Here is the text version of the Zero Energy Ready Home webinar, "Voice of the Builder- Cold Climate," presented in June 2017. Watch the webinar.
Alex Krowka:
Presentation cover slide:
... training webinar series. This is the inaugural "Voice of the Builder" webinar that we've created to kind of showcase some of our more accomplished builders and have them share some of their secrets to success with others in the industry. We're really excited that you can join us today. Today's speakers are Glenna Wilson of Charis Homes and Scott Sanders of BrightLeaf. So today's session is one in a continuous series of training webinars to support our partners in designing and building and selling Zero Energy Ready Homes. My name is Alex Krowka. I'm account manager of the program, and I'm just going to take a quick moment to cover some general notes on webinar housekeeping. All attendees are in listen-only mode, however, we do invite you to ask questions throughout the session in the questions section of the GoToWebinar program. We'll monitor these throughout the webinar, and after the presentation, we'll have some time to go over your questions that weren't answered during the webinar. This session is being recorded, and it will be placed on the resources page of the Zero Energy Ready Home website. Please allow some time for this, since it does take a few days to a week or so to be added online, but we'll notify everyone once everything is uploaded. So now I'm going to hand it over to Sam Rashkin, chief architect of DOE Building Technologies Office, as well as program director for Zero Energy Ready Home. Go ahead, Sam.
Sam Rashkin:
Hey, thank-you, Alex, and thank-you, everyone, for attending. We're so happy these builders have been generous enough to give us their time and their stories. What we do around the country -- the Zero Energy Ready Home team does these half-day seminars, and sometimes full-day seminars, on Zero Energy Ready Homes and how to get there. And my favorite part is the Voice of the Builder module, where we ask two or three local builders to stand up and tell their story. Pretty much unfiltered and with no guidance they go and explain how they got to the space and why they're doing what they're doing. And we think it's such an important story because they're at a forefront of a movement to Zero. We believe that Zero provides so many compelling advantages in terms of a superior home owner experience, that this is where housing has to go, and the leaders who are doing it now have such important lessons to share with us and experiences. So that's why they're invited. As we announced in the material about these webinars, we threw in a bunch of options for them to talk about, including what factors drove them to be a leader while others wait, what technical solutions allow them to be cost-effective achieving these rigorous guidelines for performance, what marketing messages and tools and strategies enable them to communicate something that's pretty challenging to communicate to homebuyers. And what mistakes have they made that others need to avoid, and what plans for the future do they have, based on what they've learned? So we've asked them lots of questions, let them go after as much as they can. And the first one I want to introduce for you today is Glenna Wilson from Charis Homes. Charis Homes is based in northeast Ohio. It's been building energy-efficient custom homes since 2003. Speaking today is Glenna Wilson, and she loves researching new products and building methods that will make Charis a much more efficient and innovative builder, and has led her to have Charis build all their homes to DOE Zero Energy Ready Home guidelines. I'll say this as a little extra piece of information: I've watched Glenna before, and it's amazing to watch her bring such an innovative spirit to housing. And I think you'll really enjoy her story and how she's doing what she's doing.
Then, I want to now introduce Scott. Scott started building high-performance homes and energy-efficient info housing under the BrightLeaf Homes brand in 2012, hoping to find a balance between the experiences of large production home builders and small nonprofit organizations. He's come from production builder experience with both Sentech Homes, now part of Pulte, and Ryan Homes. He spent a number of years there, and moved back to Chicago, worked for nonprofit organizations building energy-efficient improvements to low-income housing. And it's really given him some unique insight how homes should be built, and how he wants to bring this high performance to the housing industry. So it's under the current BrightLeaf Homes brand with partners Alex and Thompson that Scott's responsible for very over-arching business strategy for the company that develops and maintains relationships with all the company's trade partners and handles the financial reporting and analyses. So Scott has a passion for this, for high performance and the business aspects of delivering that high performance. So we have two really special speakers for you. So I'm going to start with Glenna and let her take you through the story with Charis.
Glenna Wilson:
OK, well, thank-you. Sam. ... Can you see my screen?
Alex Krowka:
We can see your screen, and will just suggest you put it in presenter view so we don't see all the notes.
Glenna Wilson:
OK ... one second. OK. I'm not sure what I did wrong here. Sorry. Can you see my screen, or no?
Alex Krowka:
Not any more, no. -- Oh, now we can. Perfect.
Glenna Wilson:
First presentation slide:
Alright. Thank-you. OK. Like Sam mentioned, we started building energy-efficient homes in 2003, and about that time, my son's a civil engineer in the concrete industry and he was working in Pennsylvania at the time. And he introduced insulated concrete forms to our company. And also mentioned that Pennsylvania seemed to be on a faster track on energy-efficient homes. So basically we took on the stance of we wanted to build something different. Ohio's kind of antiquated in their building techniques, basically, a lot of two- and three-generation builders in our area that basically had done the same old sticks and bricks for a long time. So we started on a energy-efficient path and in 2005 I said in 2015, in 10 years, I wanted to be offering either net-zero or zero energy ready homes. And in 2014, I had the awesome opportunity to meet a potential client that was looking for a true ENERGY STAR® builder. And he worked for First Energy, had lived in Pennsylvania, came to Ohio. So with this, I just created a team, and it does take collaboration because it takes your whole team from your project manager to your homeowner to your subcontractor. So we met a lot of early mornings with Starbucks around our conference table and made a plan to build our first Zero Energy Ready Home, and which we did achieve certification. And the HERS score was 31. Another item, I noticed that one of the program requirements was that the HERS score had to be 50 and under, and we have been achieving 50 and under HERS scores for quite a long time. Actually, our average HERS score last year without any renewables was 40.
