In an era where the understandable desire to save money on spiraling energy costs has dovetailed with reducing carbon footprints, home energy assessments have become a popular formula for achieving both goals.
It may become even more commonplace this year as customers of PG&E face yet another increase in gas and electricity rates, after an average annual increase of nearly $400 just went into effect at the start of this year.
The increasing demand is helping create a cottage industry in energy assessment startups in the region. Cooper Marcus and Joseph Chen are among them. Marcus founded Quit Carbon Inc. in 2022 and Chen launched Bay Enervisors in April 2023.
Through their consulting companies, they provide residents cost-effective ways to improve their energy usage by gathering and analyzing energy usage data and helping residents develop energy management plans.
“We are definitely seeing a growth in the number of new companies being formed,” said Marcus, who describes himself as the founder and “chief quitter” of Quit Carbon.
Remote assessments
To cut down on their own carbon output through transportation, Marcus and his advisers at San Francisco-base company decided to conduct online home energy assessments only. It’s a service they offer to California residents statewide. The company’s main focus is to help homeowners convert gas-powered appliances and systems to more environmentally friendly electric versions.
They do not charge for their online consultations, but do make money off referrals to an approved list of contractors who can help clients replace gas stoves, water heaters and furnaces, among other projects.
“Our clients are also free to use their own contractors or go the DIY route,” Marcus said. “People really love the help we give them.”
He often advises clients to take the process of electrifying their homes slowly and deliberately.
“I want them to think small,” Marcus said. “Upgrade one or two (appliances and systems) at a time, like replacing your hot water heater or gas stove. I think it’s very important that this is doable for people.
“No one makes the switch all at once.”
Marcus said — not surprisingly, given the name of his company — Quit Carbon has focused most of its work on helping residents shrink their environmental footprints. The company plans to take the issue of energy savings more into account in the future, he added.
One big area of saving money for their clients, however, is when contractors submit bids for electrification work.
“We evaluate the bids for them,” he said of his customers. “We examine the fairness of the charges.”
Over the past 18 months, Quit Carbon has advised electrification efforts in more than 3,000 homes throughout California, Marcus said.
One of them belongs to Bay Area resident Nicholas Carter, for whom quitting carbon has become an important mission in life.
“My wife and I already have two electric cars and solar (panels) on our house,” he said. Carter has replaced his gas-powered water heater and furnace with an electric-powered heat pump.
Carter also has an electric air-filtration system in his home, which he views as invaluable to provide healthy air during bouts of air pollution — including the harmful air quality caused by wildfires in recent years.
In-person consultations
Chen’s Bay Enervisors has a different business model than Quit Carbon.
Unlike Marcus’ Quit Carbon, whose electrification specialists work remotely with clients statewide, Chen provides in-home visits focused in the Bay Area only.
Growing out of his own efforts to update and convert gas-powered systems and appliances in his own 78-year-old fixer-upper home near San Bruno, Chen said he started his company to help others on the same path. He conducts Bay Enervisor work during the evenings after work and on weekends, holding onto his day job as a sales engineer at a San Francisco tech startup as he builds his fledgling business.
“This is a passion project for me,” Chen said.
He conducts in-person visits in five Bay Area counties, including San Mateo and Santa Clara, to deliver energy “scores” from one to 10 based on criteria developed by the U.S. Department of Energy.
He said the only local exception for his work are residences in Palo Alto, which receive their utilities through the City of Palo Alto Utilities (CPAU). The city conducts its own energy audits through the Home Efficiency Genie program.
Chen said he assesses his clients’ scores based on their home’s energy sources, appliances, insulation, doors and windows, among other features. After assigning the homeowner a score on their residence, he refers them to contractors who can help them electrify their homes.
He also advises them on government-sponsored rebate programs that can dramatically reduce or even eliminate their conversion expenses. There are a variety of rebates, including those for converting to electric appliances such as heat pump water heaters, induction cooktops and heat pump dryers, There also are rebates for adding insulation and sealing ducts and windows..
A single 90-minute visit costs $200 but can result in up to a 35% reduction in energy costs, Chen said. Average Bay Area gas and electricity costs have soared by 70% and 58%, respectively, during the past five years, with the typical PG&E bill now at more than $240.
For homeowners reluctant to take the plunge and go all electric — consider those rebates, he said.
“There are a lot of rebate and tax credit programs available to help electrify your home,” Chen said, citing the federal inflation Reduction Act, for example. Incentives include a 30% tax credit for up to $2,000 annually for installation of a heat pump – a gas furnace replacement that provides both heating and cooling.
Juggling his full-time career with his after-hours passion, Chen of Bay Enervisors said he saw a surge of clients during recent months. He doesn’t foresee a slowdown anytime soon.
“I really enjoy helping people navigate this process after going through it myself,” he said. “Most homes have poor heat retention. I want to help homeowners improve their circumstances as cheaply as possible.”
