Category Archives: Financing

Energy Efficiency is America’s No. 1 Housing Concern

Home-Insulation-300x225Safety, affordability and privacy – it’s no surprise that these were some of top housing needs identified in a recent national survey of more than 10,000 households. But the No. 1 unmet housing concern, which the Demand Institute that carried out the poll defined as the “satisfaction gap” between what respondents actually have and what they said was important, was not as easily expected: energy efficiency.

Survey respondents were given a list of 52 housing and community concerns and asked to rank them, on a scale of 1 to 10, by how important they felt the issues were and how much their current home satisfied these needs. The result: 71 percent of U.S. households polled placed a great deal of importance on energy efficiency, but only 35 percent felt their homes were very energy efficient with low monthly utility costs (the respondents making up percentages answered these questions with an 8, 9 or 10 ranking).

Based on these numbers, energy efficiency was the housing concern with the largest gap between the rates of importance and satisfaction – beating out consumer needs and wants for updated kitchens, storage space, safe neighborhoods, affordability, landlord responsiveness and more.

Why the strong desire for energy-wise homes?

“Utilities are a significant and regular part of households’ budgets, and spending on utilities has risen more quickly than overall consumer spending – 56 percent vs. 38 percent growth since 2000,” said Louise Keely, president of the Demand Institute, a nonprofit think tank jointly created and operated by Nielsen and the Conference Board to monitor consumer demand.

To read more of this report:  The Demand Institute Poll on Triple Pundit.

Question about Builders

google_adwordsGoogle Adwords is one way to promote a product or service.  I have used their approach in the past and currently have an ad campaign going. This campaign promotes New Home Buyers asking Builders ‘What is the HERS Score!’  The HERS Score is a transparent method the Builder can use to educate the buyers, appraisers and others essential to a success of the sales transaction.

I saw an interesting Google Referral today that is worth Blogging about.

The search term used was:  “Best HERS Rated Builder in Wichita”

The short answer is, there isn’t a best builder. That is because a HERS Rating is for a specific home, not for a builder.

images-1A HERS Rating looks at the features of a specific home and evaluates how well they are installed. The builder can specify a great furnace. The quality of the workmanship that is put into installing that furnace will effect the HERS Score.  Insulation is treated the same way.

The HERS Score shows the difference between two or more homes.  A new home buyer may be best served with a HERS Index in the low 90s.  A second new home buyer may be best served with a HERS Index in the upper 70s.

That reasoning, on the best Index Score, is best covered in another post.

HERS-scaleVAny builder can choose to build with either HERS Score above. Using one or the other does not make a builder better, it means the builder is meeting the needs of the buyer.

The HERS Score is a way of demonstrating transparency from the builder to the buyer to the realtor, the appraiser and others involved in the transaction.

The Conversation Continues!

My last posting as part of the ongoing Deep Energy Retrofit #DER conversation regarded a definition of DER.  I made the argument for using a threshold of 30% savings. The specific conversation is in regard to historic homes. There have been several Bloggers involved in this conversation and others reading. You may read my first post HERE.

Sean at SLS Construction has a post that he is maintaining as a startingpoint and links to updates in the conversation. John at Birmingham Pointe is the Preservationist among us? He actually owns and restores these treasures of times past! Peter Troast of Energy Circle has been involved!

Most recently Sean posted some definitions about Historic, home ownership and compliance width various agency requirements!  After reflecting on the discussion It is time for me to pick up the pen for the next post!

During an energy audit of a existing home, I see any number of things related to the efficient use of energy. As I make my list of observations for further examination, I have learned to keep several parameters up front. These would be, in no specific order, Budget, desired outcome, safety, durability, and comfort. I also find it Imperative to remember that I am not in charge, the homeowner is in charge.

There are a number things that I routinely run into during an audit, that are not the most energy efficient. Some are predictable because of the construction techniques used during construction, or the type of construction, or the era in which it was built. Is the house timber framed? Wood stud? Brick clad? Is the house a craftsmen style from the early years of the 20th Century? Masonry Block? Post WWII tract type? Each of these have unique features as well as common improvements that relatively small changes will save some insignificant amounts of Energy. The improvement I can see and model may seem like a no brainier to me, but to the homeowner it becomes almost an insurmountable problem.