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OK, so I'm going to talk a little bit about marketing. I believe -- my background was marketing and sales. I don't have any building background. I was fortunate to work for another builder in 1999 for just about two years, and then decided to go out on my own. But marketing is my strong arm of our company. And we have promoted the DOE Zero Energy Ready Homes in our model through our learning center. And I was fortunate to visit Gene Myers at Thrive Homes out in Colorado to see his learning center. And my daughter works with me, Emily Meadows; she designed it all, did a great job. When people come to our model home, they take a tour upstairs -- it's a ranch -- and then they go down to the learning center in our lower level, in a walk-out basement. And they're educated through a series of signage, and just about our products that we use. So we try to educate our consumer through emails. When they do visit our model home, we capture their email address and let them know that they can get the latest and newest updates on homes developed that we're going to have an open house at. And it's a really soft-sale at first, and then Emily follows up, kind of like a direct email program of sending a little short video. One we use often is the seven experts video, which is very powerful. Also, we do a lot of postings on social media, and we also have the virtual tour of the Zero Energy Ready Home on our website. So if you're not using some of the tools that the DOE has made available to us, I suggest that you do that. Also, we just finished -- actually, I think we're still in the process of -- successfully marketing the healthy portion of the DOE by using the Indoor airPLUS ad on Facebook, and to create awareness of the importance of healthy homes. And I really think that is the way of the future. People are really interested in it when you talk to them. So many people come and visit our model homes and have asthma or allergies. I think this is so important, and basically what I try to do is just let people know why we're different and what we do, and why we've gone down this path. And we also have done many press releases, blog posts; our website has a lot of information. And then we do display the DOE Zero Energy Ready label on our website, on our company vehicles, and soon we are adding it to our shirts that we wear out in the field. I think comfort is an area that -- you know, our homes are energy-efficient, but it's the comfort level of our homes that's something that we should be really marketing and putting in laymen's terms.
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Next one here ... OK ...
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A little note, too, on the marketing is it resonates personally for me. I have a grandson who's 12 years old that has had severe allergies. And he's lived in a Zero Energy Ready Home for the last two years, and I've just seen -- he had a lot of food allergies and now it seems to me his respiratory system has been able to stabilize and he's eating all different types of food. He's playing sports. I just had another homeowner, has a 3-year-old son, moved into one of our houses in March, and noticed a big difference in his allergies and asthma. So it's really refreshing that the type of homes that we're building not only save energy but are changing people's lives. And you really need to see --
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I'll go to the next one. Some of the challenges for us personally has been understanding the mandatory program requirements. And how we've overcome this, we contact Joe and Jamie at Newport Partners all the time for clarification. They get back to me right away. They've been a really great support. Also, I meet with our manufacturer reps, our window supplier. Our heating and cooling company has been on board with us for about 10 years, and they have really partnered with us to add -- like we do Aeroseal on all our ductwork now. They brought that in just for us. And at the time, we were a small builder, just 10 to 12 houses a year. We're probably going to 25 to 30 this year. So that's been refreshing. And then also, we have developed checklists for our project managers. We have two project managers that are seasoned in the industry but came from very different type of home builders. And really it was a learning curve there. But I do a lot of spot checking in the field and a lot of communicating back and forth and I want to see what's being installed in our homes. And our insulator, too, took me a while to find him, but we found him about four years ago, and he's been a breath of fresh air. He's doing a caulk and seal program that's just phenomenal; he's doing a great job. Working with our framer to be sure our house wrap's taped right, and windows are installed properly. It's a lot of housekeeping, a lot of little details that you just have to make your checklists and go out in the field and see what's happening and you'll get there.
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Umm ... the next one ... It says lessons we've learned is that there is an extra cost to building this type of home, a DOE Zero Energy Ready Home. But -- guess what I'm talking about here is the investment that we made in our learning center and then the literature and the marketing -- but the leads that we're getting and the traffic generated by the DOE has been phenomenal. I mean, I have people come through the model; we always ask how did you find out about us? What brings you out today? "Well, we found you ..." "We Googled you and we wanted an energy-efficient home" and "we found you through the ..." -- oh, gosh -- sorry ... "We found you through the DOE website." It's really worth the investment to educate. To me, I'm not selling, I'm educating and expanding on what a great home we can build. And I let people know: We're at 1 percent of the builders in the nation that are building this way. And a lot of times they ask me, why don't other builders do this? I say, well, I say it is a challenge. And it's stretching them out of their comfort zone at times, but the value, what it brings in low utilities, comfort. I just look at them, you know -- less air infiltration, less allergens coming into your home. So maybe that one less cold a year -- what does that mean to you? It's missing work or not feeling good. Our average -- right now we're doing a survey with homeowners in the past that have been in their home for one year or more. And right now what I'm seeing is the average home cost for electric, natural gas, and water is about $150 a month, which averages out to be 1.9 cents per square foot annually to heat and cool their home. So that's phenomenal, because the average home is about 12 cents -- an average home that's an existing home, not new construction, but existing home. So the savings over a 30-year mortgage is phenomenal. We have -- you can see on the left-hand lower corner we have a family there, and what the savings would be on a 30-year mortgage. We just based it on the first house that we constructed, and that savings is over $103,000 over a 30-year mortgage, and what that money can be done, and how that can be invested.
