The green building story can be appealing to buyers on multiple levels. The better they understand how the systems behind the walls can impact their lives, the more excited they will be about their new home. Builders who have made a commitment to sustainability say that their marketing efforts focus more on education than persuasion. Sales staffs need to be able to both explain the benefits in practical ways and to answer technical questions—or at least know where to find the answers. The key is to make sure the experience mirrors the message.
Green Incentives
Not every builder can guarantee energy savings.
Incentives are a major sales tool in today’s real estate environment. To promote green building, the incentives tend to be a bit different.
Louisville, Colo.–based McStain Neighborhoods has offered such incentives as Vespa scooters that get 100 miles to the gallon and a subsidy for customers selecting wind power for their homes. Harvard Communities, based in Greenwood Village, Colo., offered a Toyota Prius Hybrid last year.
The best incentive for green builders, though, appears to be guaranteed energy savings. In a 2007 study, an astonishing 98 percent of buyers told Washington-based real estate market consultant RCLCO they would be more likely to purchase a home with energy-saving features if offered an energy-savings guarantee. One way to accomplish this is through Environments for Living (www.eflhome.com), a program run by Masco Contractor Services (MCS). It guarantees the energy used to heat and cool the home won’t exceed a pre-set amount over 12 months. If it does, the homeowner is reimbursed for the difference. The comfort guarantee assures homeowners that the temperature at the thermostat won’t vary more than 3 degrees from the center of any air-conditioned room in the thermostat zone, or MCS will identify the problem and coordinate necessary repairs with the builder.
Harvard Communities has offered the guarantee for about three years, president John Keith says. “We’ve never had anyone call us up and say the house isn’t performing,” he says.
ICI Homes also offers the guarantee and recently stepped that up even further, offering to pay their customers’ power bills for three years. The guarantee was a hit at ICI’s recent Parade of Homes show home.
“The biggest thing that got people saying, ‘What? Wow!’ was our written, three-year guarantee that the cost to heat and cool that 3,400-square-foot house isn’t more than $67 a month,” says Steve Reeger, ICI’s vice president of building science. “Then we turn around and say, ‘We’re so sure of those energy bills, we’ll pay your electric bill for three years.’ It was pretty remarkable.”
Making A Sales Center Statement
For green builders, the sales center serves as a place to explain to buyers why they should get as excited about blown cellulose insulation as they do about neighborhood schools and a soaking tub in the master bath.
Austin, Texas–based Green Builders spent considerable time designing its sales center because it needed to be as innovative and sustainable as the builder's houses and neighborhoods.
“The typical builder putting in a sales center in a converted garage spends $30,000 to $50,000 and then throws it all in a dump when they’re done with it,” says Green Builders CEO Clark Wilson. “We were really struggling with this.”
He wound up collaborating with architect John Blood, a professor of architecture at Yale. The result was Studio G. While built on a traditional trailer base, the sales center “looks bigger than it is, which is kind of the point,” Blood says. “We have glass where it counts, up front and in the center. The connection to the outdoors and the experience of that is an essential part of the experience. It’s different than curling up and saying, ‘I’m not going to damage the planet.’ You want to live in it.”
The center incorporates such green principles as a rainwater-collection system on the roof, solar panels, recycled building materials, and wide overhangs for protection against the sun. And it’s reusable.
“It’s bolted together in the middle so we can move it from one phase to the next,” Wilson says. It’s currently in use at Georgetown Village in Georgetown, Texas, a community of single-family homes from the $190,000s.
“It’s just really, really different,” Wilson says. “But that’s what you have to do now.”
But a green sales center can exist in a garage, too. Atlanta-based Haven Properties, which builds all its homes to EarthCraft House and Energy Star standards, makes good use of cut-aways mounted to the garage-based sales center wall to show buyers the elements that will make their home comfortable, quiet, and energy-efficient. In its inventory homes, simple but effective posters spotlight the energy-saving features in each room. That way, prospective buyers can learn as they tour.
Show and Tell
Daytona Beach, Fla.–based ICI Homes launched its own green building program, EFACTOR, after extensive research.
“We knew [our green building program] would be a competitive edge,” says Judy Lawrence, vice president of customer relations. “Then we asked, ‘How do we sell it?’”
