Getting the Value for What You Build

Getting the Value for What You Build Presenter: Sandra Adomatis January 17, 2018 and January 24, 2018 Course description Building a house takes skill, time, and money. Selling what you build for what it is worth can be challenging. Going the extra mile to build to a higher standard costs more but can you sell it for more? If this has been your challenge, maybe its not the house or your customer, it is the methods used to promote and advertise the higher standard. Become a dream builder that knows how to make your customers want what you build not just need what you build. We will take a walk down memory lane in the building world and into today's market that demands change. Let's change your world by mastering how to get value for what you build! 1

Learning objectives MEET the challenge of going the extra mile to build something with higher efficiency. NAME the words that sell high-performance homes and appeal to consumers emotions. GAIN credibility with customers by branding the product. DOCUMENT what you build in ways that influences appraised values. American Institute of Architects Seventhwave is a Registered Provider with The American Institute of Architects Continuing Education Systems (AIA/CES). Credit(s) earned on completion of this program will be reported to AIA/CES for AIA members. Certificates of Completion for both AIA members and non- AIA members are available upon request. This program is registered with AIA/CES for continuing professional education. As such, it does not include content that may be deemed or construed to be an approval or endorsement by the AIA of any material of construction or any method or manner of handling, using, distributing, or dealing in any material or product. Questions related to specific materials, methods, and services will be addressed at the conclusion of this presentation. Provider #: G175 Course #: IAB1813 2

This concludes The American Institute of Architects Continuing Education Systems Course www.seventhwave.org/education/events Top 3 Challenges Builders Face Ask any builder around the country about top challenges and you are pretty likely to hear three things: Cost and availability of attractive lots; Finding and cultivating skilled tradespeople; and Creating high brand awareness with prospective homebuyers. Source: Thriving in a ZEN Landscape Aug 2, 2017 4:01:45 PM By Stacy Fitzgerald Redd 6 3

What is your brand? Green Queen 8 4

Self Assessment Questions (T&F) 1. A ZERH Home always has solar photovoltaic systems? 2. Customers do not want more energy efficient homes? 3. The average HERS Rating for Iowa last year was 55? 4. Appraisers cannot use HERS Ratings in valuing homes? F F F F 9 A walk down memory lane 1960s 10 5

Indianapolis Star Newspaper Ad 1960s 11 12 6

These Badges Signify You Truly Have a Space Age House. https://www.thespruce.com/gold-medallion-home-definition-1821516 13 What happened to these homes? (850,000) The Edison Electric Institute and General Electric heavily promoted the program through magazine and newspaper ads, TV spots, and radio jingles. Future U.S. President Ronald Reagan even got on the bandwagon for all electric living in his role of spokesman for General Electric. On the builder's side, they received an allowance from the LBE* program. On the homeowners' side, electricity's clean, inexpensive, and safe advantages were touted. https://www.thespruce.com/gold-medallion-home-definition-1821516 * Living Better Electrically 14 7

What happened to the Brand Gold Medallion? The brand promoted: Clean energy Safety Inexpensive alternative Oil or Gas Heat 15 Fast Forward 2018 16 8

1.8 Million ENERGY STAR Homes in U.S. 85,000 + ZE & ZERH Or Building Challenge Homes in U.S. 2 Million Green Certified Homes in U.S. best guess 2000+? Passive Solar Homes in U.S. 2 Million Homes with HERS Ratings FACT Builders and Homeowners Enemy 17 How many ENERGY STAR Homes in Iowa? 18 9

How many new IA single unit building permits in 2016 and 2015? Area 11 2017 Single Unit 2016 Single Unit 2015 Single Unit Iowa 8342 8230 7353 Cedar Rapids 407 451 489 Ames 120 112 96 Des Moines 3540 3758 3374 19 "History repeats itself because no one was listening the first time." Anonymous Build it for today Label and Record it permanently for tomorrow! Sandy Adomatis 20 10

Can you hear me NOW? 21 Picture Your Brand Cradleto Resale https://energy.gov/eere/buildings/home-improvement-catalyst-hi-cat 22 11

