Pearl Certification CEO Cynthia Adams and Rheem technology executive Alan Machuga join Green Builder Media's Sara Gutterman and Mike Collignon to discuss how high-performance home systems and third-party certification work together to document and unlock home value. Machuga's own certified home serves as the living-laboratory case study.
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Mike Collignon: Month. So in the spirit of that observation, we have some ideas to share with you. And we're going to do so in the form of a discussion instead of our usual presentation style format. Now, today, our guests are going to explore the nexus between high performance systems, sorry, between high performance systems and home certification for optimized value, and has a real life case study.
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Mike Collignon: They're going to explore lessons learned from one of their own personal homes, which serves as a living laboratory for advanced energy efficient technologies and is Perl certified. Now, who's joining us today? Well, it's Cynthia Adams. She's the CEO and co-founder of Pearl certification. Cynthia is also the co-founder of the Virginia Energy Efficiency Council, and a 25 year veteran in energy efficiency and green construction, voted 2020 entrepreneur of the Year by Charlottesville Business Innovation Council.
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Mike Collignon: She was also the 2018 winner of the Linda Wigginton Leadership Award from the Building Performance Association, and she serves on Na's Sustainable or Sustainability Advisory Group. She's been certified as a USB, C lead, AP, and Na green designee. Now, Alan Machuca is the Executive Vice President of Technology for Rheem and is responsible for developing and implementing reams long term technology vision strategy.
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Mike Collignon: He leads the company's Global Technology Group, which includes the controls engineering, IT, digital services and cloud architecture teams. Before joining Rheem in 2020, Alan served as the Chief information Officer at carrier's commercial HVAC division and global leader for the company's ERP and digital factory teams. Alan earned a Bachelor of Science in Computer Science from Southern Connecticut State University and an MBA from the University of Hartford.
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Mike Collignon: Now facilitating the discussion today is Sara Guttman, co-founder and CEO of Green Building Media. In case you don't know her, she is a former venture capitalist and graduated cum laude from Dartmouth College and holds an MBA in Entrepreneurship and Finance from the University of Colorado. She's established a reputation as a visionary, thought leader and passionate advocate for sustainability, and she works closely with a diverse group of stakeholders in the building industry to develop impactful, long term green strategies that are simultaneously sustainable and profitable.
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Mike Collignon: Now, this webinar is brought to you today by Pearl certification, which is the gold standard in high performing home certifications, bringing visibility to the valuable features that make them healthy, safe, comfortable, and energy and water efficient. Now a public benefit corporation, Pearl is the only national sponsor of the U.S. Department of Energy's Home Performance with Energy Star program, and as a partner with the National Association of Realtors Green Resource Council.
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Mike Collignon: Our other sponsor is Rheem. Founded in 1925, remanufacturing is the global leader committed to delivering innovative products that save energy and support a more sustainable future. Ream is the only manufacturer in the world that produces heating, cooling, water, heating, cooling, spa heating and commercial refrigeration products and is America's number one water heating brand with products available in more than 80 countries.
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Mike Collignon: Now you can submit questions for Cynthia and Alan. Simply use the questions box and the go to webinar control panel. I'm going to review those questions and pose those to them during the Q&A time that we have set aside after this discussion. For now, Sara, I'm gonna hand things over to you.
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Sara Gutterman: Mike, thank you so much for that wonderful introduction. I also want to offer a special thank you to our production manager, Mary Kestner. She is our wizard behind the curtain and makes it all happen. You don't see her, but we would not be here without her, so thank you, Mary. As always, Ellen and Cynthia, I'm so excited to be here with you today for this discussion because in my decades of experience in the building industry, I have never seen so much momentum towards net zero carbon, net zero energy and sustainable building in general.
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Sara Gutterman: When we first started Green Builder Media and nearly two decades ago, it was a very steep hill and a very big boulder. And I will say that the hill is less steep and the boulder is much smaller. And now we're having very active conversations with our builder, architect, energy raider, other building professional colleagues and manufacturers about getting to a net zero carbon built environment.
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Sara Gutterman: And it really is a yes and moment where we need all kinds of solutions. We need to embrace enabling technologies like heat pumps. We need to deploy renewable energy and energy efficiency measures and upgrades all the way through to other types of sustainability upgrades that make our built environment, our homes and our building more resilient and energy efficient and healthy and solar plus storage powered.
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Sara Gutterman: And then we need the certification and the validation and verification through programs like Perl to measure the the impacts of these different green building tactics that we are deploying. And so I'm as I said, I'm really happy to be here today with the two of you as leaders in the industry, both on the enabling technology manufacturing side as well as on the certification side.
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Sara Gutterman: So let's begin our discussion today by talking about how high performance systems and home certifications are cost effective tools that can enhance the sustainability of projects, decrease ongoing operating costs, and increase the long term value of homeownership. Because at the end of the day, as we're talking with our builder audience, our consumer audience, everyone's trying to get their arms around, okay, if we're increasing, let's say, upfront investment, but that's really going to decrease ongoing operating costs and increase long term value, including resale value.
00:06:02:26 - 00:06:25:07
Sara Gutterman: You know, how does that all pencil out and what's what what. How do we how do we measure it all and what do we know. Our meaningful upgrades and upfront investments versus ones that might not make as high of an impact. So, Alan, let's start with you. Can you talk about how the combination of advanced technology and home certification optimize home value?
00:06:25:10 - 00:06:56:29
Alan Machuga: Yes, sir. Great. Great question. And I actually have to thank Cynthia and her team because they actually helped guide me along this process. When I first met them at one of our one of our dealer conferences, what I would say is, is that there is a lot of investment choices that need to be made around the tech that is now going into a home built.