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OK, so you want more information, go to our website. Go to Facebook. I said Emily is my daughter, and I'm so proud of her. She's done a phenomenal job. I had a marketing background, like I mentioned, but she's taken it to a newer level. She's in that millennial age, and she can do a Twitter post, she does Hootsuite. She really has an array of knowledge that I don't have, that's let us in a lot of good leads, and a targeting market, our niche. And our niche, our people, we sell to a lot of engineers, a lot of technical people, and a lot of millennials that are looking for a more efficient home. OK, and then I think there's one more slide ...
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I know I talked fast, but basically, if you're not familiar with these resources, the building.energy.gov or it's /zero -- you can look at the Tour of Zero. If you're not a partner, you need to become a partner as a builder. And then they have a marketing toolkit. Use that. The resources are there. The other thing is, try to break down your message in laymen's terms when people come in through the door. And basically tell them why you're different, about your passion and about what you do. And that will come across in your sales presentation. I think that's all I have to say for now.
Alex Krowka:
Perfect.
Glenna Wilson:
OK, thanks.
Alex Krowka:
Thank-you, Glenna. That was great. We actually did have some questions come in while you were presenting. So if you don't mind, I'm just going to read some of them off and then have you answer them real quickly. And then we'll move on to Scott. The first one is, what objections or pushbacks have you received from sales and marketing or Realtors, and how have you addressed those concerns?
Glenna Wilson:
I think basically just formatting a list of questions that they need to ask that prospect coming through the door. As far as Realtors, that's a toughie. Really have not developed a good relationship with one or two Realtors. Like I said, our main way that we find our clients is through the websites and Facebook. We're getting a lot of leads per week. And also through our signage. We're in an allotment that there's five or six other builders in, and you know, we have a sign that basically, when they walk into the model, it talks about the average savings per month for utilities. So we're trying to capture that process on the energy savings, but then that once again side talk about the comfort, the healthy home, and address those issues.
Alex Krowka:
Perfect. And how many homes does Charis build annually?
Glenna Wilson:
Um, I'm pretty sure we'll do 25 to 30.
Alex Krowka:
And that's Zero Energy or overall?
Glenna Wilson:
Yea, all will be built to Zero Energy.
Alex Krowka:
Perfect, OK. And then we had another kind of question for the ZERH program ourselves: What are the additional administrative costs of achieving Zero Energy Ready Home certification? And there actually aren't any. At least there aren't any external administrative costs, like we don't charge a membership fee or anything of that nature. So becoming a partner is free. You know, there may be additional administrative costs on, you know, each company's end for having to fill out a little paperwork or -- and then various raters may charge a little bit more for certifying to Zero Energy Ready. But it does not cost anything to join the program. So next --
Sam Rashkin:
Hey, Alex? This is Sam. Maybe a response to that question -- Glenna, you could maybe tell us, does it cost more to verify a home with Zero Ready, with your experience with ENERGY STAR for Homes?
Glenna Wilson:
Ah, yes, it's about $200 more per house.
Sam Rashkin:
'kay, great. And also, what I thought I'd like to do, Alex, is maybe just summarize some key points I'd like people to take away from what Glenna just said? And there are a couple things that jumped out at me, from her comments. One was this idea that she communicates the why to the customers. And I don't think we can emphasize that enough in all the training we do, how important it is to explain the why you do what you do. And it'd be a really powerful why, when it comes down to building to this level of excellence. The other thing I heard from her was how incredible these health stories were, that she has to share, whether the child doesn't have allergies anymore, or gets rid of the inhalers. These stories are incredibly important to collect, and the fact that she is collecting these stories is really important. It's also interesting to hear that she's using Aeroseal to seal the ducts. Because you get to seal the ducts and test them at the very same time, and that she's finding that lower cost than to seal the ducts manually. So that's a very interesting takeaway. And the other big takeaway I thought was real important is that when she looked at the cost for Zero Ready compared to not doing Zero Ready, she wasn't restricting herself to just looking at the construction costs. She looked beyond that to getting leads and traffic and how much that changed. And when you add the cost of the leads and getting traffic through your house, that tended to offset a significant amount of the incremental costs. Another important thing she said was that she's not selling, she's educating. And how important is that, to know that you are there to educate the buyer. The more they know, the more this is what they will want to have. She also leveraged the Zero Energy Ready Home message that she's in the top 1 percent of the builders, and I think that was interesting that she did that. And very interestingly, she, even though she's a marketing expert, knew to go to Emily for the expertise on social media and a lot of the new ways of marketing through that kind of technology solutions. So I thought that was great, the leveraging some youthful perspective. And the last thing was this thing about others ask why she does it when others don't. And for me, Glenna, just be sure to say the reason others don't make a difference -- they will; it's just taking them longer to get there. So just key takeaways from me from more of your important comments.