One of my first audits was a 1960 ranch with full basement. The homeowner is a young couple and he works construction. Their goal was to get plan of work for him to complete during his down time on the winter. One of the fastest returns for their money was to put some insulation on the basement walls. No problem with blowing into the finished walls. When the recommendation also included 3 inches in the storage areas on the bare walls, my easy to install efficient improvement ran right into the homeowners impression that giving up 3 inches of storage would be a major problem!

Anyone working in the energy improvement field must keep in mind: You must meet the needs and perceptions of the homeowner or nothing happens!  You can have the best ‘fancy dan’ plan with all sorts of neat figures , printouts and scientific backup, if you don’t meet the homeowners need, your plan is worthless.

Another audit was a very large home, 2 story, full basement, 3 bedrooms, 6500 sf!  I spent a full day on this audit. Presented the plan over 2 hours, and another 4 hours in follow up field work. The comfort concern was the 2nd floor rooms on each end of the home were hot in the summer and cold in the winter.  I fixed up a ‘fancy dan’ plan for him. Dropped his $6,400 annual energy bills to $3,200.  Solved his comfort problem with a recommendation to increase the return air in the effected rooms.  Estimated cost for the additional returns was $200.00

He cherry picked the added attic insulation, because he could see the problems.  He did it fast, and soon.  It met his real need which I finally discovered on the 4th visit.  He really didn’t think his energy bills were that high.

Therefore, anyone wishing to complete a DER for a home, must have the Home Owners Approval, and that approval meets the perceived needs of the homeowner – it will not necessarily meet the perceived needs of the ‘Energy Guy’ writing the plan.  You should think of this as “Rule #1”, when all else fails remember Rule #1.








The Second Point of this post is about the Deep in a DER.  Deep Energy Retrofits should meet some type of savings across the board.  The Twitterverse lit up last night when @EnergyVanguard was Tweeted for people to give him a percentage.

Let’s look at Retrofit.

The implication is certainly not a rebuild, or a gut rehab. That would involve taking most of not all the exterior walls back to the studs or other type of internal framework and then rebuilding. If a DER was a Rebuild or a Gut Rehab, why would it be called a Retrofit.

Could you substitute reduction for retrofit? – Yes.  What about rework? Remodel?  Restore? All of those work for me.  They also all imply that the work is more of an improvement to the structure instead of a rebuilding of the structure.

Now that the “R” in DER has been established as improving as opposed to rebuilding, we can move on.  “E” of course is Energy.  Which leaves “Deep”.

Asking how deep is deep reminds me of the wood turning question about gouges:  “How sharp is sharp?”  We have established some limits on Deep.

We know the structure is not going to be rebuilt, we know the structure is not going to have major removal of visible material, only for the purpose of installing energy efficient components, such as insulation.

We also can use ‘Deep’ as meaning not shallow.  Therefore Deep must involve a plan of systematic improvements that total to deep.  This plan will only be implemented as the home owner has the money/time/desires.  This may be over a period of years.  If a deep plan cannot take place over a longer period of time, then I must send you back to read  ‘Rule #1’!

So, deep means more than doing one or two things. It means having a plan.  A plan of improvements that can be phased over a period of years, if need be. A DER would not just involve equipment change out or windows, as most sales types would lead you to believe.  And deep doesn’t mean rebuild.  It therefore falls in the middle.

In the middle means a 50% maximum reduction.  Not being a one or two item improvement plan also means that it should be at least 30% reduction.  Which leaves reduction in what.

We are talking about historic homes.  These homes have history and therefore we know what the energy costs are.  The reduction must be calculated from historical that applies to that home.  Trying to bring in code becomes an exercise in futility.  We have already ruled out rebuilding. We also need to remember ‘Rule #1”.  How does this work out.