00:06:57:01 - 00:07:25:14
Alan Machuga: I'll include insulation as part of that tech. Right. So insulation, lighting decisions, your HVAC decisions, your water heating decisions. And if you're driving towards the more energy efficient rating, well guess what. There's a price tag on it. What I would say, Sarah, building off of what you're seeing in the industry. Right. The government's right there right now.
00:07:25:14 - 00:07:58:22
Alan Machuga: So the rebates exist to help consumers get into the higher end product, if you will. But what was stunning to me as I went through the process is getting to the other end with Cynthia's team and appraising the value of the house. For all these decisions I've made, the appraisal on my house went up about 100,000. Based on all of these decisions that we made in terms of high performance appliances, our HVAC decisions, our soul, or our window or insulation decisions.
00:07:58:25 - 00:08:07:11
Alan Machuga: So that was all, all very, very, you know, interesting to me as, as we went through the process.
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Sara Gutterman: Cynthia, I'm going to ask you to answer that question in just a second. But, Allan, first, I want to I'm hoping you can go into a little bit more depth, because I know that one of the challenges that we've had in our industry and a lot of our builder colleagues and friends talk about how they don't always see that increase in the appraisal value.
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Sara Gutterman: So can you just talk a little bit more about how you were able to realize that increase in appraisal value was that easy, because your appraiser just noticed those in the increased value of the investments in upgrades that you made? Or did you have to actually work with your appraiser to do some training and education?
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Alan Machuga: Yeah, I think it's actually I actually think it's twofold. I think, you know, if you look at what Cynthia and her team are doing, there a whole industry about this. So there's a lot of work that I think Pearl and others are doing to kind of educate, you know, what is what is going on. And let's say the real estate industry.
00:09:15:14 - 00:09:36:16
Alan Machuga: I will tell you what was surprising to me as I was going through the building and getting my construction loan, that the appraiser was actually coming back to me with questions. Hey, are you really doing solar in the house? Are you going to have batteries in the house? Are you looking at using heat pumps for your heating and cooling?
00:09:36:18 - 00:10:01:29
Alan Machuga: Hey, what are you thinking about with your appliances in your kitchen? It was. It was the first time in. My wife and I have moved frequently. Frequently? We've owned eight different houses. This was the first time going through those types of questions, actually, with the mortgage appraiser, which obviously is a is a different type of appraisal than the appraisal for, let's say, a sale.
00:10:02:00 - 00:10:23:14
Alan Machuga: But what I was finding was, is that that education is starting to reach out to people. So for me, it was a very easy conversation. And the question she asked actually got us a couple of extra, you know, it got us a little ahead room, if you will, in our construction loan that we needed.
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Sara Gutterman: That's really encouraging to hear. I know that that's not always the case, so I'm glad it was for you. Cynthia, can you chime in about how the combination of advanced technology and home certification optimize home value?
00:10:37:24 - 00:11:06:16
Cynthia Adams: Sure. I think where I would start is just to say that advanced technology, I think oftentimes we associate that with smart home smart devices, things where the tech part really looms large. But advanced technology can apply to how your your air exchanger like, do you have one in your house? Are you adequately ventilating your home on purpose as opposed to by accident because the house is not air sealed?
00:11:06:16 - 00:11:39:01
Cynthia Adams: Well, so I think that, you know, for for Pearl, the really important part is helping the buyers understand the feature to benefit value for them. And when a, when a builder invests in, in better products, quality installation and some of those more advanced technologies, they sometimes also need a translator to help the buyer understand how does this improve my quality of life?
00:11:39:03 - 00:12:20:16
Cynthia Adams: Like, I get it that the house may cost less for me to own and operate, and that may be very important to me, but indoor air quality may also be very important to me. Durability may also be very important to me. Comfort may also be very important to me and maintaining the value of my investment, that is the home may also be very important to me, and it's hard to get those things without a home certification, because a lot of these features, if they're not invisible in the house because they're in places where people don't normally go, like attics and crawl spaces or or mechanical rooms, they may not intuitively speak to their benefits.
00:12:20:17 - 00:12:44:23
Cynthia Adams: And I've heard HVAC contractors frequently tell me that a silver box looks like a silver box to your your average home buyer. Isn't it like a refrigerator? Can I just plug it in and we're good to go? No it's not. Design matters. Installation matters. Commissioning matters. Particularly with the. And so the certification that it's done right is not just a certificate.
00:12:44:25 - 00:13:29:00
Cynthia Adams: It's not just a label on the home. It's a translation layer that helps and inform the buyer about the value of the property and the systems that are in it. And I think that's really where Pearl certification shines because we have a certification package. It it it does educate the buyer. We also have an appraisal addendum, which is an official document created by the Appraisal Institute that's meant to inform the appraiser about the high performing features of the home so that they have the information that they need to do their job well and assign that contributory value, like Allen saw in his case.
00:13:29:03 - 00:13:52:19
Cynthia Adams: And I think, again, when the certification is done well, which, you know, I think we do it well, we certainly tried. You give the different stakeholders the information that they need in order to to do their jobs, whether it's an MLS listing report for the real estate agent, you know, the educational component of the certification for the buyer or the appraisal addendum for the appraiser.
00:13:52:20 - 00:14:09:03
Cynthia Adams: Everybody has a different need to understand that property for different reasons. And I think if a certification can really speak to that need and and help the builder and the home buyer really capture that value.
00:14:09:05 - 00:14:24:11
Sara Gutterman: So, Cynthia, thank you for that. I have a follow up question before we move on to the next scripted question. So a little off script here. We've been hearing lately from again, some of our progressive builder.