Glenna Wilson:
Thank-you.
Alex Krowka:
Yea, thanks for those comments, Sam. So I'm going to go ahead and keep this moving and pass it on to Scott. I just want to let everyone know, you know, if we don't get to your question, we'll do our best to reference it at the end of the webinar. But in the interest of time, I'm going to keep this going. Scott, I'm going to make you the presenter right now. So you should have a little message pop up asking you to show your screen. And let me know if you have any problems.
Scott Sanders:
That all set now?
Alex Krowka:
Yep, we can hear you now and see your screen, yea.
Scott Sanders:
Perfect. I appreciate the intro, both Alex and Sam, thank-you very much. As they said, I'm Scott Sanders, managing partner over at BrightLeaf Homes. We're a relatively small new-construction builder outside of Chicago. And I will just jump into the presentation.
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What I'm hoping for is actually, I've got a fairly brief presentation, I think, compared with Glenna. I'm really hoping that everybody on the line can jot down some notes and follow up with some good questions, because I think it'd be very interesting to hear what people have actually called in to the webinar over or about the webinar, to know or to learn or to understand. So I appreciate asking those questions of Glenna, and please keep them coming for me, as well, especially for what I don't talk about. I'm more than happy to continue that dialog in the Q&A session and then also afterward. My phone number and email address will be posted, as well, on a slide here.
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So this is the team over at BrightLeaf. We're a small new-construction builder. We build about 20 houses a year. There are seven of us in the office. We started in Chicago. That's me, in case you want to put a name to a face.
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I'll say. We started building in Chicago in 2013. And I think it's helpful sometimes, geographically, to know where people are building and why. We have a mixed climate, cold, fairly cold, climate zone 5. So we do have to have pretty good exterior insulation, pretty good attic insulation, air-sealing. All those details we find a bit more challenging because people seem to complain more when it's cold rather than when it's hot around here.
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We started off in 2013 building single-family detached homes. And these are all pre-filled properties, so the homes that we've built are generally an empty lot that's been passed over and in an existing community, some house that's burned down or has been torn down in the past, or a house that's marked foreclosure, that's just obsolete. So everything that we do is (inaudible), on scattered sites. And as part of that, that can be very, very difficult to match home style to home site over and over and over again. So we have essentially come up with a couple standard models that we try and build for various widths or lengths of new-build properties. So we have our standard Eco 1, 2, and 3 models, which are all single-family homes. They vary in size from say 1,900 square feet to about 3,200 square feet above grade. And if you look at the pictures here right next to where the Prius is parked -- thank-you to our computer animator for putting that "green" feature in there -- you'll see a lot of homes that we build have full basements. And they are about four feet in the ground and four feet out of the ground. The reason we try and do that is to match the neighborhood character of homes around Chicago. A lot of those homes are built out of the ground with full basements so you can get a little bit more natural light coming into the basement. And so they don't have issues with flooding problems, both from Lake Michigan or just general drainage from all these communities, having been built over 120 years or so.
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Going forward for the company, we're actually moving into some multifamily partnerships to continue building Zero Energy Ready or at the very least ENERGY STAR-rated multifamily buildings. And then our Eco 0.5 model is actually going to be a smaller model, about 1,600 square feet, which will be a townhouse product that we'll be able to build individually if there's a very tiny lot, or we'll be able to stack next to each other and build multiple next to. Even though we're a small builder, we aren't 100 percent custom. We do a mix of both production, I guess, speculative homes, with bank loans and with our internal capital, and then also custom-build for the client. But I think for the most part we've been lucky in that we've been able to steer our clients toward the floorplans of the homes that we build and honestly toward the energy efficiency of how we build them. So that's just baked into buying or building a BrightLeaf home 100 percent, every time we build. It is certified ENERGY STAR, is it certified to Zero Energy Ready, (inaudible) program, and if we can do it based on the exterior landscaping, to the WaterSense program, as well. And honestly, it's not much of a sell for us to sell a client on adding these features, because they really have no choice. If they decide to build with BrightLeaf, that's how their home is going to be built. It's going to be built to those third-party standards with third-party verification and the third-party inspection.
