EPA ENERGY STAR Homes

Sales Training

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Before We Begin:Before We Begin:

How Do You Sell Your Homes?

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I. Background

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Have You Seen This Label?Have You Seen This Label?

The ENERGY STAR Label is the new symbol for Energy Efficiency

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EPA GreenLights ENERGY STAR Buildings1990-Present 1995-Present

8.0+ Billion sq. ft. 2.5+Billion sq. ft.

1 in 11 buildings 20-40% rate of return

ENERGY STAR Computers ENERGY STAR Homes1994-Present 1995-Present

14+Million units 1000+ Partners

100% of all manufactured 10% of all homes by 2002

95% of all homes by 2012

ENERGY STAR’s Track Record

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What is the ENERGY STAR Homes Program?

Voluntary

Single Threshold : 30% Greater than MEC

Third-Party Verification

Yes/No Consumer Decision

Significant Pollution Prevention

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What Does the ENERGY STAR Homes Program

Offer Builder Partners?

Cost Advantage

Value Advantage

“Brand” Advantage

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II. How Does EII. How Does ENERGYNERGY SSTARTAR Homes Offer a Homes Offer a

Cost Advantage?Cost Advantage?

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If you look at “Real” Cost, every product has three “sticker” prices:

First Cost

Operation Cost

Maintenance Cost

Real Cost = Cost AdvantageReal Cost = Cost Advantage

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First Cost:10 Year Operational Cost:10 Year Maintenance Cost:

Total Cost:Total Cost:

Real Cost Example: What does a light bulb really cost?

Incandescent

Bulb CFL

$.50 $12.00

$60.00 $15.00

$3.50 $0.00

$64.00$64.00 $27.00 $27.00

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Pay Buyers to take them off your hands!Pay Buyers to take them off your hands!

Incandescent Annual Operation Cost: $6.00

CFL Annual Operation Cost: $1.50

Annual CFL Operation Cost Savings: $4.50

Annual CFL Credit Card Cost: $2.50

Annual CFL Cost: -$2.00

Final Cost of CFL:Final Cost of CFL: -$20.00-$20.00

How to Sell the Real Cost of a Light Bulb

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What is the “Real” Cost of What is the “Real” Cost of an ENERGY STAR Home?an ENERGY STAR Home?

Extra Sticker PriceExtra Down Payment *

Cash Back at Closing

Extra Up-front CostExtra Up-front Cost Additional Monthly Mortgage

Monthly Energy Savings

Extra Monthly CostExtra Monthly Cost* 5% down payment

** ENERGY STAR Mortgage discount

Standard ENERGY STAR

Home Home

$ 0 $3,000

$ 0 $ 150

$ 0 $ 500 *

$ 0 ($350)$ 0 ($350) $ 0 $ 20

$ 0 $ 35

$ 0 ($15)$ 0 ($15)

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Preferred Terms with ENERGY STAR Mortgages

Discounted Closing Costs

Higher Qualifying Ratio

Assured Appraised Values

Free Interest Rate Lock

Discounted Interest Rates

How Do EHow Do ENERGYNERGY S STARTAR Homes Homes Offer Lower Cost?Offer Lower Cost?

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ENERGY STAR Mortgage Partners

Chase Manhattan Mortgage

Countrywide Mortgage

PHH Mortgage Services

FHA-EEM

Local Banks

How Do ENERGY STAR Homes Offer Lower Cost?

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Comparison of ENERGY STAR Mortgages to Leading Mortgage Lenders

Chase ENERG Y STAR

CountrywideENERG Y STAR

PHH ENERG Y STAR

Closing Costs $33.50 back tohome buyer

$500 $18.50 back tohome buyer

InterestRate

7.125% 7.75% 7.25%

EPA provides this information to allow comparison amonglenders, but does not guarantee its accuracy. All builders andhome buyers should call lenders to obtain the most up-to-dateinformation concerning loans and pricing. Closing costs do notinclude taxes and title search required by law.

ENERGY STAR Homes Sales Tools: ENERGY STAR Mortgages: Comparison Matrix

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How Do ENERGY STAR Homes Offer Lower Cost?

ENERGY STAR Homes Cost Sheet

Simple Worksheet Demonstrating . . .Simple Worksheet Demonstrating . . .