00:14:24:13 - 00:14:55:11
Sara Gutterman: Colleagues and friends who are building high performance, healthy homes that they have to price them at a similar level as the homes and the community across the street, which might not have high performance, healthy homes. And therefore they feel they are actually under pricing their homes in today's inflationary high mortgage rate markets, in order for home buyers to be able to afford to get into their homes.
00:14:55:11 - 00:15:07:00
Sara Gutterman: But they don't want to do that, and they want to understand how to actually provide a better sales.
00:15:07:02 - 00:15:43:28
Sara Gutterman: Pitch, so to speak, in order to help their home buyers understand how a higher performance, healthier home is going to be more comfortable, is going to reduce ongoing operating costs, is going to have higher resale value, and they understand the concepts, but they don't always understand the language that they need to actually utilize. So I'm just curious. I know from our cognition data, we have some very specific data points that we've collected about even all the way down to words that are resonating with home buyers and different generations with respect to high performance home healthy homes.
00:15:43:28 - 00:16:18:12
Sara Gutterman: Resiliency. Resiliency is really of high importance and entrance to younger generations. We're seeing because they understand the impacts of climate change on the value of their homes. They're having trouble getting insurance as well. So from your perspective, what are some of the most important talking points that a builder should at this point share with their home buyers if they are building these high performance, healthy, resilient, solar plus storage powered, etc. homes.
00:16:18:15 - 00:16:51:24
Cynthia Adams: I think that's a great question. And part part of it to me is around understanding what it is that matters most to your buyer. So whether you on your website or in your promotional materials, or in the one on ones that you as a builder have with prospective buyers or your real estate agents have with prospective buyers. I think it's really important to kind of ground that conversation and what the goals for home ownership are with the buyer.
00:16:52:02 - 00:17:15:22
Cynthia Adams: What what really matters to them are they are they growing a family? Does indoor air quality make a difference? Are they planning to retire at some point? Are they going to be on a fixed income. They're they're it's important to, you know, as you mentioned, understand sort of generation generationally, but also in terms of where that person is in their lives, where the buyers are what, what matters to them.
00:17:15:23 - 00:18:05:08
Cynthia Adams: But I do think that starting out with this idea of what is value and what is quality is is really important. And the problem, I think, comes with the fact that oftentimes builders and contractors in general have bad reputations in general with with consumers, there's a sort of trust factor in in play or mistrust, I should say. And I think, you know, when you when you go the extra mile as a builder to get a Herz rating, to build an energy star standards, to get a Pearl certification, you're you're engaging that third party to help build trust with the buyer around the things that matter to them, whether it's comfort, cost, indoor air quality, convenience,
00:18:05:08 - 00:18:34:25
Cynthia Adams: durability, all of that. And I think creating that peace of mind is important. And leaning into the the nature of the third party ness in that, in that certification is also important when when talking about the features and the benefits to those particular buyers. And and I do think just a sweeping blanket statement about all of the different benefits that you might get as a buyer.
00:18:34:26 - 00:18:59:27
Cynthia Adams: You know, that's a great place to start. But it can also be overwhelming, particularly if the builder is, you know, just ticking through all of the different features to the home. So I think it's it's important to try and get as specific as you can and then also point to that, that third party validation for the sorts of things that you're engaging your prospective buyer on.
00:18:59:29 - 00:19:01:10
Cynthia Adams: Yeah.
00:19:01:12 - 00:19:26:09
Sara Gutterman: Thank you. Now, Alan, you recently completed your own home, which Yuga Labs, which is intended to be a learning laboratory. Can you tell us a little bit about the project and talk specifically about some of the challenges and obstacles that you encountered during the design, build, and certification process, as well as the most relevant learnings? What ended up being more successful than you had expected?
00:19:26:11 - 00:19:56:21
Alan Machuga: Yeah, I'm going to try and build off of, you know, the last question you had with with Cynthia here, because I think it's a real important one, and it'll go into actually the thought process as we were building, building our house, someone had said earlier the unseen things. Right. A lot of what we begin to talk about with value and quality, quality of life, I'll say, are driven by the unseen things.
00:19:56:24 - 00:20:24:00
Alan Machuga: Hey, I want hot water. I want guaranteed hot water. I don't want to pay a lot of energy costs to get that hot water. Hey, I want to be in a good indoor air quality space, right? I don't want that unplanned air or that unplanned humidity getting in to, let's say, that conditioned space. And what I'll tell you is an interesting story.
00:20:24:02 - 00:20:51:17
Alan Machuga: As we were building in the house, we lived in three different temp housing situations, right. One was actually a brand new house, right? It was two years old, and it had all of the, you know, glitz and glam, granite countertops, you know, nice tile floors, etc. but me, coming from the industry, I do I like to go behind the scenes and actually see how things operate.
00:20:51:20 - 00:21:15:10
Alan Machuga: Well, the lowest quality possible mechanical equipment was in the home. And guess what? That equipment was probably going to fail, wasn't going to perform, and was going to need to be replaced the soonest. So the way that we approached, you know, our house and there were obstacles on it was is actually we tried to think about all the unseen things.
00:21:15:12 - 00:21:37:16
Alan Machuga: Right? We were worried about insulation and air tightness. Well, guess what? That drives the fact that you got to think about airflow and incoming air quality that you need to worry about filtering. So insulation was a big deal for us. Casey from Cynthia's team was like, Alan, can you put more foam in your ceiling? That'll be better for us as we're going for the ratings, right?
00:21:37:17 - 00:22:01:21
Alan Machuga: So guess what I said, hey, Casey, we're going to go with this. We're going to spray more phone. Right. Because we wanted to make sure that the guts of the house was where the quality was. Right. You can always paint, you can always repair a counter and stuff like that. But that's where we wanted the guts. But in that work, duct work actually became the biggest issue for us.
