Benefits of Working with ENERGY STAR: A Self-guided Tour for Residential Professionals

OUTLINE What is ENERGY STAR? The Science Behind the Value Signs of a Changing Environment Benefits to Consumers How ENERGY STAR Affects the Real Estate Industry How You Can Get Involved

WHAT IS ENERGY STAR?

ENERGY STAR is a joint program of the EPA, the DOE and private business partners, helping us all save money and protect the environment through energy efficient products and practices which deliver same or better performance.

BRAND ADVANTAGE Brand Shorthand: Truly Energy Efficient Credible Environmental Leadership = Recognized by >70% of households by end of 2007

BRAND ADVANTAGE

WHAT IS THE ENERGY STAR NEW HOMES PROGRAM? Government-backed label At least 15-20% more efficient than local code Third-party verified Whole-home performance New way to sell homes Voluntary – proof of your leadership

How You Know it’s ENERGY STAR Look for the label – located on the circuit breaker box

REVIEW ENERGY STAR is a public/private partnership which strives for and achieves: Truly efficient products and services Credible and authoritative results Environmental leadership Customer satisfaction

THE SCIENCE BEHIND THE VALUE

WHAT’S AN EFFICIENT HOME? What do we want in a home? Comfort Sustainability Affordability Durability Healthy conditions

WHAT’S AN EFFICIENT HOME? How do we get these things?

KEY COMPONENTS TARGETED BY ENERGY STAR Control Air Flow Control Moisture Flow (Vapor, Bulk) Control Thermal Flow High- Performance Homes

WHAT’S AN EFFICIENT HOME? Control Air Flow Control Thermal Flow Control Moisture Flow (Vapor, Bulk)

ENERGY STAR Qualified Homes Features Effective Insulation High Performance Windows Efficient equipment Third-party verification Tight Construction and Ducts Lighting and Appliances

EFFECTIVE INSULATION This means properly installed and high-quality insulation which: Reduces heat transfer to improve comfort; and Protects homes from moisture damage which improves durability A Home energy rater will visit the home at pre-drywall stage and inspect it using the thermal bypass checklist to ensure the insulation is installed with no gaps, voids or compressions.

Improved technology reduces heat transfer Multiple panes insulate better Low-E glass reflects light & UV rays Non-toxic gas fills insulate better HIGH PERFORMANCE WINDOWS Warm edge spacers reduce heat flow & condensation

TIGHT CONSTRUCTION AND DUCTS In an average home, ducts can leak 20-30%, which compromises comfort and distribution of air. Properly sealed ducts will minimize leaks, humidity, dust, pollen, and pests in the home. Expanding foam is used to seal holes and cracks in the home’s envelope. Reduces the amount of humidity, dust, pollen, pests, and noise that can come inside; Helps maintain even temperatures; and Can save up to 20% on heating and cooling costs.

EFFICIENT EQUIPMENT As much as half of the energy used in homes goes to heating and cooling. Therefore, equipment plays a critical role in the efficiency of a home. Efficient, properly sized HVAC systems: Use less energy Reduce indoor humidity Are quieter than other systems If a system is installed that is too large for the home, it not only costs more, but also operates less efficiently, and can cause comfort and humidity problems.

LIGHTING AND APPLIANCES ENERGY STAR qualified homes include ENERGY STAR qualified products from at least one of these categories: HVAC or Windows or 5+ lights/appliances

THIRD PARTY VERIFICATION Home energy raters inspect the homes twice during the construction: 1)To inspect air sealing and insulation details at pre-drywall stage using the Thermal Bypass Checklist shown here…

…and 2) To measure the leakiness of the building envelope and ducts. THIRD PARTY VERIFICATION Here, a home energy rater is employing the blower door test to measure air leakage in the building envelope. And here, a home energy rater is using the duct blaster test to measure the leakiness of ducts.

REVIEW ENERGY STAR qualified homes address air, thermal, and moisture flow through six major performance features: Effective insulation High performance windows Tight construction and ducts Efficient equipment Lighting and appliances Third party verification

SIGNS OF A CHANGING ENVIRONMENT

YOUR CUSTOMERS MAY NOT REALIZE… US Energy Consumption by Sector Source: US Energy Information Administration statistics

INCREASING INTEREST It’s estimated that more than half of builders nationwide are involved in green building in some way. The National Association of Home Builders estimates that by 2010, 5 -10% of homes will be completely green*, in addition to others which will have some eco-friendly features.

GOING GREEN BEGINS WITH ENERGY STAR BLUE Resource Efficiency Site Planning Water Materials Waste Mgt. Renewables Indoor Environment Bulk Moisture Radon Pest Control HVAC Combust. Safety Materials Commissioning Energy Efficiency Envelope Distribution Equipment Lighting Appliances Step 1 Step 2 Step 3 Up to 30-50% of green building point systems are related to energy efficiency

GOING GREEN BEGINS WITH ENERGY STAR BLUE Green building means improving the way that homes and homebuilding sites use energy, water, and materials to reduce impacts on human health and the environment. Building a green home means making environmentally-preferable and sustainable decisions throughout the building process to minimize the environmental impact of the home, while it is being built, and over the years it will be lived in.

