the ground.”
Xavier Walter, owner of Energy Partners LLC in Philadelphia, said there was a short-term bubble because of incentives, but he contends that contractors are now seeing home performance as a viable money maker and lead generator.
“I think some people are bringing it back to the forefront again,” he said. “Over the last two years it’s been pretty busy in HVAC. Some contractors who were hyped up on it may have fell out of vogue, but they are turning around and realizing it’s a great option. It’s a great tool and contractors see its inherent value.”
Allison A. Bailes III, president of Energy Vanguard LLC, pointed out that, while training is readily available, successful home performance takes a great deal of time and effort.
“There are a lot of HVAC companies that get into it and don’t understand how intricate it is,” he said. “It certainly has pros and cons, and it takes effort and dedication to make it work. After a few years, some contractors may not see all the benefits, and they’ll eventually give up on it.”
TRAINING TO GO
One of the best-known government programs, “Home Performance with Energy Star,” features nearly 330,000 homeowners and 2,100 contractors nationwide. There are also many state incentives home performance contractors have utilized to gain ground in the market.
Still, while home performance is a craft that must be properly understood to be effective, the training is accessible and easy to find for contractors interested in getting their feet wet.
“[Home-performance training] has become remarkably easier and less expensive over the past few years,” said Walter. “I work with Green Training USA, where we are able to administer exams with body cameras, and the actual training online is easy and convenient. You used to have to go to one of two or three trainers in New Jersey. You couldn’t absorb the information, and it could be pretty boring. Now, you can sit down in the comfort of your own home
and watch videos, take practice tests, and complete a written exam. Contractors can even take the field exam in a house that they choose.”
Adams and Begley both also noted the ease with which training can be attained, and Bailes said there are tons of resources out there.
“Online courses are readily available,” he said. “Intense, one-week certification classes can give information that may not stick because it is crammed in so quickly. I teach an eight-week course that allows more breathing room. I also read blogs, and LinkedIn has a great group for home energy pros called the RESNET BPI group.”
CUSTOMERS GRASP THE BENEFITS
Often, the most difficult part of selling customers on the benefits of home performance is ensuring they understand the principles behind the offering and fully grasp how the return on investment (ROI) will justify the short-term expenditures.
“Consumers find us by searching for solutions,” said Adams. “They don’t search out home performance. They learn about home performance from us. We teach them that home performance is the key to solving their problems. It’s a complicated subject. Once roped in, though, I find my clients start spouting blower door numbers to anyone who will listen.”
Adams also said consumers don’t care about the technical aspects of ROI. “They only think they do because we were silly enough to make them feel that way,” he said. “We are not financial advisers; we’re contractors. We shouldn’t conflate the two. It would be good to begin predicting energy savings and watch to see how close we get. Energy models are good enough now to get within 10-20 percent, in our experience.”
As buildings catch up with green building standards, Begley believes the public is becoming more aware of the comfort and energy savings home-performance contracting can provide.
“You and your staff have to be willing to listen to your customers and guide them to what they need. They will never call in and ask for home performance,” he said. “But they will call all day and all night to discuss rooms that don’t stay comfortable, homes that are dusty, children who suffer with allergies, and high energy bills. It is then up to you and your staff to understand that replacing a system probably won’t solve these issues and provide them with the correct evaluation of their homes, including the HVAC component.”
Like Adams, Begley believes that ROI is generally not a motivator for customers.
“This is a concept largely created by programs to justify the bureaucracy needed to maintain their existence,” he said. “If customers are looking for energy savings, we will take a good look at their usage history and figure out the best ways to create energy savings for them. If they are looking to solve comfort or healthy home issues, then financial ROI is not that big of a deal. The real ROI comes with a comfortable home that they can finally enjoy and breathe easy in.”
THE FUTURE OF HOME PERFORMANCE
With training readily available, an abundance of incentives, and customers becoming more aware of what home
performance entails, how do contractors see the market shifting and evolving in the next few years?
“It’s gone from a market largely driven by government funding to a next-best practice for premium contractors who really want to stand out as the best in their industry and have a legitimate revenue generator,” said Begley. “Contractors who want to be the best, do the right thing for their customers, and add a nice bit of bottom line will be doing home-performance contracting for years to come.”
Adams hopes the industry will embrace accountability in the future.
“We need to track outcomes and make outcomes the reward,” he said. “Think Amazon rankings for home-performance contractors. Right now, programs claim success based upon unverified savings. This is a terrible integrity gap that justifiably prevents consumers from trusting contractors. Without accountability for performance, it’s a rigged game that offers short-term rewards to the sector’s biggest liars, and, ultimately, everyone loses in the long term. If outcomes aren’t tracked, what’s the incentive to do good work? If you don’t track outcomes, without a feedback loop on performance, how do you even recognize good work from bad?”
Of course, smart devices and interconnectivity throughout the home have also been trending in recent years, and Bailes believes home performance needs to stay ahead of the game.
“One of the things home-performance professionals are battling is the notion that smart homes will solve every problem,” he said. “Smart thermostats and such can lead to a false sense of security. They are great products, but people need to realize that everything starts with the building enclosure; high-performance homes always start there.”
Publication date: 4/11/2016