Garbett Homes thriving with green marketing
Being a successful builder means focusing on marketing. And showing how each home is different than the competitor's. One builder who has mastered the art of marketing is Salt Lake City-based Garbett Homes.
In 2009, Garbett Homes built its first green home in Salt Lake City. This year, every home the company builds will be extremely energy efficient with a Home Energy Rating System (HERS) index under 40. And to help everyone understand what a HERS index means, the builder embarked upon a substantial marketing campaign to help consumers understand the HERS rating, using outdoor, radio, TV, print, direct mail and internet advertising to get their point across.
"If you can get people green without them having to pay to be green, you've got them. You've now got a target audience and a loyal following. Marketing this stuff isn't that difficult if you're prepared to get low on the HERS scores," said Rene Oehlerking, marketing manager for Garbett Homes. In 2010, Garbett built 250 homes and is on target for 280 in 2011.
With an onslaught of cheap foreclosed homes on the market, Garbett had to figure out the solution to compete. "We decided to survey a bunch of our current buyers and future prospects and what came out of the survey was overwhelming that everybody wants to be green, but no one wants to pay for green," Oehlerking said.
Apple as model
"We looked at the Apple computer model. People will pay $600 for an iPhone in the middle of a recession because they want it so bad. We realized there must be a way to apply that to homebuilding and create a product that is almost recession proof and that they would want so bad that they would do all they could to buy it," he said.
"Energy savings are on everyone's mind. Utility bills are going up and the feeling, in at least the consumer's mind, is that energy is a resource that is going to continue to become more scarce and therefore cost more, just like $4 a gallon gasoline," he said. "People can buy one of our homes and spend $5 a month on their power, or the home next door where they're going to be spending $300-plus on utilities."
The homebuilder started researching how to deliver a product that was both energy efficient and would produce profits. Garbett quickly started selling the green homes built in communities such as Daybreak, a sustainable community developed by Kennecott Land in South Jordan, Utah, with 2,500 homes already built, and up to 20,000 allowed for development on the 4,200-acre site.
"Not only were these homes energy efficient, but we sold them at market rate. Most builders are discounting homes by $20,000 to $50,000. We sold at the actual asking price for the house, like Apple," Oehlerking said.
HERS index key
"We're currently delivering homes from the $160's to the $250's that are super green homes," Oehlerking said. "In our mind we've related super green to under a HERS 40. We've looked at all the technologies out there and decided we would stake our future on HERS, not LEEDS ... not Energy Star. We determined that HERS was the way to go. We think that HERS will be adopted as a mandate throughout the United States."
Having a home with a lower HERS index means that it will cost less to live in the house because energy usage will be lower, and that makes the home more affordable to buyers. It only costs $300 to $400 to get a HERS rating on a house, using an independent energy audit. So it doesn't add significantly to the cost of a home, yet gives something specific to show the homebuyer about energy efficiency.
Oehlerking compared it to buying a car, in that people will choose to buy a 100 mpg car over a 14 mpg car. "People say, 'What is the total cost of owning this car. It's not only the cost of monthly payments, but the gas money I will have to spend out of pocket to keep this car on the road.' We are betting that mindset will come into home ownership very quickly."
Garbett Homes includes signage in its model homes to show how a home's energy efficiency is determined.
In addition, Garbett Homes targets first-time homebuyers. "The first-time homebuyer might not be the best market in a boom, but it's a fantastic market in a recession," Oehlerking said.
The demographic of a first-time buyer, typically someone about 25 years old in the Salt Lake City market, is someone interested in finding green components in an affordable home, he said.
"Interest rates are artificially low. In a recession when home prices drop and interest rates for mortgages drop, rental rates usually increase, and the occupancy in rentals go up. So, a first-time homebuyer can come out of a rental and move into a brand new home for relatively little money down. And so it's really nice. They don't have a home to sell, they're eager and they have a lot of options," he said.
Affordability is crucial
However, one thing that poses a problem is the affordability factor.
"There is a $250,000 ceiling in the U.S., and to be able to innovate with homes under $250,000 poses a really big challenge. So, we had a really good hard look at this to see how we could make affordable homes."
Builders can benefit now from this mindset by creating products that will work in this environment, he said. Creating a tight building envelope to control air flow in and out of the house helps reduce energy costs, and this can be done by using a combination of blown-in insulation topped with spray foam insulation to air seal and insulate areas with the potential for air leaks. Another way to lower costs is to use advanced renewables in the house to heat water and generate electricity. Water usage is reduced with low-flush toilets and low-flow faucets, and energy use is further reduced by installing Compact Fluorescent Lights (CFLs).
Garbett has also figured out how to build these homes and come in at the same price point as a competitor building a non-green home, and still make a profit. "You've got that $250,000 ceiling and you have to be smart about how you get there," Oehlerking said. "Educate the buyer that low flow isn't low performance. The buyer doesn't know the difference, but they are using less water. Use a 95 percent efficient furnace. Be as efficient as you can with your equipment. If you put in a 98 percent efficient furnace you're looking at a tremendous jump in cost. So, help the buyer understand what a 95 percent efficient furnace really means."
"We're one of the pioneers in attached homes with geothermal as standard," Oehlerking said. Low-E windows, indoor air quality with indoor air replaced with outdoor air six times a day are also crucial. Geothermal is standard in some single-family homes, and solar photovoltaic thermal is standard in others.
Oehlerking said another key is to make a home look visually appealing.
"A beautiful, amazing green home that no one lives in is a waste of money. You cannot underestimate the power of design," he said. "Don't put style on a back burner. Color comes into play as well. It's the whole package. Landscaping, the community design, open areas for families are all essential for Garbett."
He also said, "Selling the same old design you sold two years ago or four year ago, it's not going to work. You've got to look at the whole package and innovate. You can affordably build a home with a HERS under 40 and you can price it at about the same price as your competitor. It's that simple."
For more information, see our Building a Green Home research center.
Teena Hammond Teena Hammond has published more than 2,000 articles in People and W magazines, Women's Wear Daily, and in dozens of newspapers and books. She also wrote a home improvement, remodeling and decor column that ran in Gannett newspapers nationwide. She's interested in all things green and would love to hear from you with your story ideas.