Indoor airPLUS Program EPA has also created the Indoor airPLUS program to address indoor air quality in new homes. This label requires that the home first qualifies as ENERGY STAR, and then addresses issues such as: Moisture Control Pest Control Radon Control Look to the wide variety of available green home programs to complete the picture with water-efficient products, renewable energy technologies, waste reduction, recycling, and sustainable land development practices. HVAC Systems Combustion Safety Building Materials

REVIEW Consumers are increasingly interested in going green: 21% of U.S. energy consumption is used by homes. 17% of greenhouse gas emissions are produced by homes. Energy efficiency is a critical component of green building. In addition to ENERGY STAR, EPA has also created the Indoor airPLUS Program.

BENEFITS TO CONSUMERS

Typical Price Location Facade Floor Plan Amenities Features Effective Insulation Adv. Windows Tight Construction & Ducts Efficient Equipment Lighting and Appliances Third-party Verified + Additional Benefits Quieter More Comfortable No Drafts Fewer Bugs/Pests Better Indoor Air Quality Higher Quality Less Maintenance… = BENEFITS TO CONSUMERS

The financial benefits you can’t see… Lower ownership costs & a better investment Let’s take a look at an example…

VALUE BASED ON PRICE Compact Fluorescent Light Bulb (CFL) $3.50 Incandescent Light Bulb $.50 Comparing initial prices makes the incandescent bulb seem like the obvious choice. BUT…

The CFLs in an ENERGY STAR qualified light fixture only need to be changed once every 8 years on average, compared with an annual ladder-climb for incandescent light bulbs. 35 CONSIDERING TIME & EFFORT

CONSIDERING PERFORMANCE 100% Electricity 100% Electricity 25 Watts 100 Watts 90 Watts Heat [90%] 16 Watts Heat [ 60%] 75% less heat 8,000 Hour Life1,000 Hour Life 700% more durability 10 Watts Light [40%] 10 Watts Light [10%] Better Optics CFLs also have these performance benefits:

CONSIDERING TOTAL COST CFL Lighting (8 years) Incandescent Lighting (8 years) Initial Investment: $.50 Initial Investment: $3.50 Energy (lifetime): $40.00* Energy (lifetime):$10.00* Bulb Replacement: $ 3.50** Bulb Replacement:$.00 Total Cost: $44.00Total Cost:$13.50 *Assuming 1,000 hours/yr. operation and.097 cents/kWh. **All costs, except initial cost, are discounted over the products' lifetime using a real discount rate of 4%.

THIS COMPARISON WORKS WITH NEW HOMES TOO…

COSTS FOR ENERGY STAR Based on $2,000 additional financing, additional mortgage payment is $15 per month* Use substantially less energy for heating, cooling, and water heating-delivering $35/mo* savings Potential for positive cash flow starting on move-in day Plus more comfortable, quieter, and third-party tested If energy prices rise, savings will only increase * Figures are for illustrative purposes only. Assuming: 30 years and 6.5% interest.

MORE VALUE Investment Return Example: A $2,000 cash purchase for additional energy features yields ~35% investment return rate (after taxes) over an average 7-8 years of ownership

MORE VALUE Lower Maintenance Cost - Avoided moisture damage - Low-E windows reduces sunlight damage to furnishings & wood floors - Longer-lasting equipment

MORE VALUE Potential Higher Resale Value - Track record of low bills - Reduced obsolescence compared to other homes - Government-backed label for high- performance

REVIEW By adding ENERGY STAR features to a home, homeowners will receive added benefits that make the home: High-performing; Affordable; Environmentally friendly; and Easier to maintain.

HOW ENERGY STAR AFFECTS THE REAL ESTATE & APPRAISAL INDUSTRIES

KEEPING YOUR BUSINESS ON TOP How do you maintain your status in a crowded and increasingly competitive market? Supporting ENERGY STAR qualified homes can help With growing concerns about rising energy costs, new homes that earn the ENERGY STAR offer homebuyers lower utility and reduced maintenance costs, while providing improved comfort and greater durability.

CONDITIONS AFFECTING VALUE High Utility Bills Comfort Problems –Cold/Warm Drafts –Unevenly Conditioned Rooms –Musty Smell Durability Problems –Peeling Exterior Paint –Presence of Mold –Wet Basements –Wet Stains on Walls/Ceilings –Ice Dams in Winter

VALUE PROPOSITION Energy Efficiency ENERGY STAR for Homes Indoor Air Quality ENERGY STAR with the Indoor airPLUS Package $ Savings Comfort Durability Health

VALUE IN THE WHOLE A traditional appraisal process of incandescent vs. CFL would have missed more than $30 of value for a single light fixture. This exact same value proposition is becoming increasingly important for whole-house performance...

