Realtor and Lender networking value for HERS raters?

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Permalink Reply by Sandy Michaels on October 18, 2012 at 9:31am

I think the residential energy efficiency market is missing the boat by not doing more "pre-purchase" energy audits.  There are loans to accommodate buyers that want to do energy upgrades and have the cost tied into the mortgage.  Real estate agents need to know how streamline this process can be and how happy it can make their clients. It doesn't delay closing, the work is done within 90 days after closing. Contractors / auditors should be reaching out to Realtors to build on this idea, increasing the number of energy audits and home improvement jobs - and most Realtors already have their financial networks established.  

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Permalink Reply by Tom Conlon on October 25, 2012 at 2:45pm

I think you are smart to be skeptical about this. Most Realtors are highly 'value conscious', and to date most raters just haven't been able to demonstrate enough of a value proposition beyond the range of services offered by traditional home inspectors during escrow. 'Good enough' is always the enemy of 'better'.

That said, Realtors are community superconductors, and as effective networkers they're second to none. So if you can show that your ratings deliver real value (i.e., better/faster/cheaper) and you're trustworthy, you'll find no better allies than Realtors to help you sell them... at least in those cases where they make the most sense (which from a Realtor's perspective might well be after the close of escrow).

As for buyer-paid pre-sale inspections, cultivating prospective buyers directly may be your best strategy, or at least a complementary one. Experienced home inspectors often do this to improve their independence and sell more higher priced, value-added services. However, to be cost-effective this requires an entirely different set of marketing skills. Here, the 'green lifestyle' and move-up segment buyers are probably your best targets. 

Without a mandate, seller-paid pre-sale ratings only make sense in those rare cases where unless a rating is available to appraisers, they will be apt to undervalue the home's unusual (above-market) efficiency enhancements. The trouble is, unless the sellers themselves already realize this, only EcoBrokers or NAR Green Realtors are likely to be able to recognize such a listing when they get one. And as we know, far too many supposedly "green" homes just don't have the HERS scores to prove it; so a pre-sale rating can still be risky for sellers, even in cases like these.

Originators offer an entirely different set of challenges. I've heard reports of raters becoming captive to a particular EEM broker, relying on leads or even kickbacks, to the point where the value they end up offering their clients becomes questionable. If EEM's have a significant share potential in your market, then cultivating the lenders who are writing them might make sense as part of a diversification plan, but I'd be reluctant to build too much of your business around it. 

Finally, I completely agree with you about 'free' audits; on again/off again audit subsidies just kill any chance of stabilizing this market.

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