Related
The real estate industry is starting to undergo some dramatic changes, especially in light of the recent Sitzer/Burnett v. National Association of Realtors case ruling in October that found the real estate industry guilty of collusion to inflate commissions by forcing home sellers to pay a broker fee to the homebuyer’s agent in addition to their own listing agent. A federal jury awarded $1.8 billion in damages to home owners who brought the class action suit forward in Missouri.
More recently, the National Association of Realtors announced on March 15 an agreement to settle the above case, as well as other lawsuits regarding broker commissions by paying $418 million in damages and eliminating certain objectionable rules related to real estate commissions. The trade association also agreed to put in place a new set of rules, including one that would require a buyer’s agent (those who represent the buyer in the real estate process) to enter into written agreements with their clients to help them understand exactly what services and value will be provided, and for how much. These changes are scheduled to go into effect in mid-July, according to the association’s announcement.
Additionally, the U.S. Department of Justice has been scrutinizing the structure and elements of listing agreements, suggesting inevitable shifts in how real estate agents are compensated and by whom.
All of this will have far-reaching implications in the industry: It is now clear that sellers do not have to offer 2.5% commission to the buyer’s agent.
Even prior to the Sitzer verdict and the association’s pending settlement, brokerages could see the writing on the wall. Not surprisingly, they have been training agents to ask buyers to sign agreements committing them to work exclusively with a particular agent and compensating them for their services.
While these anticipated industry changes are expected to benefit both buyers and sellers in the long term, there are a number of details that buyers should consider before signing any agreement with an agent.
Tips for homebuyers
Choose the right agent
Many buyer’s agents will request that potential buyers sign buyer representation agreements – a contract between a homebuyer and a real estate agent that outlines the terms and conditions of their working partnership. While some agents will fully explain the terms and ramifications, others may attempt to gloss over its significance or slip it in unnoticed. It’s essential for buyers to understand the agreement fully to avoid unexpected commitments, such as how much commission they will be expected to pay. This is particularly important since it’s been the longstanding practice for sellers, rather than buyers, to have paid the commission fees for the buyer’s agent.
Although the notion of paying for their own agent might catch buyers off guard, this structure offers several benefits. It encourages competition among agents, which should enhance service levels and exert downward pressure on commissions. Further, compensation can be tailored to the agent’s level of competency and time invested, ensuring fair remuneration for their services. For instance, a buyer who finds a home independently and receives no advice on disclosures or financing options may pay a lower rate; whereas, a buyer from outside the area who requires extensive analysis and guidance over months of house hunting may find great value in an agent’s services, justifying higher compensation.
Finally, this structure also reduces the risk of agents steering buyers toward less-desirable properties solely because of higher commission.
The level of experience, expertise and quality of service, however, varies significantly among agents, making it crucial for buyers to conduct thorough interviews, akin to sellers interviewing listing agents.
Factors a buyer should consider include:
- Developing a list of priorities
- Researching and interviewing three to five qualified agents, making sure to ask detailed and specific questions
- Signing agreements with one or more of the chosen agents
Through this process, the buyer will be able to ascertain the pros and cons of each agent.
Limit the geographic scope of the representation agreement
Local expertise is very important in real estate. Nevertheless, some buyers sign agreements committing themselves to working with one agent despite considering various geographic areas.
Most buyers would be better off working with different specialists from different areas. For example, one agent could focus on the Los Altos to Atherton area; another on the Hillsborough, Burlingame and San Mateo area; and a third on the Saratoga and Los Gatos area. Agents who claim expertise across all areas probably lack true specialization in any particular locale.
Beyond localized knowledge, buyers benefit from agents who are aware of competing agents in different areas, motivating them to act diligently to secure the perfect property before their counterparts do.
Limit the duration of representation agreement
Buyer representation agreements should strike a balance between giving the agent adequate time to demonstrate their expertise, work ethic, responsiveness and value and not holding the buyer hostage if they’re dissatisfied.
Generally, contract periods of 90 and 120 days suffice. If the buyer is happy with the level of service provided, they can always extend the agreement.
Consider an agent’s access to off-market homes
Properties that are sold without being listed on the Multiple Listing Service (MLS) and without marketing through other channels, such as local newspapers, TV commercials, paid online ads and direct mail, tend to sell for less money than similar properties that receive extensive promotion. While this is generally very bad for sellers, it can result in a good buying opportunity. Therefore, an agent’s ability to access these off-market properties is a significant advantage to his or her buyers.
Typically, high-volume buyer’s agents are well-connected to off-market properties. Similarly, brokerages that handle substantial volume in specific cities or neighborhoods often possess valuable insights into these less-promoted properties.
This guest column was written by contributing writer Michael Repka. Repka, CEO and general counsel for DeLeon Realty, Palo Alto, formerly practiced real estate and tax law in Palo Alto. He formerly served on the Board of Directors of the California Association of Realtors. He can be reached at DeLeon Realty.