Making More Money by Providing Home Energy Scores

Home Energy Scores are a rating system created by the U.S. Department of Energy (DOE). The simplest way to describe the Home Energy Score program is to compare it with the familiar miles per gallon (MPG) rating for cars, which was developed by the DOE’s Environmental Protection Agency. The Home Energy Score is intended to be an easy-to-understand, national standard that will motivate homeowners and buyers to invest in energy efficiency in a similar way to how the MPG rating encourages buyers to purchase cars that are more energy efficient. Everyone can understand a simple rating scale of 1 to 10, with 10 being the most energy-efficient homes. And, just like with cars, the DOE wants every house to be scored.

The DOE started testing their Home Energy Score program in 2011. Ten agencies across the United States ran the program to help test and refine it before going public in 2012. During that first year, 4,000 Home Energy Scores were generated. As of the beginning of 2016, over 32,000 homes had been scored. With 5.25 million homes sold in 2015, though, it’s obvious that most homes have not yet been scored. One of the main reasons for this has been that the incentive to pay someone, such as a home inspector, to perform the Home Energy Score test just wasn’t there.

Several recent developments have caused things to change, however. In September 2015, the U.S. Department of Housing and Urban Development’s Federal Housing Administration (FHA) announced a new policy. Under this new policy, a homebuyer receiving an FHA loan can receive thousands of dollars in additional funds added to their mortgage. If a home receives a Home Energy Score of 6 or higher, the buyer’s lender can provide a 2% stretch on the debt-to-income ratio during the purchase or the refinance of the home. If a home receives a Home Energy Score below 6, the buyer can receive funds to help bring the house up to the level of a 6 or higher. The goal of these incentives is to increase the energy efficiency of homes in the United States by rewarding the owners of homes that are already scoring well in the hopes that the owners will spend their savings on making more energy improvements to their home and by helping owners of homes that aren’t up to the ideal score to finance energy-efficient improvements in those homes. (You can read more about the FHA’s partnership with Home Energy Score program at http://goo.gl/idTqMp.1)

Another big change that has occurred recently is the acceptance of the Home Energy Score rating by multiple listing services (MLS). The DOE’s Real Estate Standards Organization (RESO) and the Council of MLSs are working together to provide energy information to all buyers. This partnership means that Home Energy Scores will start appearing on MLS data sheets and on sites like Realtor.com, Zillow and others. Currently, five regions—in the Northeast, Washington, D.C. (MRIS), Chicagoland (MRED), Boulder, CO (IRES) and Portland, OR—are leading the way. The rest of the MLS areas have agreed to incorporate Home Energy Scores by 2018. Many areas are already in the process of programming in the scores. (You can read more about the MLS and Home Energy Scores at http://goo.gl/2r1BL1.2)

The last major change that’s occurring is the acceptance and expansion of the program among states and cities. Colorado, for example, will give homeowners $750 for each point that they improve their Home Energy Score, up to a max of $3,000, or four points. In addition, Connecticut, Vermont, Oregon, Missouri, Alabama and others are working with the DOE to create combined state-federal programs and energy recommendations. The city of Berkeley, CA, has become the first city to mandate that a Home Energy Score be acquired for all real estate sales. 

Becoming a Home Energy Score Assessor
There are not many statements you can make when speaking with prospective clients that will show that you’re more qualified than saying you are certified by the U.S. Department of Energy. So, how do you get certified?

First, the DOE requires all inspectors to be members of an official organization. In the home inspection industry, ASHI, BPI, CREIA and InterNACHI all qualify. You also need to be affiliated with a DOE partner. Currently, ASHI, BPI and InterNACHI are considered to be partners. To this end, ASHI is holding an “Assessor Boot Camp” September 13 and 14 in partnership with the DOE, the Mid-Atlantic Chapter of ASHI (MAC-ASHI) and Northern Virginia ASHI (NOVA ASHI). If you’re interested in signing up for this camp, contact Ken.Slattery@csra.com, who is the DOE contact. The two days will include classroom and on-site training and is a big step in ASHI working with the DOE to turn more of its members into energy assessors. ASHI and the DOE have more training sessions in the planning stages in different locations across the country!