To start with, ICI sold its existing models and built 12 new ones. Advertising, including bus wraps, focused on EFACTOR. Brochures feature a checklist to help buyers compare EFACTOR construction to other builders’ houses. Seminars and a Web site, www.myEfactor.com, explain the benefits. Plus, ICI guarantees the monthly power bills.
“Mostly, it’s been a PR push,” says Rosemary Messina, ICI’s vice president of sales and marketing. "We get at least two stories a month [in local media].”
The “crowning glory” of ICI’s marketing, Messina says, is the Emerald, the showcase home for the local HBA Parade of Homes. It featured eight education stations, including a building science lab in the garage, staffed by ICI employees in white lab coats.
What have the results been? Sales were up 100 percent from 2007 to 2008. Messina attributes a third of that to EFACTOR. ICI identified 55 buyers during the Parade of Homes.
For the remainder of 2008, the show house will host everything from a children’s art show to Realtor green building certification classes.
“We want the show home to live all year long,” Messina says.
A Different Approach
John Keith is a true believer in green building. President of Colorado-based Harvard Communities, Keith trained his sales staff to explain the benefits to prospective buyers and had elaborate displays in his sales center. It didn’t really work.
“A lot of what we do is pretty boring,” Keith says. “Ultra energy-efficient [building] isn’t very sexy.”
Then, Keith took matters into his own hands and started leading wine-and-cheese tours of under-construction houses for small groups of buyers and prospective customers every couple of months. He walks them through the house, pointing out the dozens of details that go into his homes. During the course of an evening, he says, he watches as people start to grasp the concept and shift from being mildly interested to being raving fans.
“People say, ‘Thank you for doing this; I had no idea,’” Keith says.
He’s seen first-hand what many green builders know. They don’t really save money on marketing. They just spend that budget in different ways.
“A lot of successful green builders will spend less on paid advertising and deploy [those dollars] into public relations, events, referrals, and more interactive on-site displays,” says Jeff Kingsbury, who worked for several years at pioneer green builder McStain Neighborhoods and now consults with green builders and developers. “What you want to do is connect with customers on a values basis because you have a richer, deeper story than ‘$30,000 off.’ We’ve all worked too hard to discount it.”
Harvard Communities has generated a substantial amount of positive press by offering a solar option and by completing two near–zero-energy homes that are about 80 percent more efficient than code-built houses.
Keith has noticed a steady change in the public’s awareness of green building, which he attributes to the constant media presence of environmental messages. As a result, he says, Harvard Communities had its best two quarters ever “at a time when builders 10 times our size have had almost no sales."
“I think our successes are due in large part to the fact that the word is out on what we’re doing,” he says. “We see more and more people who are seeking us out because they’re hearing about what we’re doing and thinking, ‘Wouldn’t it be great if we had an energy-efficient home?’”
Getting an Edge
There was a time not too long agowhen the phrase, “Build it and they will come,” applied to the housing business. That time is past, and builders are now squarely focused on building what buyers say they want in a home. The primary factors in a buyer’s decision-making process—location, floor plan, price, and community amenities—are still firmly in place. But a growing percentage of buyers are adding elements of green building principles to their must-have list. Their motives probably have little or nothing to do with saving the planet (see “The Motivation to Buy Green,” below)—studies indicate that Americans lag well behind consumers in developing countries in their commitment to sustainability—but they are increasingly well-informed about what constitutes a green house and neighborhood. Builders can establish a competitive edge and reduce their impact on the environment by zeroing in on these buyer preferences.
The Motivation to Buy Green
Interest in sustainability is growing, but motives are more personal than altruistic.
Builders have said for years that they’d love to go green, but buyers weren’t interested. That attitude appears to be changing. Sustainability has moved to the mainstream, making it a much easier sell.
A global consumer study by the New York–based market research firm TNS released this spring reported that 49 percent of U.S. consumers surveyed were more concerned about the environment than they were five years ago, and 36 percent had changed their behavior recently to benefit the environment.
Moving from the general population to home buyers specifically, a 2007 study on the market for green residential development by Washington-based Robert Charles Lesser & Co. (RCLCO) found that 36.4 percent of potential home buyers identified energy savings, health benefits, or the environment as their primary decision-making factor in their next home purchase.