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So that jumps right into marketing for us, and how we market. We market as a high-performance builder. We don't market as a green builder; we don't market as tree huggers, even though I am a tree hugger, I guess I would say. We don't market as, you know, very hippy kind of people. We are just a very, very good builder with an excellent customer experience, client experience, when people are either working with us to buy a house or working with us to build a custom home for them. So that's always been our positioning. And I'll go into that a bit later, and then also hopefully in the Q&A I can talk a little bit more about why we chose to market ourselves more as a high-performance, high-quality builder rather than a green builder. Our website is a huge draw for us, obviously. We don't do much print advertising. We don't do any print advertising. We don't do any local advertising. Everything is digital that we're putting out in terms of marketing and advertising. So we just actually underwent a website redesign in January and February. Put this together, highly interactive, totally focused on a mobile experience, just based on -- our target consumer group seems to be young professionals moving out of the city of Chicago toward the suburbs. Or it seems to be young couples, professionals who are in the suburbs who want to move up home, to what we are building. So we don't have a lot of empty-nesters, for the most part so far. We don't have a lot of non-tech-savvy people working with us, building with us.
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And so our Internet presence -- especially our mobile presence, for mobile displaying on phones -- has been huge. The only thing -- I mentioned that the one thing that we do not do outside of straight-up digital advertising, and that is referrals and word of mouth. We've actually had three clients this year already come from referrals from past clients. And one client come from a referral from a Realtor, which is kind of high praise, when you think about it. And so whenever we build a home, we set the expectations, or whenever we fill a home, as well, we set the expectation with the client that we're going to ask them later on for a testimonial about what they experienced either buying through the buying process or building through the entire build process with us. And we specifically want that testimonial to address what the experience was working with us, and also what the comfort levels are of their home. That is an advantage that goes right back to the Zero Energy Ready program in terms of the quality and comfort of the home, is what is different about the home that they live in now, which is a BrightLeaf home, versus the home or the apartment that they lived in the past. And that's really what we want to know to our perspective clients is, what's the difference between a high-performance BrightLeaf home and what they're living in now? What can they expect to be a benefit rather than just a feature?
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I won't go too much into this, but our marketing firm right now is Inbound Marketing, which is positioning BrightLeaf Homes as the expert in high-performance building in the Chicago area. We're trying to pull people toward us rather than push our message toward them through billboard advertising or TV advertising or something. So our marketing firm is doing this huge number of blog posts. We are doing community outreach events, doing all kinds of stuff to position BrightLeaf Homes as the people to talk to if you want to build a high-performance home, or frankly, if you want to build a new home in general in the Chicago area. The last thing I'll mention is we actually do have just a little bit of digital advertising and that is through Google AdWords and Facebook paid promotion. We're also doing some organic tool search engine optimization work, but we are also getting leads, of course, from the Zero Energy Ready, ENERGY STAR, our local homebuilders' association, all of those kinds of related groups in addition to our push digital advertising.
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The other primary, I guess, method of our new clients that come to us is when we go out and do a community activity. We're sponsoring a bike ride at a nearby community. We sponsored a community cleanup a couple months ago in Brookfield to see where we are. We do other community-based activities where we can get our brand and our name out and frankly, where we can just get out and promote to people, to tell them who we are. This cut-away drawing is a huge draw normally for people, because it's just something cool to look at, and it's a great conversation starter as to what is really inside a BrightLeaf home or behind a BrightLeaf home, that makes a difference. So if you take anything away from marketing, or at least from what we're trying to do, is have something like this that's an attention-getter, that's an attention draw. And I know Glenna had a bunch of these things in the pictures from her model. I think that education is a huge thing for us. It was a huge thing for Glenna, and I think it's a huge thing for Sam and the program as a whole, to not only educate clients but help them learn more about what makes Zero Energy Ready Homes different, what makes our homes, BrightLeaf Homes, different from what they're buying or looking at down the street. Actually, we also have this posted in our conference room at our office. And so whenever we have clients or other vendors or trade partners come in, it's actually also a very interesting thing to talk with them about what the cut-away shows in terms of how they can help make BrightLeaf Homes a much higher-quality home, and what things they are responsible for, for putting behind the walls that we show clients.
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So to get into the very nitty-gritty technical strategies of what that cut-away drawing showed, a lot of it is just in the details. We want to get all of the little tiny details right so they add up to a big whole, which is a win for getting a third-party certified home. We can't just wave a magic wand, and voila, I get certified. There's all kinds of steps that we need to take along the way, little, teeny-tiny things that all add up. And so window flashing, proper window flashing with a sloped pan is not necessarily something that's going to get us points or leads, but it is something that's going to make our homes more durable, our envelope more durable, lead to reduced warranty service call-backs, increase client satisfaction, and then therefore more client referrals, more homes being built, and so on and so forth. Those are kind of a nice (inaudible) benefit there that builds on itself.
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We also do a lot of fine detailing of those details. So every home that we build obviously has blueprints, but in addition to those blueprints we have a field guide that gets handed out to all of our trade partners, and they have on site with details of all the particular assemblies that go into creating a high-performance home. And make sure that we meet the standards for Zero Energy Ready and EPA Indoor airPLUS and ENERGY STAR. But also to make sure that we're getting the durability details that we want as a company, so we have zero warranty liability and zero call-backs and 100 percent satisfied clients. This is actually a Google SketchUp drawing. It's nice to have it in color so the trades can differentiate more. And we also do a lot of 3D views and cut-aways and drawings, because that helps our trade partners, especially some of the trade partners around Chicago that speak out of Polish or Spanish and not English at all, to be able to see how an assembly goes together in 3D rather than just trying to read this off a set of blueprints. So definitely there can be some complicated assemblies when you're building a very, very airtight home under the program. Before they can be as simple as you can make them and still meet the standard, but if we can make it as easy as possible to build it, and as easy as possible to understand how to build it, then we find that we have a lot more success in getting it done right the first time instead of having to go back and do it again later.