NEW VALUE INDICATORS FOR HOMES Property damage cases in courts ~Moisture & mold claims have surged, with more than 10,000 mold-related lawsuits happening at one time. [Insurance Information Institute, 2006] Consumer willingness to pay ~In 2007, consumers said that the first thing they would do if they had an extra $10,000 to put into their homes would be to replace flooring and countertops; in 2008, it was replace windows and upgrade their heating and cooling systems to save energy. [Shelton Group, 2008]

“Energy efficient features and cosmetic upgrades top the list of best remodels for the buck.”

NEW VALUE INDICATORS FOR HOMES Asthma: Recent studies have shown that moisture damage and mold growth in the main living quarters of a home are associated with the development of asthma in early childhood. *[ Moisture damage and childhood asthma : a population-based incident case-control study ]

OPTIONS FOR CONSIDERING VALUE Determine the following for consumer reference: The value of an ENERGY STAR qualified home based on sales comparison Calculated or actual utility bill savings (HERS Score or ENERGY STAR BOP): Monthly energy savings Present value of energy savings Cost of energy efficiency improvements added based on table of values by measure

REVIEW Based on $2,000 additional financing and an additional mortgage payment of $15 per month,* consumers will: Use substantially less energy for heating, cooling, and water heating, delivering $35/mo* savings Have potential for positive cash flow the day they move in Have a more comfortable, quieter, and third-party tested home Save more if energy prices rise * Figures are for illustrative purposes only. Assuming: 30 years and 6.5% interest.

HOW YOU CAN GET INVOLVED

FOR REAL ESTATE PROFESSIONALS You can increase customer satisfaction by selling ENERGY STAR qualified homes that are more comfortable, require less maintenance, have improved indoor air quality, and cost less to own.

FOR APPRAISAL PROFESSIONALS The best way to gain more referrals is to provide expert guidance to your clients… Determine the value of an ENERGY STAR qualified home based on a sales comparison.

RESOURCES TO HELP YOU SELL

BEHIND THE WALLS This is a great link to send relocation buyers. Consider displaying the tour in your office.

ORDER OR DOWNLOAD ENERGY STAR MATERIALS Help your clients understand the features and benefits of ENERGY STAR.

WORK WITH ENERGY STAR PARTNERS IN YOUR AREA You can find them by visiting the Partner Locator. Also, encourage builders you work with who are not currently constructing ENERGY STAR qualified homes to join the program. Be sure to mention the benefits to participation, such as increased profits and market differentiation.

BE A LOCAL ENERGY STAR EXPERT Download presentations and other marketing resources from the ENERGY STAR Web site to educate customers. Speak to groups such as the local Chamber of Commerce, Association of Realtors, Home Builder’s Associations, inspectors, and appraisers. Prepare a press release or advertorial about your support of ENERGY STAR for local newspapers, magazines, and home-related Web sites.

HIGHLIGHT ENERGY STAR …on your website, newsletters, and business cards by displaying the “Ask About ENERGY STAR” logo. –Be sure to follow the ENERGY STAR Identity Guidelines when using the logo.

Brand Identity Guidelines

Talking/writing about ENERGY STAR Always write ‘ENERGY STAR’ in all caps Always add ® in superscript the first time ENERGY STAR is mentioned on a document Homes are “qualified” not “certified” Program specifications are “guidelines” not “standards” XYZ Builder is a “partner”; not “endorsed” by EPA or the government

PROMOTE ENERGY STAR AS A MUST HAVE FEATURE Support the addition of ENERGY STAR into your local MLS searchable listings database. To start the process, contact your local Realtor Association and encourage the addition.

INCORPORATE ENERGY STAR INTO YOUR BUSINESS Consider giving your clients an ENERGY STAR homebuyer gift upon the sale or purchase of a home. Include items such as ENERGY STAR qualified compact florescent lights (CFLs).

EXISTING HOMES Support energy efficiency improvements in existing homes. Encourage homeowners who are planning to sell their home to have an energy audit completed and make ENERGY STAR-recommended home improvements to increase their home’s efficiency.

REVIEW You can incorporate ENERGY STAR into your business by: Using the online resources Create financial analyses for your clients to show the benefits of owning an ENERGY STAR qualified home. Work with local ENERGY STAR partners Support the addition of ENERGY STAR into your MLS searchable listings database Encourage sellers to have an energy audit on their home and make improvements to increase their profits.

ENERGY STAR AND YOUR BUSINESS The building industry is adapting to a changing environment and there are many ways for real estate agents and appraisers to incorporate this program into their business models to offer clients high performance features and increase customer satisfaction.

FOR MORE INFORMATION Visit us on the Web: Or call the ENERGY STAR hotline: STAR-YES