Make your customer feel this way about you! 23 Design & Build Rate & Label Record Document Cradle to Resale Vision Design a highperforming house that exceeds current codes. Build to the higher standard. Build for tomorrow s buyer don t get lost in yesterday s desires for housing. Rate the house from Plans and Specifications A Projected HERS Preliminary AIGREEA A Preliminary House Label ZERH ZEN ENERGY STAR Green Certified Record the ratings and make them accessible to more than the first buyer. Label in electrical box Completed AI Res. Green & Energy Efficient Addendum (AIGREEA) Preliminary Insist the labels you use are made accessible through a central database 24 12

Why don t all builders build to a higher standard and Brand their work? 25 Conquer the Sales Half of Equation Communicate Value to Your Buyers and Gain credibility with customers Be able to charge much more for the project Generate more sales Build a reputation and brand 26 13

Make them want not need your house Who do your customers love? Make them want not need your house Buyers take pride in brand names 28 14

Make them want not need your house Guilt buying the wrong house can cost all those you love. Make them want not need your house Take the fear out of the decision to buy your home rate it, brand it and record it for the future. 30 15

Top 3 Reasons Consumers Get Involved in Energy Efficiency 59% Save Money 27% Healthier Home 35% Comfort Source: Energypulse 2016 Special Report 31 What makes a home livable? Based on a world wide poll the following themes prevail: Sunlight or natural light Most prevalent Fresh air Views Connections to nature Small well-designed spaces Creative spaces flexible to allow personalization Security Storage http://www.ecohome.net/guide/makes-home-livable 32 16

10 Most Powerful Words in Advertising 1. You 2. Results 3. Health 4. Guarantee 5. Discover 6. Love 7. Proven 8. Safety 9. Save 10. New https://www.thebalance.com/most-powerful-wordsin-advertising-38708 33 Is your advertising measuring up? Save Money Healthier Home Comfortable Home 17

Iowa Builder Website Custom Builder A has been involved in the Residential Building Industry for over 30 years combined, from remodeling to new home construction. We expanded our building custom homes in the Cedar Rapids/Iowa City corridor and nearby communities. 35 He s Been Around for Awhile! 36 18

Iowa Builder Website Revised Custom Builder A has experience building homes that provide comfort, good indoor air quality for better health, and lower energy costs. We can also retrofit your current home to be a healthier, safer, more comfortable and lower cost home that commands more value on resale. You will love our custom homes in the Cedar Rapids/Iowa City corridor and nearby communities. 37 You reached my emotions comfort health safety Alaska Housing Finance Corp. 2017 Sandra K. Adomatis, SRA, LEED Green Assoc. 38 19

Iowa Builder Website Building a new home can be a stressful process, but finding an experienced custom home builder can make things a whole lot easier. Stress free Construction offers consultations and strives to keep lines of communication open, from the beginning of the process until the finishing touches are applied. You ll have no doubt you re getting the top-quality work you expect for your new home. 39 New Home = Stressful New Home = Communication Problems New Home = Questionable Quality 40 20

Iowa Builder Website Revised Building a new home for your loved ones is our specialty. The quality of your new EarthCraft home exceeds the building code and comes with a third-party rating to verify the higher building standard. Not only do our homes offer you comfort, they offer you a lower cost energy bill that has better indoor air quality for a healthier environment. 41 Label it before it is finished for all to see! HERS 45 42 21

Just as building science changed so should your advertising. Put a label on FOR SALE SIGN showing special features On Sign Zero Energy Solar Energy Ready Efficient Ready 43 Record it permanently! Its your brand and future business referral! Put a label in the electrical box showing special high performance features 44 22

Advertise the Performance Educate your buyers 45 Advertise the Performance 46 23

47 Roadblocks to appraised value Appraiser not provided preliminary ratings No ratings considered Limited accessible data Limited knowledge of construction type 48 24