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Another one of the details that we might be most known for in the immediate area where we build -- and maybe even in the Zero Energy Ready program -- is the staggered stud of wall design that we do. So instead of adding -- in climate zone 5, we are supposed to have 2 inches of continuous exterior and 2 inches of continuous insulation in our exterior wall assembly. A lot of builders are meeting that requirement by literally putting 2 inches of foam board or rock wall insulation on the outside of the exterior sheathing before they install siding. And so we had done that, actually, for a few homes back in 2013. Then we kind of realized that the cost and hassle of doing that was pretty intense when it came to detailing window flashings, when it came to detailing exterior penetrations for utilities. Frankly, in just putting up that insulation and getting siding to stick to it, rock wall furring strips. So I didn't come up with this, and I honestly can't say where I got it from, but I'm sure it was from the industry somewhere. But what we do is we actually take a 2-by-6 wall plate out at the bottom, and then we stagger 2-by-4 studs inside and outside every 12 inches on center. What we really get is what's basically a 2-by-4 wall with an extra 2 inches of insulation weaving in-between those 2-by-4s. So this saves us the hassle of using (inaudible) furring strips. Our carpenters do this in a matter of course; they don't charge us any more. The material cost is actually very, very similar because we are using 2-by-4 studs instead of 2-by-6 studs at 16 or 24 on center. And so the material cost really is marginal. As I said the labor cost is significant and we don't have to go through the hassle of exterior insulation. So this has been a huge win for us. It took us a while to get this accepted or adopted in some of the municipalities that we work in, due to code officials pushing back a bit. But once we could show them that we've done this in multiple communities -- we actually invite a lot of those building officials out to new homes that we have in progress in other communities -- and actually showed them that it worked and this was a fantastic solution to the problem, everybody's come around and come on to it. So if you'd like any more information or details about this specifically, let me know, send me an email or give me a phone call. I'd be happy to share this detail with you. We'd love if more builders started using this detail, until someone can prove us wrong or tell us that we're crazy for doing this for some building science reason that we don't know about.
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In a bigger picture of the technical strategies, we continuously try and innovate. So BrightLeaf, we always want to do the next thing better. We always want to build the next home better. Even though we're building our Eco 1, Eco 2, or Eco 3 models over and over again, never have we built the houses exactly the same. So in these pictures, you can see that we've tried out a number of different weather-resistant barriers, from (inaudible) to blue skin, to straight SIP walls, (inaudible) product. We've done different window manufacturers. We've done different carpenters and different air-sealing techniques. Different insulation strategies, like that 2 inches of foam on the outside, 2 inches of rock wall on the outside, all kinds of stuff. Just to find out what the most cost-effective way is to meet the standards of the program, frankly, and to meet our goals as a company. And so if we can find a less-expensive way to do something and still get the same results -- obviously, it's a business; we want to make sure to save that money and to build homes that way and still meet the performance standards and building durability standards that we want, that the program wants, but at the lowest cost possible. And that's actually how we have been able to compete in our market and frankly excel in our market, is we find ways to reduce cost and still come out with a home that is pretty close to the same price as a conventional new-construction home, or even a renovated used home in our market. And that's been our primary constraint and our primary problem, I guess, when it comes to marketing, is the fact that we have competition on in-fill sites right next door that might have had an addition put on it, that might have been gut rehab, and they're selling for a certain price. They look at our home, and we have to be able to justify for a relatively small dollar amount why our homes perform and their homes. And there comes the third-party certification, the value of having that certification from not only the code officials from the municipality but from the Department of Energy or from the EPA. So it's really being able to throw those names around that helps us get a small price premium for the homes that we build.
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This one is actually taken pretty much right from Sam, I think. Why would you price a car at dollars per pound if you don't price a house in dollars per square foot? It really doesn't make any sense. We build a lot of our homes that live larger than they feel. A lot of our homes are 2,000 to 2,200 square feet, and we can find Realtors walk in and think they're 2,500-, 2,600-square-foot homes. We have very good attention to detail. And it goes back, again, to every single time we build a home, we try and take the opportunity to improve it, to (inaudible), to continuously improve what we're doing, based on feedback from the Realtors, feedback from clients, feedback from homeowners, feedback from the kids who live in the home when we go back. So every time we try and do it better. And we generally never talk about dollars per square foot with clients, because we don't really believe that you can value a high-performance home in that manner effectively, especially compared to renovations or rehabs or used homes.