If we start with a home built in 1800, with a historical usage of $5,000 annual energy usage, what are we talking about in reductions of usage?  30% would end with a $3,500 annual usage, and 50% would be $2,500.  If you look at a reduction from code, then you introduce an additional step.  You first have to arrive at a code usage; then make the reduction.  So, if the code usage on this home comes in at $3,200, we have range of $1,700 – $2,250; if the code usage comes in at $4,000 the range would be $2,000 – $2,800.

That means we define our DER as:

  • A 30% or more reduction in usage compared to historical.
  • It means the DER is a plan that uses the concept of the ‘House is a System’. It must address the construction of the actual structure. It cannot just consist of generalities. Timberframe is different from Balloon Framing which is different from a 50 year old American Suburban ranch.
  • It allows various parts of the plan to be implemented in phases.
  • And last, but really first – we acknowledge ‘Rule #1’. The home owner is in charge.


The Energy Triangle

I attended a 3 Day Preservation, Sustainability and Energy Conference and Fair held last week in Wichita. Sponsored by Green Wichita .  It was interesting, I met a lot of neat people and got the inspiration for this blog entry.

I had one young lady, Nikki Gartner from Emporia, stop by our booth.  She is with Energy Innovators, a lighting firm.  They handle consolation, design and replacement of your lighting with new efficient and  practical solutions.  Later I stopped by her booth and visited some more.  She had on display an interesting diagram, which she called the Energy Triangle (link opens a PDF for you). She discussed the concept and her inspiration for the design, coming from the USDA Food Pyramid and Maslow’s Hierarchy of Needs .

These concepts also apply to Energy Consumption and plans to reduce the use through Conservation, Efficiency and addition of renewable energy sources to a property.

Conservation can be defined as ‘Changing the way People Work’.  Changing your habits! So energy measures such as turning the thermostat down one degree and putting on a sweater; or remembering to turn off lights are examples of conservation.

Efficiency can be defined as ‘Changing the way Things Work’.  The advantage to this is you don’t have to change habits of people or have them remember to do something. Energy measures such as adding insulation, installing an occupancy sensor to a light, or air sealing your home would be efficiency measures.

When you combine Conservation with Efficiency, you achieve a synergy that can drastically reduce the energy use of a building. This can be a home or it can be a commercial building.  These two approaches can, in a residential setting, decrease the energy usage by 30 – 50 percent each year. In a commercial building the dynamics are somewhat different from a residential building, the end result remains the same.  Obtain a significant decrease the energy consumption of the building.

The concept of Nikki’s Energy Triangle is helpful as people in their homes or at work, develop and implement various methods of reducing the cost of energy.  If you reduce the amount of energy used, you can reduce the cost in dollars.  The question most people have is: “what do I do first? Where do I get the biggest bang for my dollar?”  Conservation is the low cost, high motivation approach. Efficiency is a higher cost, lower motivation approach.  Like most good things on this earth, it takes some of both, not all of one or all of the other.

How do you answer the question “What do I do first? Where do I get the biggest bang for my dollar?” That starts with an assessment.  At home, some type of Home Energy Audit.  You can begin with a Self Audit, this one is from the Lawrence Berkeley National Lab.  You can then move to a full comprehensive Energy Audit. In the Wichita area Efficient Energy Savers – that is us – do those. If you are not in this area you can check here or here for a list of auditors in your area.  There are all types of Energy Audits with prices from Free to lots of dollars.  My friend Sean of Alabama Green Building Services wrote about the differences on Building Moxie’s Blog.

The report of the Energy Auditor will provide you with a prioritized list of things you can do. Implement them at your pace, all at once or as you can get to them.  Many times the issue is cost. The important thing is to do them in order for two reasons.

  • The low cost – high return items provide savings in Energy costs to pay for future improvements.
  • Some improvements need to be done prior to others for technical reasons. For example, sealing holes before you add insulation.

After you have achieved the best for your building that conservation and efficiency can offer in lowering energy usage, then you have a good usage to plan for renewables.

In the end, the journey you take along the road of saving energy will be yours; it may be similar to mine or very different.  What does not change is the basics.  Save some by changing how you work. Then save some more by changing how things work.  Finally think about adding some type of renewable energy source to your property.