00:22:01:22 - 00:22:24:24
Alan Machuga: On how you're going to move through the house. We're in a in a historic area, so we're only able to build on a certain amount of land. Right. And so so our building envelope was already shrunk and now I had to worry about ductwork. Right. So so I didn't want to give up indoor space for ductwork. So what do we do?
00:22:24:24 - 00:22:48:09
Alan Machuga: We put more HVAC systems in because then I didn't need to take up HVAC. Duck duck space. So those were like maybe some of the obstacles and the learnings as we lived in these other houses, we spent more time thinking about what's behind the scenes and kind of the guts, if you will. One of the most successful things I think we did was actually go with solar.
00:22:48:11 - 00:23:21:14
Alan Machuga: We're in the northeast. We built this house in the northeast. We're not in the Sun Belt. It's semi cloudy today. But the fact is, is my house is is 50% off the grid right up here in the northeast. Right. We've seen immediate value for what we've done with with solar in the house. And given that I run the house with all heat pumps, that's a tremendous value all the way, all the way around, because the house is mostly, mostly electric.
00:23:21:16 - 00:23:56:19
Alan Machuga: I tell you, the biggest learning we had is, is because we wanted a smart, energy efficient home. You can quickly get pulled to all the glitzy things the AV, the entertainment systems, etc. I've got 17 different subsystems in the house. Nobody's figured out how to connect all these things well yet. Okay. But the things that are of the most value to me are actually being able to control the energy use and consumption and scheduling with my HVAC systems, my water heating systems, my irrigation system.
00:23:56:19 - 00:24:21:18
Alan Machuga: Because, again, thinking about water consumption and usage, you know, want the irrigation system running when it's raining out, for example, or drought conditions, those systems actually return the biggest value to me. And they're not that glitzy. But, you know, a lot of what's being pushed, I think it's the consumers is the AV and and the granite countertops and all that type of stuff.
00:24:21:18 - 00:24:30:18
Alan Machuga: When you can actually think behind the scenes is probably where you're going to get the most value. If you think about the quality that you're putting behind the scenes.
00:24:30:20 - 00:24:54:05
Sara Gutterman: Alan, that's interesting, and it's really refreshing to hear how you, as a homeowner, building and designing a home. Granted, you're in the industry and you have the knowledge and experience, but how you approach designing and building this home with respect to airflow and comfort and optimization of a lot of things that we're talking about as a point of reference, just that I think you'll find interesting.
00:24:54:05 - 00:25:18:09
Sara Gutterman: So Green Builder Media, we reach millions of early adopter and first mover consumers who are committed to sustainable living. So you know, where they are today is where the mainstream is heading. And maybe the next six, 12, 24 months. And I never would have thought that one of the things that they think right now is the sexiest upgrade to make is demand side energy management systems.
00:25:18:10 - 00:25:36:11
Sara Gutterman: Like, who knew that demand side energy management systems would be so sexy within this group of consumers? Do you have a demand side energy management system that interacts with your utility to do peak load shifting and shedding and time of use pricing, or is it within more of the ecosystem of your house itself?
00:25:36:18 - 00:25:39:15
Alan Machuga: Yeah. So, so so I do participate.
00:25:39:15 - 00:26:00:15
Alan Machuga: In selling energy back to the grid, right? I do. If I took you to my mechanical room, it's actually one of my favorite rooms in the house. I think my plumbers, my HVAC, and my electricians did a fabulous job with that one room in the house. It's the one room I like to show everybody first. Right. And and I got a whole wall of my energy system, right?
00:26:00:16 - 00:26:33:19
Alan Machuga: For, for the home. Everything from a smart load panel to where the incoming panels are for the solar and my Tesla, you know, power walls, etc.. So, yeah, we participate in, in all of that. What's interesting, and we get back to the fact that this is a living lab. It's one of the areas that the team is spending time on is around kind of this demand side, capability, if you will.
00:26:33:19 - 00:27:01:10
Alan Machuga: And water heaters are like a thermal battery where they're a cheaper version of a Tesla Powerwall, if you will. Right. And offer tremendous value to the utilities in terms of load shedding and load shifting. And that's where we're spending a lot of our time, you know, thinking about that opportunity where we can add extra value to the homeowner or the building owner, as well as contribute to the greening and decarbonization of the grid and offer value to the utilities.
00:27:01:12 - 00:27:28:20
Sara Gutterman: Well, Allen is the CTO of Rema, would not expect anything but a you know it advanced mechanical room in your home. So, Cynthia, let's shift back over to you and talk a little bit more about how home certifications can enhance value as a strategy for builders and building professionals. What do you say to skeptics who claim that certifications aren't worth the time, or the financial investment?
00:27:28:20 - 00:27:42:11
Sara Gutterman: And what are some of the most important investments that building professionals or home buyers or homeowners can make specifically to augment their certification levels?
00:27:42:13 - 00:28:03:15
Cynthia Adams: So I'm not sure who the skeptics are. I don't know if that's the builders that don't want to, like, pay anything extra because they're value engineering the heck out of their subdivision, or if it's, you know, potentially coming from the homeowner. But I would start off by saying that the data is there, that absolutely documents that new construction homes sell for more if they have a third party certification.
00:28:03:17 - 00:28:26:17
Cynthia Adams: Freddie Mac did a study back in 2018, found a 2% increase in value. Our own studies have shown an average of 5% increase in value, and there are other ones that have been done. And these are these are studies that are are using appraisers to actually write the studies. They're using comps as the basis for coming back with the value premium.
00:28:26:17 - 00:28:51:11
Cynthia Adams: So you don't need to take my word for it. Others have have proven out that the data is there. But but I will say something that I think is really interesting about our own study is that for homes that have these features, high performing features were there and they actually had the certification, but the agent did not put that information into the Multiple Listing Service.