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Another business lesson learned from us, in addition to the not talking about dollars per square foot, would be very, very clear specifications for our projects. So every single project has a 50-page document associated with it that all of trade partners get to see, that spells out not only what the contractual relationship is in terms of warranty and getting into job site safety and all that stuff, but also very detailed specifications as to what products we want installed, what products we expect to be installed, and to an extent, how we want them to be installed. We're not experts at HVAC or electric or plumbing, but the general ideas here are what we have to convey. Also reminding our trades that we're trying to meet a third-party standard that will be inspected for these particular items. We never want to have an issue at the end when it comes to ratings, and luckily we never have. That's why we're proud to be 100-percent committed to the program. Because every single home that we build has the boilerplate specifications that get slightly customized and help meet those standards.
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Sam, I think you'll wrap up probably with some key thoughts and comments. As I mentioned, this is my contact information. This is why I love working in this program, frankly, and participating in Zero Energy Ready, is because I get to network with other professionals who are doing the same thing, but also professionals who want to do things like this, as well. So we hope to continue to do that. I would love to have phone calls, emails, from any of the participants on the webinar today to talk about this, talk about why we do it, how we do it. Anything that we can help bring this program to more builders across the country, we would love to absolutely help them.
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Alex, back to you, and let me know if I can answer any questions.
Alex Krowka:
Great. Thank-you so much, Scott. That was awesome. We had a lot of questions come in throughout the course of this webinar, and so we have about 10 more minutes. We'll try and get through as many as possible. Unfortunately, we probably won't get to all of them, however, we are tracking them and we'll try and get them answered one way or another. So I guess, you know, we asked this of Glenna; how about you, Scott? How many homes do you guys build annually?
Scott Sanders:
We actually built four homes last year. We are building 20 units this year. We're actually building 15 single-family and five multifamily, in an apartment building. And all 15 of those will be certified in Zero Energy Ready. Next year, we're on track to build 36 homes. And we are actually hoping to be building 500 homes in 10 years in two separate markets somewhere around the Midwest.
Alex Krowka:
Wow. Great, and then going to kind of the objections that you are seeing from sales and marketing and Realtors -- how do you address those concerns?
Scott Sanders:
Sure. We often don't get necessarily objections to anything about being certified, but we do get comparisons that I mentioned during the presentation to a used home that's for sale on the market nearby on the same block. Or a renovated home, or even a new-construction home by another builder who doesn't participate in the program or build to our standards. And so that goes back to what Glenna was talking about, what Sam was talking about, which is the education. We just try and educate and not really sell, but we hope that the client will be smart enough, the Realtor will be smart enough, to come to their own conclusion that this is a superior house that's worth the same price or a little bit more than the used house that they're looking at.
Alex Krowka:
And Glenna, feel free to jump in on this question. It's kind of for both of you. Would you guys feel that your buildings are being assessed at the correct value?
Scott Sanders:
Glenna, you can go ahead, if you want.
Glenna Wilson:
Um, yes and no. If you talk about appraisers, you know, we have a couple different builders that we do a lot of business with, and they know our product. So when a consumer comes to us, we're approved at eight to 10 different banks, but I tell them that these three banks or these four banks really get what we do. They understand what they're appraising. But I, a lot of times, refer to our product as the Mercedes of buildings. People get that message, you know. Or the Lexus or whatever, a high-performance car. So that helps. People get it that it's what Scott said about attention to detail, and there's a value in that high-performance product. And people, they recognize it as soon as they walk in your home. There is a difference.
Scott Sanders:
I'll share that, too, and I'll actually share this document -- I can send this to anybody who wants it.
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We have been seeing an increased value, when it comes to appraisals. Not the amount that we want to see, but for every home that we sell or build, we make sure that the new home buyers, the agent, the bank, and the appraisal management company get the letter that exactly says, we demand that we have a certified appraiser look at this home. So either they have some sort of MLS experience, they have some sort of appraisal institute experience, something that basically qualifies them to rate -- I'm sorry, to appraise a high-performance home. We also do (inaudible) addendum through the MLS. Chicago is a participating MRED, or multiple listing service that has that addendum document. And so it's been a little bit easier over the past 12 months, but it certainly was not two years ago when we first started this, or before we used this letter demanding from the appraiser that we have a qualified appraiser.
Alex Krowka:
Now going into a couple more technical questions: Regarding HVAC, do you use flex or ridged ductwork? And then, after you install the ducts, do you air-seal the system?
Scott Sanders:
We use all ridged, and we use a lot of open web trusses where our ductwork is contained within the conditioned envelope 100 percent. We don't use any flex anywhere. We do -- our HVAC trade partner is actually wavering back and forth between mastic and Aeroseal, after the ducts are complete. He tapes a lot of the joints as it is right now, if he is going to Aeroseal, because I guess Aeroseal is an expensive product and he wants to use less of it. But he was having quality control problems and missing ductless or test results when he was just mastic-ing. He's still trying to find the best way to do it, in terms of cost and benefit for him, and therefore we are, as well.
Alex Krowka:
And how about you, Glenna?
Glenna Wilson:
Ridged and Aeroseal.
Alex Krowka:
Perfect. And do you guys ever install natural gas appliances, and what heating systems do you use in colder climates?
Scott Sanders:
Glenna?
Glenna Wilson:
Oh, yes. We use natural gas, and we're using the Infinity two-stage carrier furnace system, and with an option for upgrade to a modulating unit.