I would be interested in hearing your comments and ideas about saving energy, so please comment. If you like the Energy Triangle give Nikki a Thanks in the comments.

Energy Efficient Mortgages

Ray Hall has been doing efficient energy work in California for many years. Here is a link to his video on Energy Efficient Mortgages.

These can be FHA, VA or Conventional types. They allow the cost, of qualified energy improvements, such as additional insulation, other improvements to the building shell and newer more efficient heating and cooling systems, to the mortgage amount. This applies to your first loan on the property or a refinancing loan. The concept of a qualified energy improvement is one that shows enough cost savings to support the additional cost of the mortgage payment.

If you qualify for a loan, you probably qualify for an Energy Efficient Mortgage.

See what Ray Hall has to say in the video. Ask your mortgage lender about an Energy Efficient Mortgage. Efficient Energy Savers can provide the audit and the calculations for the EEM.

Here is the link to

Energy Mortgages Part V

Q: What are the bid requirements for improvements made from an Energy Improvement Mortgage?

A: While competition between vendors can result in a cost savings for the consumer, there are no specific requirements to use a bid process or to take the low bid. A consumer may choose to obtain only one price on a recommended improvement, or to issue a Request for Proposal to more than one contractor.

Competition is also available for HERS Ratings Services. Some Raters work for a contractor, some work independently. Using a Rater that is employed by a contractor may or may not reduce the choice you have in selecting contractors for that specialty. An independent Certified HERS Rater does not have a financial incentive to limit your choice in contractors. All Certified HERS Raters will provide a RESNET Standard Disclosure concerning payment for services, employment, and the products or services, if any, they or their employer can supply or install.

Q: Which homes are not candidates for an Energy Mortgage.

A: A home originally built to the Energy Star Standard should be financed with an Energy Efficient Loan. This home has a HERS Rating and is efficient. The Seller should receive credit on the price of the home for the energy efficiency built into the home.

A home that needs energy efficient upgrades is a great candidate for an Energy Improvement Loan. The cost of the improvements can be included in the mortgage and the cost savings covers the increased cost and may allow the new home owner an extra cushion.

Any home the buyer would like to improve would be a candidate for an Energy Improvement Loan. For example: An Energy Star Rated Home is listed four years after construction. A potential buyer is interested in adding a renewable energy source. This home with a HERS Rating of 82 in 2006, would be a candidate for a new Audit and an Energy Improvement Loan to cover the cost of a renewable energy source.

Q: How do I determine if a home was built to Energy Star Standards.

A: The seller will probably share the information with you. They would be thinking of this rating as an added selling feature. If not, check the Circuit Breaker Box. A HERS Rating Label is usually placed on the box, by the original Rater. This would also demonstrate an older home that had been audited and improved after construction.

Q: How would a homeowner, or realtor determine if a home without a HERS Rating Label is worth the time investment to pursue an Energy Improvement Loan. Is there an age, or amount of insulation, or other indicator?

A: The best indicator for an existing home’s need for an energy improvement loan would be to obtain an Annual Utility Usage Analysis. The seller can obtain from his records or from the utility company the past twelve months of usage and amounts from both electricity and gas or propane, a certified HERS Rater can apply the Analysis and the amount of use could be pinpointed.

Energy Mortgages Part IV

Q: What training is required for certification as a HERS Rater?

A: The written standards are available on the RESNET website. Training includes principals of thermodynamics; evaluation of purchased energy amounts and usage; evaluation of building components such as walls, ceilings, roof, floors, fenestrations (doors, windows, skylights), crawl space and basements, ventilation standards, HVAC equipment efficiency determinations, and other types of building science. Diagnostic Testing includes Air Pressure Testing of the building using a Blower Door, and pressure testing of ductwork using a duct fan.

Q: Are there other National Organizations that can offer the type of HERS Rating required by Lenders?

A: RESNET is the national organization for certifying a standardized HERS Rating accepted by the Home Mortgage Industry, the IRS, the DOE and the EPA.

