Saturday, February 20, 2010

Why homeowners should be cautious of FREE AUDITS

(-or- Why homeowners should PAY for an AUDIT)
After November 15, 2010 New Yorkers can get audits paid for by the Green Jobs Green NY program.  This means the contractor gets paid to perform this work.  

Prior to this some companies offered "Free Audits."  These Free audits aren't free.  Your home is a long term investment for you, not the contractor.  A free audit puts pressure on selling product, not on good design.  


if you pay for it you can hold them accountable to deliver quality recommendations, not simply recommend work they want to perform.



Homeowners should hire someone to perform an audit because they can build a relationship and accountability into the equation.  They can expect thoughtful solutions instead of shotgunned products.  

Also, they can hold that contractor accountable for doing a thorough job. 

A little history might help paint this picture:

In the summer of 2008 I started working for a BPI Accredited HVAC company.  After taking 4 BPI Building Performance courses, I went in thinking we were going to provide comprehensive consulting services.  I learned that was not the case, the focus was to sell furnaces and insulation as quickly as possible, and use HPwES to facilitate rebates to the consumer and to the company.  

Initially I was told we only did audits if the program was required to make the sale.  We couldn’t just sell audits unless we charged $750.  (If you are only selling high quality audits and design services this is actually not enough to be profitable.  But if you do a fair amount of work in conjunction with the audit, and don't have a whole bunch of "bids" to throw together for people who are not clients, building comprehensive designs is justifiable.)

Given my background in Financial Planning, Accounting and Economics, a consultative sales process was all I was familiar with.  Add to that this company’s customer service focus meant a pretty fair margin requirement, so I found in price competitive situations I was usually high.  Since I had NO experience selling furnaces and insulation I found myself at a significant disadvantage in the product sales arena.   I knew I needed a different mousetrap. 

Fortunately this fair sized organization had little chain of command or supervision.  This ended up working to my benefit.  Since I was interested in selling solutions rather than products I quietly started selling audits whenever possible.  

Over the next year or so I worked out the bugs and eventually developed a fair method of communicating to people the benefit of having an audit before expensive, long term improvements were committed to.  It's like having an x-ray before surgery.  After the machine gets rolling you are living with the result. 
The lead auditor really liked my approach, and we spent long hours developing the critical path together. Since I was selling results my customers couldn't achieve through the competition, they ended up getting a bargain and I got a lot of experience.  I’ve been tracking results and I’ve helped my clients reduce their energy use by 30-70%.  Having a team of people who are passionate about reducing people’s energy use is really powerful.

My company was not the exception with the "sell product and shoehorn the audit if it has to go through the program" approach.  In fact that seems to be the rule rather than the exception in the “Home Performance” industry.   There is a lot of paperwork and significant consumer protection built into the Home Performance with Energy Star program.  Consumer protection and contractor interests are not always in alignment. 
There is the risk that the audit will uncover for the customer that they are focusing on the wrong end of the problem!  Say you sell furnaces, and the customer really needs insulation (or vice versa) - if you are that salesperson, do you want the customer to find this out? DO YOU EVEN WANT TO RISK IT?!  There is a lot of additional effort involved if selling audit is not the approach you are used to.  
I'm finding that most BPI Accredited contractors bring HPwES out of their back pocket only when they suspect a competitive situation.  I thought; there must be a way to help others properly implement HPwES and at the same time help me see more people.  My plan was to encourage other program participants to embrace the "Sell the Audit First!" approach, and have me sell audits for them.  
In the fall of 2009 this is what I came up with:

It is very clear that the customer is best served when thorough diagnostics are performed BEFORE expensive changes are made. 

Look at this house.  Would you say it might have a disease?  
Do you think the average contractor would come up with a cure or a treatment?  Would you pay them to come up with a plan, or just for the plan's implementation?
If a doctor diagnosed cancer and prescribed surgery within the first 10 minutes of your visit, would you sign up?   

A house is a system. Quick fixes often have unintended consequences.  Beware of simple solutions that put a paycheck in a salesperson's pocket - you live with the results!  Build the relationship.  Build in accountability.  Look for solutions, not products.  Cures, not treatments. 


Free proposals tend to be "built to code" type work.  Codes are updated very slowly.  

Built to code means built to the very lowest standard allowed by law based upon 30 year old building science.  Science evolves, best practices change over time.  Minimum standards from 30 year old science may have subsequently been determined NOT to be good building practices.  

Let's face it, nothing is truly free.  If I put together a "free" proposal for you, that cost me time.  If you are getting 5 other proposals, I'm not likely to put my heart and soul into your proposal.  You are simply buying a product from me, not a solution.   I am likely to put together the cheapest offering I can find because I think that will be your primary motivator.   