Story Time Actual Case Study 49 Habitat Builds House with Five Labels 50 25

Sales Data in Neighborhood All Code Built # ML Number Close Date Sq Ft Heated Current Price SP/SqFt Beds Baths Year Built Pool 1 C7229463 6/23/2017 1,348 $170,650 $126.59 3 2 2017 None 2 C7226399 8/12/2016 1,540 $171,150 $111.14 3 2 2016 None 3 C7228403 8/10/2016 1,437 $174,900 $121.71 3 2 2016 None 4 C7230646 3/17/2017 1,227 $178,900 $145.80 3 2 2017 None 5 C7226415 9/24/2016 1,540 $178,150 $115.68 3 2 2016 None 6 C7226509 8/15/2016 1,437 $181,900 $126.58 3 2 2016 None 7 C7225176 8/19/2016 1,437 $182,900 $127.28 3 2 2016 None 8 C7236968 4/24/2017 1,437 $186,900 $130.06 3 2 2017 None 9 C7230418 12/2/2016 1,415 $187,000 $132.16 3 2 2016 None 10 C7217526 9/24/2016 1,540 $190,250 $123.54 3 2 2016 None 11 C7236482 6/5/2017 1,437 $191,900 $133.54 3 2 2017 None 12 C7236946 5/26/2017 1,437 $191,900 $133.54 3 2 2017 None 13 C7232250 4/18/2017 1,540 $194,750 $126.46 3 2 2016 None 14 C7230273 4/21/2017 1,546 $198,500 $128.40 3 2 2017 None 15 C7231761 1/18/2017 1,437 $203,000 $141.27 3 2 2016 None 16 A4171079 1/30/2017 1,437 $226,000 $157.27 3 2 2016 Yes Mean 1,450 $188,047 $130.06 Median 1,437 $186,950 $127.84 51 Appraised Value Results Appraised Value $5,000 under the lowest sale priced code built house 52 26

What went wrong? Appraiser without knowledge of the labels or construction type No Preliminary HERS provided No Preliminary Green Score Sheet Provided No AI Residential Green & Energy Efficient Addendum Builder had no vision for cradle much less the resale 53 https://www.appraisalinstitute.org/assets/1/7/residentialgreenandenergyefficientaddendum.pdf 54 27

Resources https://www.appraisalinstitute.org/assets/1/29/ai BCAP_Flyer.pdf 55 https://www.appraisalinstitute.org/assets/1/29/ai BCAP_Flyer.pdf 56 28

Appraisers need the Projected Rating if you want them to acknowledge energy efficiency. Final HERS Ratings are public for anyone to check including the appraiser, lender, REALTOR, buyer, and your competitors. 57 Iowa is in Top 5 States with highest No. of HERS Ratings State AVG HERS 2013 AVG HERS 2014 AVG HERS 2015 AVG HERS 2016 % of Permits w/hers 2013 % of % of Permits w/her S 2014 Permits w/hers 2015 % of Permits w/hers 2016 DC 66 65 67 59 38.7% 38.9% 65.1% 100.3% MA 58 62 56 55 68.7% 72.8% 83.1% 99.4% UT 57 60 61 62 8.1% 9.4% 10.9% 98.2% IN 68 67 66 65 72.8% 68.9% 74.6% 63.5% IA 61 60 59 56 54.1% 58.3% 66.2% 61.1% MD 60 59 57 55 59.1% 54.5% 53.8% 58.7% CO 60 59 57 55 45.0% 49.0% 51.2% 57.5% CT 56 53 55 53 31.5% 29.7% 49.1% 51.6% AZ 61 62 63 63 16.6% 57.0% 49.7% 51.3% MN 54 57 53 51 11.1% 56.8% 38.3% 47.7% DE 59 57 55 53 46.9% 38.3% 55.2% 44.1% NV 65 62 62 62 30.1% 48.6% 48.6% 43.7% OH 60 59 60 60 57.6% 47.8% 52.2% 43.3% OK 63 62 62 61 36.4% 34.2% 37.0% 43.1% Source: RESNET and NAHB 58 29

Most Valuable Database Now is MLS Does your MLS have well documented green fields? 59 Words of Wisdom to Builders Never let appraiser go to a site without you or a representative that can identify the features and interview the appraiser to make sure they have knowledge of the features. 60 30

Appraisal Institute s Green Registry http://www.appraisalinstitute.org/education/your career/professionaldevelopment programs/ 61 Stakeholders Builder Homeowner Seller Energy Advocates Buyer Lender Underwriter Education! MLS Appraiser Broker Listing & Selling 62 31

Session Take A Ways Building Standards have changed So should advertising Words matter appeal to emotions Buyers want healthy, comfortable homes that save money Build it- Rate it Record it HERS, AI Addendum Dream Builder Greater Las Vegas Assoc. of Realtors 2017 Sandra K. Adomatis, SRA, LEED Green Assoc. 63 Sandra K. Adomatis, SRA, LEED Green Associate E-Mail: Adomatis@Hotmail.com Twitter: https://twitter.com/sadomatis Do you hear me now? 64 32