Back to School: Home Performance Certifications

Factors to Consider

Will your market bear it? Most momentum for home performance has come from government and utility subsidies, and not market demand. Nor are subsidies a reliable inducement. Minnesota remodeler Bob Mock of Case Design/Remodeling Twin Cities says he recently spent $4,000 to promote home improvement tax credits through the Recovery Act’s “stimulus” provisions. “I got one call, from a foreign gentleman who didn’t understand the provisions,” he says.

Moreover, “As these programs evaporate, the phone calls slow down,” Asdal says. Setting aside the $6 billion possibility of Home Star–like incentives, it’s inevitable that “our industry will have the continuing challenge of market development.” (See “Building a Future.”)

Utility costs will affect market demand and your sales positioning. These costs can vary widely based on global oil prices, as well as from market to market. St. Louis–area homeowners enjoy some of the cheapest utility rates in the country, so “most of the calls I get are comfort-related,” Rabenau says. “They’re not really interested in lowering their bills.”

Also consider your market’s mobility. Transient regions and demographic groups may not be swayed by the long-term payback argument.

Can you sell it? “Consistently the two words on the tip of homeowners’ tongues are, ‘How much?’” Asdal says. Arm yourself by learning to “convey a strong message about your company, the durability of the product, the lower operating costs, and how that customer will interact with the building” over its life cycle — comfort, air quality, environmental impact, etc.

Listing your certifications in your marketing materials will be more effective if you are proactive in explaining their value as a differentiator. “My experience is that consumers are fixated on first-cost criteria … and pay little attention to industry recognition or professional designations,” Asdal says. “The best way to earn leverage from the designation is personal growth followed by a conversation opener on the work you may be contracting.”

Take advantage of opportunities such as listings on the certifying organization’s site and co-branded “leave-behind’ materials.

Can you afford it? Out-of-pocket expenses for certifications and basic equipment can easily reach five figures. Some people believe that training from both BPI and RESNET is a must, because the two cover different information. Equipment leasing may be an option, but “by the time you do that twice, you could have bought one,” Lintow says, counting travel time and hassle expenses.

Local utility and government programs may exist to offset your expenses to some degree (see “At the Local Level,”), but realize that some government help may come at a cost, at least initially. On Home Star rebates, for instance, you’ll need cash reserves while you wait to be reimbursed by the federal government — assuming your work passes muster, warns Shawn McCadden, an industry consultant and REMODELING columnist and blogger.

How will you structure your services? It’s risky to stake your entire business on home performance, especially as well-funded national operators enter the arena (see “Outside Assistance,”). Most small remodeling companies offer it as a complement to their bread-and-butter remodeling business. This can expand the scope of work of projects, Zarker says, by integrating comfort into straight-up remodels. Some larger companies have established separate divisions that they staff with certified specialists.

You’ll also want to decide whether to be a one-stop home performance provider (from test-in through hands-on work through test-out), or an auditor only, or a retrofitter only. Zarker likes the one-stop model, citing a study showing a miniscule conversion rate from audits to actually getting the work done. “Without the ability to follow through, it leaves the homeowner in a position to say, ‘Now what do I do?’” he says.

The one-stop model also tends to be more profitable for contractors, who in many cases allow the audits alone to serve as loss-leaders in order to secure the hands-on work.

Others believe objectivity and quality control require a separation between the test-in/test-out audit work and the hands-on component. In some cases, says auditor Rabenau (whom homeowners hire separately from contractors), the one-stop provider’s recommended “‘fix’ can be what the contractor specializes in, or what work is easiest to perform, or what work makes the contractor the most money.”

Can you deliver? Quantifiable results are a key piece of the home performance puzzle and will be even more so under legislation like Home Star, whose reporting requirements are intended to deter the kinds of unqualified contractors that government incentives sometimes attract. This is especially true at the “Gold Star” level: Its quality assurance program inclues a test-out energy audit to ensure that the installed measures are working properly.

Home performance work isn’t difficult, most insiders agree, but it requires diligence and care, from business planning to avoiding the kinds of hands-on “omissions” that Asdal compares to estimating mistakes. It’s not so much the skills needed as how broadly they must be applied, given that home performance work typically extends beyond any one trade. “I think the difference is in how, where, and why the skill is applied,” says Rabenau.

Trade contractors, too, must be trained to do it well. A templated work process can help ensure that no steps or savings opportunities are missed.

Ultimately, Zarker says, “incentives may close the deal, but you have to deliver the goods — the energy savings” — to succeed in home performance contracting.

—Leah Thayer, senior editor, REMODELING.