The consumer doesn't base purchasing decisions on quality if they don't know the first thing about how to differentiate.  Home improvements are very complicated, quality is very hard to differentiate until long after the job is done.  So most decisions are based upon price.  It is a terrible catch 22. 

Your only guarantee of quality is to have a BPI Accredited Contractor perform work.    Becoming BPI Accredited is very expensive and hard. If a BPI Accredited contractor doesn't  live up to the BPI Standard of quality when they do work for you, they either come back and fix it or lose their accreditation.  It's fun to see people jump when their accreditation is on the line.

By selling the audit no time is wasted quickly throwing together recommendations and kiting bids for prospects (who are getting 5 other "quotes" and may be using your bid to keep their 2nd cousin honest).  This means more time to thoughtfully prepare recommendations for customers rather than wasting expertise on prospects.  If a doctor diagnosed cancer and prescribed surgery within the first 10 minutes of your visit, would you sign up?

More energy can be focused on the client, who you have a whole lot more information about, and a consultative relationship with.  I have been hired to build recommendations rather than asked to give a free quote. Now design and recommendation time is spent primarily on clients.

No more rushing crap out the door to see what sticks. This allows you to improve your knowledge and skills because you are focusing on problems, not running around pumping out cookie cutter bids.  The prospect makes a relatively small investment and becomes a client, or you don't spend more than the initial visit discussing their problems. 

This approach puts things in the proper order.  If you build the work scope AFTER the audit you avoid embarrassing missed opportunities (no back pedaling) and your recommendations are much more thorough. 


By focusing more energy on people who recognize the benefit of  paying for diagnostics, better recommendations are built and implemented, meaning better results.  This has huge benefit to the client, and it actually appears to benefit the company because sales tend to be larger.  

I save my clients 30-70% on their energy bills,



Above is before, Below is after.

$1200 annually for oil becomes $350 in Natural Gas

This gas bill shows stove and hot water estimates.  Then in November the oil furnace was replaced with a three stage Infinity furnace with ECM blower.  The gas company continued to estimate based on past history, so every other month the actual read caught the bill up.  What you see is usage for 2 months. The worst 2 months was about 150 therms.

Because comfort is so dramatically improved homeowners fall in love with their homes and become very enthusiastic referral sources and project examples.  I am documenting results and will create a blog for homeowners to comment about their experiences over time.

Here is the basic process:

  1. Visit the homeowner, possibly for free - review energy bills and home - get a very thorough questionaire.  This questionaire is the foundation upon which their option packages if they go to audit step.  Hopefully drives of more than 20 minutes  will be rare, or the homeowner may have to pay something. 
  2. Recommend Comprehensive Home Assessment which includes a computer energy model of the home under current and improved conditions, analyses the energy savings of improvements, and performs cost benefit analysis of each improvement.  This allows the homeowner to really understand the financial impact of various improvements!
  3. Audit performed/TREAT model built. This is done in the NYSERDA approved TREAT software
  4. TREAT Collaboration.  Good answers aren't quick, and quick answers aren't good.  Face time and Think time can make a HUGE difference in design and result quality for the homeowner.  If a contractor tells you the audit and recommendations can all be done in one day, be very skeptical of whose interests they are focusing on.  These home improvements mean a long term benefit for you and a short term benefit to the contractor.  
  5. DELIVER CHA and assist with decision making. (Comprehensive Home Analysis), answer questions about various recommendations, then review the financial and comfort implications. 
  6. Energy Model including Contracted Package and Contract electronically sent to CSG  in Albany for approval. Approval can take as little as 2 days if the model has no errors and improvements don't elicit questions. 
  7. Job Approval.  This allows the job to be scheduled and work to move forward
  8. Job Completion. Upon completion the home is "Tested Out,"  This inspection checks that work was done to specifications and that there are no health and safety issues.  
When making home improvements, there are a large number of critical dependencies.  This often means HUGE opportunities for the homeowner. 

MISSED OPPORTUNITIES:  Without performing an audit, and thoughtfully looking at the information uncovered, you may lock yourself into a path that cannot take full advantage of these opportunities, a path you later regret.  
Will the audit always uncover great hidden opportunities?  Do you always need an x-ray to see if a bone is set right?  No, of course not, but you don't know that until after you've seen the x-ray.  X-rays, like audits, are cheap insurance against expensive mistakes.
Since the approach has little to no cost it is crazy not to follow it.
When properly communicated to the consumer most are smart enough to understand this. 

No comments: