WellHome is a home performance division aimed at residential home improvement. The division was launched earlier this year by building products manufacturer Masco, which operates a similar division called Environments for Living. That division is targeted at new-home builders.
Remodeling: How is the Environments for Living program for new builders connected to WellHome? Is that your model?
Larry Laseter: It’s not our business model but it’s definitely connected. Environments for Living started in 2001. It’s a building science ¬based program focused on helping home builders build high-performing homes. The program, once implemented, guarantees certain heating and cooling costs and comfort levels. We’ve issued more than 135,000 guarantees through that program. It has grown in a down market. We found out that building science is real and could be applied to homeowners.
RM: How does Environments for Living work?
LL: Customers sign an agreement to participate in the program. It starts with a design review. We go through designs and recommend changes to make the homes perform better. We do inspections and testing in the home building process. At the end of the process the homeowner is issued a guarantee.
RM: How does what you’re doing with WellHome differ from energy audit franchises such as Pro Energy Consultants, Energy Doctors, or an audit/implementation company such as GreenHomes America? Are you looking to franchise your model?
LL: We are a home performance contractor. We don’t do audits. We make recommendations with a turnkey price. We serve as a general contractor to implement the home improvement. We don’t just do a checklist audit. It’s a diagnostic whole-home assessment.
This is important because there have been millions of free or low-cost audits in the last decade.
The biggest problem when there are free audits is that homeowners don’t take action. It’s a big barrier when you, the homeowner, get this long list of recommendations and then you have to go shop, trade by trade, for people to do the work.
We built this business by starting with the homeowner, looking at the situation from his or her perspective. With WellHome they have one person who’s on the hook to deliver what we promise. At the end of our process, we issue a guarantee. If we say our improvements will save 40% and that doesn’t happen, the [homeowner] can contact us and we will write them a check for the difference. So, we are not in the business of auditing homes and giving recommendations.
A second difference between ourselves and these other organizations is that we’re definitely not a franchiser. [Ours] are company-owned locations.
And a third is that we have a parent company that already has national operations and service businesses. So we understand buildings and services.
RM: You’ve launched in seven cities and in your press release you indicate that you plan “multiple locations.” How many, where, and how are you staffing them?
LL: We are in the process of recruiting to staff the locations. Our intent is to be a total branded provider of home performance services. Our target this year is 25 locations. We are a very process-focused company — we have an 83-step process to make sure everything is in line before we go live in a market — so we want to make sure that we provide a high service experience in every home we go into.
Our staff receive nine weeks of training before going live with a customer. We have taken building science and combined it in a way that it can be mass-produced. That said, every home and owner is unique, but what the appropriate improvements are for that home are not unique. So in training our staff we start with building science, we show them how to use the tools, we practice on real homes, show them how to do a sales presentation … because in the end we are selling home improvements.
RM: What will WellHome do to help homeowners find out about state tax credits and utility rebates and incentives?
LL: Part of our launch process is having people in the market contact utilities, state energy offices, and the like, to see what rebates are available. So when we’re in the home selling a job, we can take that right off the top as an instant rebate, and if [the homeowners] file for it we can help them as much as possible. We also have a national organization working across markets to provide that data.
RM: What would be the maximum amount that a homeowner could recoup from state, federal, and utility credit and rebate sources?
LL: It’s different state by state, home by home, and that’s part of the complexity a lot of people don’t take on. Say the job costs $10,000. A homeowner may be eligible for a local rebate of less than $500. But then — and we don’t know every homeowner’s tax situation — if they’re spending that much, they’d be eligible for the $1,500 federal tax credit. So there’s $2,000 out of the $10,000.
There are programs where homeowners are eligible for $4,000 in instant rebates. And they can get part of the tax credit. The range we’ve seen is anywhere from 15% to 50% of the cost of the job, as long as you get more than 20% energy savings.
RM: Is financing available?
LL: We offer financing when we explain payment options. We have a financing program that they can apply for — and be approved — right in the home. Many take that path.
RM: Why do you refer to them as “home assessments” rather than energy audits?
LL: We start with a customer interview. What’s important to them? What are they trying to improve? Building science can improve efficiency, comfort, indoor air quality, and durability of the home if there are moisture problems. We start with why they called us to begin with. Energy audits are about the home. We focus on the homeowner, and take our understanding of building science and apply it to the issues they’re trying to solve. If we weren’t aware of those, we might come at it from a purely energy-savings perspective.
RM: What’s the average length of time your WellHome adviser is in the home conducting initial tests?
LL: It could be two to five hours depending on what problems they have and the complexity of the house. Things like how many additions there have been to the home, things that could make even a small house complex. In all cases our people are BPI-accredited and following those protocols. They are doing zone testing and carbon monoxide testing. It’s very thorough and it can take them a long time
RM: What equipment do your technicians bring?
LL: Blower door fans, carbon monoxide sniffers, infrared cameras, smoke wands. Those are really important for the diagnostics and in helping the owner see where the problems are, with insulation problems especially. This is really a science, and that’s the reason we can offer a guarantee. Then we take the data, feed it into computer programs on a laptop to model the building and improvements, and come up with a price.
RM: What is your average job size?
LL: It can range from $2,000 to $20,000 plus. At the low end is air sealing and duct sealing. I don’t think we’ve had a home that didn’t need that. After that [come] insulation upgrades. And after that, HVAC upgrades and lighting upgrades.
RM: You guarantee energy savings for the first year. Isn’t that a little risky? Is anyone else doing that?
LL: There are some who guarantee heating and cooling load reduction. Not sure if anyone is doing a whole-home savings guarantee. You can see window ads that promise 74% improved efficiency. All that means is that the opening is 74% more efficient. That doesn’t translate to what’s happening with their energy bill. We’ve already done 135,000 homes on the builder side, so we applied that experience in creating the guarantee.
RM: How big does the home performance market look to you? How many homes are potential customers for retrofits like the one you’re offering, and what do you calculate as the dollar volume of home performance work?
LL: Here is how I describe it. First, think about the home improvements that go to make up home performance. It’s the bundle I just described: weatherization, HVAC upgrades, window change-outs, a lighting package, energy-efficient appliances. Add that up and you’re already at anywhere from $30 billion to $45 billion a year that’s spent by homeowners, depending on what you include on your list of products and services.
Consumers clearly have a need. They’re already spending the money. The key is getting them to take a whole-house approach in spending it. We figure that right now less than half a billion dollars is being spent via a whole-house approach. If you look at Home Performance with Energy Star data, that’s maybe 10,000 homes a year. But it’s growing and it’s clearly the smarter approach.
That has led to the Gold Star portion of the bill. These aren’t risky technologies. They’re all proven. Take air sealing and duct sealing. They’re the most cost-efficient improvements you could make. But how many homeowners would know to look for that in the Yellow Pages?
RM: Is this a trend, or a wave that will die down once the Home Star bill is passed?
LL: We at Masco have looked at it really hard and we believe it’s a permanent change or we wouldn’t be launching a national business to go at it. It’s going to take market awareness and players to service it. I mean reputable contractors in the market who will take the whole-home approach. The need for it exists.
It’s a matter of getting the word out. That’s why the Home Star legislation can be so powerful. It will jump-start the market and create that initial awareness.