00:28:51:11 - 00:29:11:27
Cynthia Adams: The agent did not call out the certification and the marketing of the property. The agent did not in any way call attention to these features that were there. The house didn't sell for more, and the reason it didn't sophomore is because, again, we didn't have that education layer to go to the buyer, to go to the by site agent, to go to the appraiser.
00:29:11:27 - 00:29:46:02
Cynthia Adams: Ultimately, that that help them identify the features existed. And here are the quality of life benefits you can expect to have as a result. So it's really important to spotlight these features. It's important, I think, to do it with a third party and to make sure that the information is presented in a way that the different stakeholders can, can access it, because then you will see the value because you understand as a buyer why it is important to pay more what it is more that you're getting from that home.
00:29:46:02 - 00:30:09:11
Cynthia Adams: And there are mortgages out there now. They're a little bit few and far between, but there are different types of mortgages you can get through Fannie or through Freddie that extend the buying power for the purchaser. If the house is high performing, because the loan takes into account the fact that the monthly expenses will be lower and that will increase the purchasing power of the buyer.
00:30:09:14 - 00:30:36:13
Cynthia Adams: So some builders are are looking into that. I certainly would encourage buyers to do their homework when it comes to like me, choice and other types of mortgages that are out there that may help them remodel and existing home to become a high performing home, or to be able to afford a high performing home that has a Herz rating or a third party certification.
00:30:36:15 - 00:31:01:13
Cynthia Adams: You had asked about. What are some things that that people should be thinking about in terms of important features for a high performing home? And I'm kind of with Alan, like, let's start with the basics. Let's make sure that you've got adequate air ceiling, that you've paid attention to the ventilation in the house and that you have, you know, insulation that needs to exceed exceeds modern energy code.
00:31:01:14 - 00:31:34:12
Cynthia Adams: Because if you do all of that right, then when you get to your HVAC system, you've given it a good foundation, if you will, for the design and for the choice of the system itself, and ultimately for what we also think is really important. And that's a quality installation. So you want to make sure that the HVAC contractor has adequately thought through the design so that you can be comfortable in your house, no matter what room you're in, no matter what floor you're on.
00:31:34:12 - 00:32:05:05
Cynthia Adams: And you want to ensure that the system was commissioned at install, because a really high efficiency system that has not had its performance tested at install can effectively lose a lot of its efficiency as a result. And you don't want to be paying for an 18 year, 26 system that's functioning like barely at the federal minimum standard because your contractor didn't go the last mile and make sure they did that quality install.
00:32:05:07 - 00:32:32:05
Cynthia Adams: And most, most homeowners, I think most home buyers think that quality is just a part of how HVAC gets done. Nope. It's not. It takes extra time, care, and effort on the part of the contractor, and you should be willing to pay for that as a homeowner, because that money will come back to you in the form of lower bills and less maintenance issues and the longer life of your system.
00:32:32:07 - 00:32:46:22
Cynthia Adams: So I think that it's not enough just to put the right thing in. You want to put it in correctly, and then you want to maintain it over time. So that I would start with those things. And Alan, I bet you've got some thoughts on that as well.
00:32:46:24 - 00:32:48:28
Alan Machuga: Yeah. Listen, Cynthia, it's interesting.
00:32:48:28 - 00:32:56:07
Alan Machuga: When you went down that that point because
00:32:56:10 - 00:33:24:22
Alan Machuga: And it was a great it's a great question, sir, because my mind is totally shifted on home buying right now. Right. Figuring out the guts of what you're buying is more important than, you know, let's say what the surface looks like. So, you know, building off a Cynthia thing about the insulation, thinking about the mechanicals. These mechanicals are becoming more complex, right?
00:33:24:23 - 00:33:48:19
Alan Machuga: There's more electronics in them. Airflow matters. The tightness of the home and the exchange of the air in the in the home for the, you know, the indoor, you know, quality conditions that you're going to have are so important, you know, to our everyday, to our everyday lives. One of the things we've been focused on is making sure this commissioning process can go better.
00:33:48:20 - 00:34:15:07
Alan Machuga: Right. And Cynthia highlights, well, you know, you could be buying and people could be buying a high tiered system and actually not get the full value out of it because the commissioning and the installation didn't happen properly. Some of the things that we've done with our thermostats is actually in our high end units is making sure that we're making that installation process for the contractor go smoother.
00:34:15:09 - 00:34:49:16
Alan Machuga: Our stats are intelligent enough to be able to guide, the HVAC technician through the install so that at the end of the process, it's commissioned properly, and that you can be assured that you're going to get the full value of the performance out of the unit at the time of install. So, you know, having the right professional, you know, install these things and making sure that you're getting the performance, all the equipment that was actually installed is very, very important.
00:34:49:16 - 00:35:09:25
Alan Machuga: You can think upon this, a home sale of actually coming back and rechecking the commissioning. Right. Like I think about a home inspection report today. It's pretty much looking at the basics. Are there are there bugs. Are there are there any other things that you know you need to worry about from, you know, wood and drop and water damage?
00:35:09:25 - 00:35:22:22
Alan Machuga: But no, there should be more time spent in actually looking at the mechanicals to make sure that they were properly commissioned, so that when you take ownership of that new house, you understand exactly what you're getting.
00:35:22:25 - 00:35:44:08
Sara Gutterman: Thanks, Alan. I'm I know we have a couple of questions coming in from the audience. I have a few more questions, Alan and Cynthia, for you, but I think that. Mike, why don't we kick it over to you to ask 1 or 2 questions from the audience, so we make sure we have time to fit those in, and then I'll come back on and ask a couple of my final questions.