Once you choose your partner organization, you’ll be required to complete its specific program. To begin this process, you’ll contact the organization’s designated Home Energy Score representative, who can direct you to the online courses you’ll need to complete to become a Home Energy Inspector. 

Once you’ve completed the requirements of your DOE affiliate partner, you’ll be directed to the DOE website. The DOE website offers online training that includes using a 3-D simulation tool, and you’ll take the practical and written test online.

Entering the Data and Generating Reports
Although there are a few software programs outside our industry that you can use to generate the report, the main methods currently available within the home inspection industry are via the Inter-NACHI website and by using Home Inspector Pro. Home Inspector Pro recently became the first home inspection software company to partner with the DOE, and we have spent the last year adding software that allows people to create Home Energy Scores online.

During the inspection, you’ll collect data on approximately 40 items, almost all of which you normally would collect during your home inspection process. These items include the type of HVAC system and water heater units in the home (and when they were manufactured) and information about the home’s roofs, foundations, walls and windows. The only equipment required that you may not already own is a measuring wheel, which you’ll use to measure the perimeter of the house. The total additional time needed to collect the Home Energy Score data and enter the information into the program is approximately 20 to 30 minutes.

After you’ve entered all the data, you’ll electronically send the information to the DOE. Within a minute, the DOE software will automatically generate and send a PDF of the information back to you. The Home Energy Score program does not require mandatory reporting—this means that your client can choose whether or not to send the Home Energy Score information to his or her lender.

Reading the Report
The Home Energy Score report contains five pages. Page 1 shows the home’s score on a rating scale of 1 to 10. Pages 2 through 4 show the information that you collected in an easy-to-read format. Page 5 shows the items that are recommended for “Repair Now” or “Replace Later.”

Items listed in the “Repair Now” category are repairs for which the homeowner could recuperate the costs within 10 years. Items under the “Replace Later” category are repairs that could take longer to recuperate the costs. Having a list of these items is useful to homeowners because they may be planning to make specific changes to the home, and they may want to know that an item, such as their home’s HVAC unit, is already near the end of its life.

Calling All Home Inspectors
I hope that the information provided in this article has helped you to see what’s happening and what’s likely to happen in the realm of Home Energy Scores. If you’re still wondering whether becoming an inspector who can conduct Home Energy Score assesments would be beneficial to your business today, think about this: Can you imagine going to a car dealership to buy a car and then even considering a car that doesn’t have a MPG sticker on it? Of course not. So, as more and more Home Energy Scores start showing up on MLS listings, there will be a tipping point at which buyers will begin to demand this information. Will you be in the group of inspectors who led the way in performing Home Energy Score assessments? Will you be the first to teach a class at your local real estate agent’s office? Or will you sit on the sidelines and wait to see what happens? H

1. Glickman J. DOE’s Home Energy Score and FHA Mortgages: New Tools to Help You Shop for and Buy an Energy Efficient House. Posted January 14, 2016. Better Buildings, US Department of Energy. Available at: http://betterbuildingssolutioncenter.energy.gov/beat-blog/doe%E2%80%99s-home-energy-score-and-fha-mortgages-new-tools-help-you-shop-and-buy-energy-efficient. Accessed July 25, 2016.

2. Crawford J. Home Energy Efficiency Information: Coming to Your MLS by 2018. Posted January 5, 2016. Better Buildings, US Department of Energy. Available at: http://betterbuildingssolutioncenter.energy.gov/beat-blog/home-energy-efficiency-information-coming-your-mls-2018. Accessed July 25, 2016.

Dominic Maricic is the CEO of Home Inspector Pro, Inspection Software & Website Hosting. He has spent the last few years working with the Department of Energy to bring Home Energy Scores into the hands of home inspectors via Home Inspector Pro. Dominic has given several talks with the Department of Energy and will be giving another joint talk with the DOE in January 2017 at ASHI’s InspectionWorld.TM

If you have any questions on this topic, please contact Dominic Maricic, CEO of Home Inspector Pro, at Dominic@HomeInspectorPro.com.