Scott Sanders:
BrightLeaf in Chicago also does natural gas. We do natural gas tankless hot-water heater, furnace, and frequently a stove, because some of our clients are upgrading to induction stoves, electric. The part that we put in our homes between 1,900 and 2,400 square feet is a 40,000 Btu carrier furnace, actually the smallest furnace that they make that does have two stages, as well. So we can get some of that have heat, especially in the spring or the fall months.
Alex Krowka:
Great. I'm going to read one more question here, regarding validation of energy savings, and then I'm going to pass it off to Sam for some kind of closing thoughts. Do you guys have any independent verification of actual fuel consumption, to validate the upfront energy modeling, or do you show the energy costs compared to kind of conventional new homes in your area?
Glenna Wilson:
I'm sorry. We ... say that again, I'm sorry. I thought Sam was answering that question.
Alex Krowka:
Sorry, sorry. I didn't make that clear. ... With verifying the fuel savings of the homes versus what's modeled, do you go through that process? And then also, are you able to kind of share the energy costs of your homes compared to conventional new homes in your area?
Glenna Wilson:
Yes. We have been collecting our utility bills from our homeowners for a long time. Again, we build for a lot of engineers, and they create these awesome Excel spreadsheets for us, and then -- one community with about 45 homes, and there are some other builders in that area. And the neighbors talk to one another and compare their energy bills. And it is kind of neat, some of the feedback I have gotten. And then upfront, my ENERGY STAR rater, you know, does the modeling, and what we have found is that when we get our tests back, the annual consumption ends up actually being lower. And I've never had one customer come back and say, I received my ENERGY STAR report, and it cost more to heat my home then what your paperwork says. So that's been a blessing. But it's -- need to see that modeling upfront, and the homeowners like that, and then the follow-up getting their utility bills.
Scott Sanders:
We also do collect client utility data. It's actually a line item in the contract, that we want them to share with us, so we can help make our homes better long-term. And our utility data has been at or slightly above some of the modeling, and we kind of attributed that to our (inaudible) in a lot of cases, for clients, where they are working from home, they have old computers or servers or monitors, things like that, where we've been able to track it down. In general, yes, we track a lot with the models.
Alex Krowka:
Great. Well, thank-you two so much for this presentation, the two presentations. It really has been fantastic, and we have received a lot of questions. Unfortunately, we weren't able to answer all of them. So your guys' in-boxes may fill up over the next couple days with people asking you how you're doing what you're doing. But anyway, I'm going to pass it off to Sam Rashkin to kind of give his closing thoughts and commentary, and thank-you guys for presenting, and thank-you to all the attendees for attending.
Sam Rashkin:
OK, thank-you, Alex. And I can't thank Glenna and Scott enough for sharing their information with the group. A couple of really important points, again, I'd like to highlight, because these builders are leaders, and they're really special and I don't want to lose of the important key points that were made. And one of the most important ones was the last point made by Scott, that there's a line item in his contract that they have access to the utility billing data. Every high-performance builder needs to create that kind of opportunity to get the empirical data that shows just how high-performing these homes really are. Such an important thing. I thought it was also important that Scott said that the customer had no choice. And what he's really saying that's really powerful, and it's the same with Glenna, they have a brand. And other builders don't really have a brand, for the most part based on my extensive travel, but these builders do. And they're about delivering a completely different customer experience. And that's why, again, the education is so important. I love that Scott was able to really showcase how he reaches consumers with no investment in traditional advertising -- everything is digital, web, referrals. And that's the different space you're in as a high-performance builder. The other thing he does that's so important is he contrasts what the BrightLeaf home experience is with what you live in now, and he's doing such an important skill in communicating about high-performance homes. He's explaining the contrast. That's so important. And even what he does with the exploded diagram -- that's a contrast. The other builders are not showcasing advanced construction technology and practice, and he's putting it out there. It's not like the consumers and home buyers going through his models are going to spend hours looking at this diagram. It's there to say, we build to a different level of excellence. If you ever want to know, we can explain it, but suffice to say, look at this diagram to understand we're applying the best innovations in housing. So very significant. And it was really important that his prices are competitive with conventional homes. You need to understand that Glenna and Scott are learning every day new solutions for how to build more competitively and deliver the performance at lower cost. So eventually, you've got to get on this ladder to get these learning curve experiences under your belt. And lastly, this discussion about the appraisal process: I want to mention, on the website for Zero Energy Ready Home, we have a great presentation available 24/7. It's a webinar from Sandy Adomatis, who's a great expert on appraisals. And she really does a great job working you through the details, how to maximize your opportunity to get a good appraisal. So do take advantage of our webinar feature on our website and do go listen to Sandy's great webinar on how to work with appraisals. Again, thank-you so much to the builders. By sharing their stories, I hope most of you realize, this is an amazing space to be in, in the market. Thank-you for coming to this webinar, and look out for the rest of the series featuring some of the leading builders in the country building Zero Energy Ready Homes.
Alex Krowka:
Thank-you, everyone. Have a good one.
Glenna Wilson:
Thank-you.