00:35:44:11 - 00:36:06:23
Mike Collignon: Sounds good. So this question came in from David Davids up in Canada. And the first question he had was, do homeowners really want a plaque next to their front door proclaiming their certification or rating? So, Cynthia, can you kind of talk a little bit about the appetite for something like that?
00:36:06:26 - 00:36:42:03
Cynthia Adams: Sure. And to be clear, we don't give homeowners a plaque, but I know that lead does. And and depending upon the subdivision, you know, your home association may or may not want you to have things like that up in the first place. But I do think that homeowners want to take credit for the investments that they've made that have improved the quality of their home, particularly if it matters to them from, you know, an ethics or moral perspective, i.e., they care a lot about climate change and they want to know that they're doing their part.
00:36:42:03 - 00:37:03:02
Cynthia Adams: But I reflect often on folks that I know that have solar installed and they want to without their phone and show me how much power they produce that day. Or sometimes you see, with the demand side, if there's a way to to show that the home is saving money because of the way that the systems are engaging with the grid, then then you get the energy efficiency savings.
00:37:03:02 - 00:37:30:26
Cynthia Adams: So I think that people do want to take credit for that. They want they want that attaboy at a girl because it does cost more upfront, even though it's saving you more over the long term. So do they need that in the form of a plaque? I don't know, but I do think that the third party component can be really important for validating the messaging that the the builder has given them.
00:37:31:00 - 00:38:04:11
Cynthia Adams: And importantly, when the builder moves on and that homeowner is ready to sell 5 or 7 years or ten years down the road, how do we represent that? This was a really well built home to begin with. Where does the data live or exist to speak to that? And one of the advantages of Pearl certification is that we have a consumer facing app called Green Door, where the home's profile can be accessed by the homeowner, and if they make additional improvements, or they replace things over time because they go out, that record can be updated.
00:38:04:11 - 00:38:26:18
Cynthia Adams: So the certification is actually a living certification for the home. It's not a one and done label like some of the other scores and certifications are that are out there. And I think in that way, it's very much a part of the way that people live their lives these days and, and want to be able to have easy access to important information about things they've invested in.
00:38:26:18 - 00:38:30:11
Cynthia Adams: And I would I would put their home in that category to.
00:38:30:13 - 00:38:58:19
Mike Collignon: Okay. And the other question that David sent in and it's I think it's for both of you. But Alan, you you brought it up a little bit earlier with the whole appraiser angle, our real estate agents and appraisers on board with some of the stuff. Does it vary by locale or. I mean, what are you seeing, Cynthia? Certainly as the co-founder of a certification system.
00:38:58:19 - 00:39:11:11
Mike Collignon: But then also, Alan, you spoke about appraisers earlier. So can each of you kind of give your perspective on the, I guess, market acceptance on some of this stuff?
00:39:11:13 - 00:39:41:01
Alan Machuga: Yeah. So I'm going to I'm going to dovetail off a synthesis answer that she was given to the to the first question and where my mind was going on that, Mike, was the fact that everybody's some level of brand conscious. Right. So if you think about these certifications, you know, in what typically is a person's largest investment in being able to say, hey, my home is X, right?
00:39:41:04 - 00:40:02:28
Alan Machuga: I think is a value to people. Right? Because people do talk in a, in a, in a brand, you know, conscious way or at least outwardly. You know, people think about that. So being able to distinguish the things you're doing in your home differently in your neighborhood, I think is, is is a value of importance to people. But I agree with Cynthia.
00:40:02:28 - 00:40:20:08
Alan Machuga: I don't think they need a plaque. It's just something you're going to talk about. The Green Door app is pretty excellent. I actually whip it out similar to my Tesla app or my Eco Net app for our products. And you know, I show people, right? Hey, I have a platinum house. Here's here's what it means, and here's all the features of getting there.
00:40:20:08 - 00:40:40:02
Alan Machuga: So so, you know, I think as people are more apt, conscious and brand conscious, I think I think those things are important. Going back to the to the appraisal discussion, I think the industry is moving to where having a.
00:40:40:04 - 00:41:29:00
Alan Machuga: High performing home and having that energy efficiency and having that is part of the sales pitch, I think is growing right. I think we're moving to that point in our history where that's becoming important. I think folks like Pearl and Cynthia's team, continuing that education through the industry is going to be very, very important. You know, my rough, you know, guess at this from just talking to realtors in, in in my neck of the woods, I'd say we're probably at the ten, 15% range of people thinking about this, which to me is, you know, pretty, pretty good when it was probably zero about five years ago.
00:41:29:03 - 00:41:50:26
Alan Machuga: So it's going to be interesting to see how this progresses as we progress through the decade, as more greening of the grid is more greening of our products gets pushed, you know, into the marketplace how the evolution of what's going to happen in the real estate industry and mortgage industry is going to evolve with this.
00:41:50:29 - 00:42:27:00
Cynthia Adams: Yeah. So I'm going to build on what you were saying there, Alan. I think that there are a couple of different factors that are going to drive more education and a sort of bigger, warmer embrace from both the appraisal and the real estate community when it when it comes to high performing homes and these features, the fact that most states have passed energy code as a part of their their building code means that new construction is just inherently so much more efficient than what we have been doing 10 or 15 years ago.
00:42:27:00 - 00:42:53:13
Cynthia Adams: And that's, that's that's your minimum standard, you know, like we've moved the football in that sense when it comes to existing homes. I think the Inflation Reduction Act tax credits and rebates, particularly the rebate program, was once the states start to launch them, are going to put energy efficiency more at the top of mind, not only for the homeowners, but also for the real estate agents and appraisers.