The lion’s share of those buyers—21.8 percent—is what RCLCO refers to as Greenback Greens, buyers for whom energy savings is their top priority. They’re joined by another 52.2 percent of the survey group who say they care about energy savings and they’re willing to spend money on it, but it’s not the primary issue in their next home.
The opportunity to save money on monthly power bills—and do something good for the environment at the same time—is an attractive pitch. Emil Morales, senior vice president of TNS, lives in Del Sur, a sustainable community in San Diego developed by Black Mountain Ranch. His house is powered by solar energy.
“What I love is that my electric bill is like $20 a month,” he says. “The people in my neighborhood who don’t have solar, their bill is $200 to $300 a month.”
RCLCO’s research, however, found that the Greenback Greens tended to be older with lower incomes and to expect a payback on their investment in less than four years, which is probably unrealistic. Most green builders put the payback period at between six and eight years, and most homeowners move every three to seven years, says Shyam Kannan, RCLCO vice president and director of research and development. The disconnect in the payback periods is why energy savings alone has challenges as a marketing position for green builders.
“To an extent, that incentive will resonate with a certain subset of buyers,” Kannan says, “but for the vast majority of people, it’s not enough.”
Add in health benefits, though, and builders have a message that gets people’s attention. In fact, Kannan thinks the biggest opportunity lies with the group RCLCO calls Healthy Greens, those buyers who consider potential health benefits of green homes to be the most important factor in their decision to buy a new home. When asked about their willingness to pay a premium for the health benefits of a green home,
54 percent of Healthy Greens were willing to spend an extra $10,000, 32 percent were willing to spend $17,000, and almost 15 percent were willing to spend at least $20,000— with no expectation of a financial payback.
“When you change the argument from one of saving a few bucks on monthly electric bills to one of limiting exposure to carcinogens, there’s a market that extends beyond financial issues,” Kannan says. “Our conclusion is that the motivation of personal health was the most powerful message.”
It’s powerful because it’s universal, and it dovetails perfectly with the emotions tied to the decision to buy a home, says Jeff Kingsbury, managing principal of Indianapolis-based green building consultant Greenstreet Ltd.
“If you ask anyone, ‘Do you care about the health of your family?’ the answer is a pretty resounding, ‘Yes,’” Kingsbury says. “That’s where successful green marketing has ended up.”
Breathing Easy
A green house changes one family’s life.
At 5 years old, Brooke Madden should have been spending her days learning the alphabet, jumping rope, and playing tag on the playground. Instead, the Georgia kindergartner spent most of her time being sick. Severe allergies to pollen sent the Madden family to the emergency room on a weekly basis as the little girl gasped for air. Steroid breathing treatments bloated her little body, and she missed countless days of school.
“You feel so helpless as a parent,” says her mom, Jody Madden.
In researching ways to help their daughter, the Maddens learned about the EarthCraft House program, a sustainable building system that improves indoor air quality through sealing air spaces and filtering the fresh air that comes into the house. They put their house on the market and went shopping for a house built to EarthCraft standards.
“When we told people we were selling the house, they thought we were crazy,” Jody says. “They said, ‘Why don’t you just rip up the carpet?’ EarthCraft goes above and beyond that. It’s a totally different feel to the house when you have all the stuff they put in it for EarthCraft.”
The Maddens bought a Haven Properties house in the Windemere neighborhood in Cumming, Ga. Haven Properties builds all its houses to EarthCraft standards and has all its houses certified by EarthCraft inspectors. Since moving in to the house, their lives have changed dramatically, Jody says. Brooke hasn’t been to the emergency room once, and she doesn’t have to do breathing treatments anymore.
“She’s totally fine,” Jody says of her daughter, who is now 8. “She’s not missing school because of her breathing. She hasn’t seen an asthma doctor at all. It’s a huge, 180-degree change because she was so sick. We love our house, obviously.”
Hearing is Believing
Atlanta-based Monte Hewett Homes uses a simple, dramatic demonstration to show buyers how blown insulation can give them both energy efficiency and peace and quiet, even in the middle of the city. The company was kind enough to film it for Builder. Check it out on YouTube.com.