Representatives from the National Association of State Energy Offices and the Home Mortgage Industry formed RESNET in 1995 to standardize energy measurements and energy improvements to homes. Prior efforts had resulted in varied programs in some states and not others, and some municipalities.

Q: How is an improvement to a home calculated by the software as a cost effective improvement?

A: The software compares the projected cost of the improvement to the calculated annual cost savings. If the cost of installation and materials result in a favorable rate of savings in energy cost, the improvement is generally recommended. For example, the cost of $2,000.00 to insulate the walls of a 1960 era home and add insulation to the attic resulting in R-13 in the walls and R-50 in the attic could show an $800.00 savings annually. This shows a payback of the improvement in 30 months. Many simple improvements such as insulation, shell sealing, installation or replacement of weather stripping can show immediate results. After calculating these changes, it may become cost effective to replace the HVAC equipment with newer more efficient models that are correctly sized for the improved house.

Energy Mortgages Part III

Q: What software can do the calculations for these types of mortgages?

A: The national group that works with the various stakeholders on Energy Efficiency is the Residential Energy Services Network, RESNET.

RESNET approved Software packages are available through a network of Rating Providers. These Rating Providers perform QA on all Certified HERS Ratings.

There are currently three software programs accepted by RESNET for HERS Ratings. They are used across the US for Energy Efficient or Energy Improvement Mortgages.
• Energy Gauge
• Energy Insights
• Rem Rate
• The Kansas Energy Office has designated Rem Rate for use in state operated weatherization and efficiency programs.

Energy Mortgages Part II

Q: How much money could be available to increase a loan amount for Efficient Improvements?

A: Amounts vary with the program. The EEM and EIM is recognized and provided for by the F.H.A. with both Fannie Mae and Freddie Mac; it is also available for VA loans.

Q: How is it determined which improvements qualify for this type of loan and how much is allowed for various items.

A: The house under consideration is treated as one system. If it is insulated with very high R-Value insulation, it requires a smaller furnace and air conditioner. The differences in each house can be accounted for through the application of a certified Energy Audit and software. The audit determines the actual amount of various energy efficient features, such as insulation, solar orientation, HVAC equipment, and other items. There are diagnostic pressure tests run that determine the leakage in the building shell (to measure the possibility of cold drafts in the winter) and the supply and return ducts. These are entered into the software for a rating.

The features are then adjusted to account for improvements in the various features, along with estimated costs for each. The computer results show the cost of that improvement and the resulting savings. The improvements are then ranked according to payback time.

Home Energy Audits and Mortgages Part 1

During the past week, I’ve had several questions about HERS Ratings and Mortgages. I thought I would put up some of those answers in posts this week. Something fun to do while I do my Combustion Appliance Class.

Q: What can an Energy Efficient Mortgage Do?

A: An Energy Efficient Mortgage (EEM) allows the lending agency to allow a larger amount to be loaned to the buyer. It is allowed because the efficiency results in lower costs for utilities. The decreased cost of utility payments enables a home buyer to afford an increase in P&I payments, and many times leaves savings available to the home owner for other expenses.

One example of an Energy Efficient House would be one that was built to Energy Star Standards. An Energy Star House should be worth more, than an otherwise comparable home, at re-sale time.

Another example would be where the homeowner had upgraded various energy efficient features over the years. This improved house should be worth more because the homeowner installed a 92 or 94 AFUE Furnace instead of a 78 or 80 AFUE furnace. Other energy efficient items could be insulation, triple pane windows, a tank less hot water heater, an Energy Recovery Ventilation System and/or others.

Q: What is the difference between an Energy Efficient Mortgage (EEM) and an Energy Improvement Mortgage, (EIM)?

The EEM is designed for a home that was originally built to a higher efficiency status or one that has been upgraded to the efficient status prior to the time of sale.

The EIM is for the home that requires improvement to the energy efficient features. In the case of an EIM the lender places the additional amount of loan proceeds in escrow. The improvements are implemented and the contractors are paid from the escrow. Any amount remaining after all bills are paid is used to pay down the principal.