00:42:53:13 - 00:43:37:01
Cynthia Adams: And I say that because there's a mandate for every state to create a market transformation plan as a part of their rebate program, and the market transformation plan has to specifically address how states will help ensure that homeowners which have made these investments will be able to accrue value for resale or rental. And it mentions specifically data aggregation, MLS integration, certification, you know, the sorts of things that we care passionately about at Pearl certification, but the things that are actually going to create that flywheel effect in the market where we can take these, these homes that have these features, and instead of it being an outlier, 10 to 15% of the of the housing stock
00:43:37:01 - 00:43:56:14
Cynthia Adams: in 10 to 15% of professionals actually understand it and start to move that more towards. No, this is how we live. This is this is going to be the average house, hopefully in 10 or 15 years time or sooner really, if you're worried about climate change. So it's a lot of work. I mean we're not there yet there.
00:43:56:15 - 00:44:37:16
Cynthia Adams: I look at the Appraisal Institute, which has done great work in creating certifications for appraisers and coursework for appraisers, both light and heavy, to help them get up to speed on how to use different types of methodologies. If there are no comparables in their market in order to assign value for efficiency or solar. And then I look at the National Association of Realtors Resource Council and their green designation, which is its own education for real estate agents to get up to speed on some of these building practices and technologies so that they can talk to buyers about them and be able to help their clients better understand why these speakers matter, why they should invest
00:44:37:16 - 00:45:04:19
Cynthia Adams: in them, etc.. But I feel like we're we're kind of all coming to alignment between, you know, the public interest, whether it's the federal government, states, utilities and then private interests in terms of how people want to live their lives and what we what we need is, is more education and communication so that folks understand that these are investments with a return.
00:45:04:20 - 00:45:29:06
Cynthia Adams: They're not just improvements, they bring real value to people over time. So more more to come on all of that with agents and appraisers. I agree with Alan that I think that that we're getting somewhere and people are really starting to to take these sorts of things much more seriously than they did in the past. And we still got work to do.
00:45:29:09 - 00:46:01:20
Sara Gutterman: Yeah. Mike, let me chime in. I have two questions, but I'm actually going to fold them into one partly for the sake of time. And then also, just in case there are any more audience questions that you want to get to. Mike. So Alan, your well, the context behind this question is, as you well know, Green Builder Media does a lot of demonstration projects, and we try to do a whole spectrum from very aspirational to very attainable so that we can show how to raise the bar, but also how to raise the floor.
00:46:01:20 - 00:46:26:08
Sara Gutterman: And, you know, in that spectrum, Alan, I would probably I think that Machuca Labs is probably more on the aspirational side of things, which is great. But I also know that there are very attainable elements to the project. So Alan first and then Cynthia, can you talk a little bit about what the most replicable elements were of your project?
00:46:26:08 - 00:46:52:28
Sara Gutterman: And then, you know, kind of the part two of this question is, what are your top tips, tricks, and hacks for building professionals in our audience, either live today or watching the recording of this webinar for scalability, because I think that, you know, we can talk about how important it is to get to a net zero carbon energy and water, all electric, healthy, resilient, solar plus storage powered, built environment.
00:46:52:28 - 00:47:11:11
Sara Gutterman: We can talk about getting to 45 El so that builders can access $2,500 for Energy Star certification and $5,000 for Zero Energy ready home certification. But, you know, a lot of the questions that we hear, which I'm sure you do too, is okay, we get the concepts, but how do we get there? What's what are the what's the lowest hanging fruit?
00:47:11:11 - 00:47:33:22
Sara Gutterman: And I think fortunately, you know, there is enough awareness to take those first steps and to get to at least Energy Star, if not zero energy ready homes. Those aren't the only two programs out there. They're not the only way to measure high performance, healthy homes. But you know, talk about, again, Alan, what you would say, again is the most replicable and your your most impactful tips.
00:47:33:24 - 00:48:01:17
Alan Machuga: Well, here's here's what I would say, Sarah. Everything I've done is is repeatable. Why we just happen to proceed. What happened with the mass building code. So actually, my entire general contracting team were thanking me after the build because when they had to go for their annual training, they're like, well, we just did this. We just did all of this at Michigan House, right?
00:48:01:19 - 00:48:35:19
Alan Machuga: So, you know, we took a very practical approach with what I would say is the is the building envelope. And a lot of the things that we put into the house with energy efficient products, you know, we put Rheem heat pump products in the house. They're attainable today, if you will, in the marketplace. They're affordable today using the incentives that are in the marketplace with the IRA and other utility, you know, programs with rebates, etc..
00:48:35:20 - 00:49:03:18
Alan Machuga: So all of that is, is is repeatable. The lab portion. What we've tried to do with thinking about mature the labs is, is, hey, because these products are becoming more sophisticated, what are the different experiences that we can develop off of them to improve the quality of life with the product over its lifetime for the end user, right?
00:49:03:22 - 00:49:35:01
Alan Machuga: I.e. we have technology in there that lets you know when your air filters are getting clogged or dirty, right? Wouldn't it be nice that they get replaced, or you're notified that they should be replaced on a frequent cycle, and it's just not a light sitting somewhere that says, oh, replace your filter type of thing. If you're going to participate in these demand side programs, how can you alert the end user in terms of what the type of program that you're going to participate in?
00:49:35:01 - 00:50:03:17
Alan Machuga: So a lot of what we've structured in the house is for residential, and I'd say light commercial, that we're able to test out some of these, let's call them digital product use cases in the home here. And quite frankly, we've got the toughest consumer in my life that everything must work, you know, coming out of the box. So my team knows my wife, you know, by first name.
00:50:03:17 - 00:50:26:01
Alan Machuga: And when she's calling, they know, okay, hey, we've got to fix that. We've got to put into something. So that's the part of, of of of the lab part. What I'd say is the, the, the tips or tricks, I really don't have any like what I would encourage people. There's a lot of people that want to do, you know, die.
00:50:26:04 - 00:50:52:11
Alan Machuga: Right. These products are becoming more and more sophisticated where you actually need quality installers to come and do this work for you. So like our Pro network, if somebody asks me, hey, Alan, can you recommend, you know, an HVAC system or a water heating system? I refer them right to our pro network because those are the guys that are dealing with this day in and day out.
00:50:52:11 - 00:51:33:28
Alan Machuga: And that's what I would say is the is the important part here. My analogy on all of this usually is back to the auto industry. Three decades ago, you could probably, you know, repair your car. Fast forward. Most people can't repair their cars because it's a, it's a, it's a, it's a computer on wheels, if you will write a similar thing is happening to the mechanical systems in our houses and and getting the right team in place to support you to do these installations, to do your maintenance, I think, is a big deal.
00:51:34:00 - 00:52:03:27
Sara Gutterman: Sorry, I had muted myself. Alan. One more. Just a very quick question. And then, Cynthia, I want to ask you this question and have you answer to wrap up the hour. But Alan, did you have integration issues? Because I know that that is one challenge that a lot of our builders and even homebuyers report is that sometimes when they put in these advanced systems, they do have some technology integration issues with elements of their energy systems, demand side energy management systems, etc..
00:52:03:27 - 00:52:07:24
Sara Gutterman: So did you have any of those integration issues?
00:52:07:27 - 00:52:38:19
Alan Machuga: Sarah I'll go back and I'm very, very grateful for the team that we assembled when we we put the house together, I'd say that we had quality electricians, quality HVAC team, quality plumbing team, that essentially it was all pretty smooth for me, which was surprising because I thought commissioning was going to be a little more difficult. Me being the tech guy, as soon as things were turned on, I was playing with them remotely.
00:52:38:21 - 00:52:58:03
Alan Machuga: They slapped my hand and said, hey, keep your hands off of it. We're not fully commissioned yet. So you can't play with this stuff until until we tell you it's it's it's it's good to go. But I would say the the integration thing was easy for me. And quite frankly, it might be because of our products.
00:52:58:03 - 00:53:24:09
Alan Machuga: We design our products to actually make them installer friendly. And quite frankly, my HVAC team had never installed a product before and actually was very complimentary of the equipment that they installed and how easy it was and how intuitive it was for them to get put in place so it could be part of actually, the integration could have been simple because of the way our engineers have actually designed the products.
00:53:24:11 - 00:53:31:04
Sara Gutterman: Thank you. And Cynthia, in the last few minutes that we have tips, tricks and hacks.
00:53:31:06 - 00:53:56:00
Cynthia Adams: Well, I think for builders that if you're if you're working with an architect, then a design charrette is a great place to start for the custom built in figuring out how you optimize for, again, the the goals of home ownership that your customer has. But but particularly around, you know, comfort, operational efficiency, you know, maintenance, durability, etc. probably much in the way that that Alan's experience was with his builder.
00:53:56:02 - 00:54:18:11
Cynthia Adams: I think if you're a production builder, you know, using that 45 L, going after Energy Star is a great place to start. But again, sitting down with your Rader, leveraging their building science knowledge, whole house as a system so that you can bake into your production process the things that you'll need to do to hit energy stars as an absolute must.
00:54:18:11 - 00:54:40:00
Cynthia Adams: And that can be cost effective. But you you need to give it some thought and work with your installers to figure out how to optimize and economize for the home buyer, look for a home that's got a rating, whether it's a Herz rating, a Pearl certification, an energy star, but some sort of a third party rating on the home is going to tell you that for sure.
00:54:40:01 - 00:55:08:14
Cynthia Adams: This builder built to a higher standard, and they engage the third party to validate that. And I think if you're just getting started as a homeowner, then I would encourage you to go into Green Door. Even if the house you have right now wouldn't qualify for certification. You're thinking about building, or maybe you're thinking about upgrading. It has a lot of information in there to help you understand which systems are perhaps the most important to invest in, and why.
00:55:08:17 - 00:55:28:02
Cynthia Adams: We also include in there and integration with climate checks. So if you wanted to get a sense of what sorts of climate resilience issues are at play for you, that's done by zip code and we can offer some suggestions there as well. But those those are the things that I would say off the top of my head. Sarah.
00:55:28:04 - 00:55:42:10
Sara Gutterman: Wonderful. Well, Cynthia and Alan, thank you both so much for a riveting conversation. I know I learned a lot and really appreciate you sharing your expertise. Mike, I will kick it back over to you to wrap things up.
00:55:42:12 - 00:56:08:12
Mike Collignon: All right. And again, thank you both, Cindy, Cynthia and Alan, because we really do appreciate the discussion. Sarah, as always, very good job facilitating. Also, thank you to our audience for attending today and the questions. Thank you very much. And also one more thank you to both Pearl Certification and Reem for the generous sponsorship of this webinar. Now we have another webinar coming up next week, Thursday, April 4th to be exact.
00:56:08:14 - 00:56:25:29
Mike Collignon: It will be the fifth webinar in our housing 2.0 series. We're going to be talking about translating the hidden value. So we actually hit on this a little bit today, translating the hidden value of zero and how we can utilize behavior change techniques to assist that effort. So we're going to be talking a little about that sales process.
00:56:26:01 - 00:56:34:28
Mike Collignon: That seminar is going to start at 2 p.m. eastern time again on April the 4th. And till next time, stay safe, stay healthy and take care of everyone. So long.