Real Cost vs. Sticker Price Investment Return Resale Value

State-of-the-Art Technologies Track Record of Low Utility Bills ENERGY STAR Home Label

[ENERGY STAR Builder]Model:

[ENERGY STAR Builder Name] Cost SheetOther BuilderModel:

Net

“Sticker Price”

Down Payment

Net Monthly Payment

(____% Down)

Minus Cash back*

Net down payment

Mortgage Payment

Plus monthly utility bills

Monthly Costs

Rate-of-Return

Resale Value

- =

- =

- =

State-of-the-Art Technologies Track Record of Low Utility Bills ENERGY STAR Home Label

Monthly Cash Flow

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How Do ENERGY STAR Homes Offer Lower Cost?

TABLE 1: Monthly Mortgage Cost

Total Incremental Cost for ENERGY STAR Home UpgradesInterest

Rate $500 $1000 $1500 $2000 $2500 $3000 $3500 $4000 $4500 $5000

6.5% 3.16 6.32 9.48 12.64 15.80 18.96 22.12 25.28 28.44 31.606.75% 3.24 6.49 8.73 12.97 16.21 19.46 22.70 25.94 29.19 32.437.0% 3.33 6.65 9.98 13.31 16.63 19.96 23.29 26.61 29.94 33.277.25% 3.41 6.82 10.23 13.64 17.05 20.46 23.87 27.28 30.69 34.107.5% 3.50 7.00 10.50 14.00 17.50 21.00 24.50 27.97 31.50 35.007.75% 3.58 7.16 10.74 14.32 17.90 21.48 25.06 28.64 32.22 35.808.0% 3.67 7.34 11.01 14.68 18.35 22.01 25.68 29.35 33.02 36.698.25% 3.76 7.51 11.27 15.03 18.78 22.54 26.29 30.05 33.81 37.568.5% 3.84 7.69 11.53 15.38 19.22 23.07 26.91 30.76 34.60 38.458.75% 3.93 7.87 11.80 15.73 19.67 23.60 27.53 31.47 35.40 39.349.0% 4.02 8.05 12.07 16.09 20.12 24.14 28.16 32.18 36.21 40.239.25% 4.11 8.23 12.34 16.45 20.57 24.68 28.79 32.91 37.02 41.13

(Note: These costs do not reflect the interest tax exemption allowed under Federal law for interest paid on home mortgages.Depending on your tax bracket, these incremental costs will be even less after taxes.)

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How Do ENERGY STAR Homes Offer Lower Cost?

Table 2: Investment Rate of Return Rate of Return on Investment for ENERGY STAR Loan1

MonthlyPositive

Cash-Flow Additional Up-Front Cost for an ENERGY STAR Home

$100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000

$5 60% 30% 20% 15% 12% 9% 8% 6% 5% 4%

$10 120% 60% 40% 30% 24% 20% 17% 15% 13% 12%

$15 180% 90% 60% 45% 36% 30% 26% 22% 20% 18%

$20 240% 120% 80% 60% 48% 40% 34% 30% 27% 24%

$25 300% 150% 100% 75% 60% 50% 43% 37% 33% 30%

$30 360% 180% 120% 90% 72% 60% 51% 45% 40% 36%

$35 420% 210% 140% 105% 84% 70% 60% 52% 47% 42%

$40 480% 240% 160% 120% 96% 80% 69% 60% 53% 48%

$45 540% 270% 180% 135% 108% 90% 77% 67% 60% 54%

$50 600% 300% 200% 150% 120% 100% 86% 75% 67% 60%

$55 660% 330% 220% 165% 132% 110% 94% 82% 73% 66%

$60 720% 360% 240% 180% 144% 120% 103% 90% 80% 72%

1 Compare with other investments such as 5.4% for 5-year CD (average APY for top 4 national banks based on assets); 7.5% for 1991-1996 Lippe

Taxable Bond Fund average; 14.5% for 1991-1996 Stock Fund average; and 15.7% for the 1991-1996 S&P 500.

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How Do ENERGY STAR Homes Offer Lower Cost? ENERGY STAR Homes Cost Sheet Example One:

Sticker Price:

Percent Down:

Length of Loan:

Mortgage:

Interest Rate:

Monthly Utility Bills:

Competitor Quality Homes

$170,000 $173,000

5% 5%

30 Years 30 Years

Conventional Conventional

7.25% 7.25%

$135 $95

State-of-the-Art Technologies Track Record of Low Utility Bills ENERGY STAR Home Label

The Maplewood

Quality Homes Cost SheetQuality Homes Cost SheetAcme HomesModel: Vanilla

Net

$173,000$173,000$173,000$173,000“Sticker Price”

Down Payment

Net Monthly Payment

(_5__% Down)

Minus Cash back*

Net down payment

Mortgage Payment

Plus monthly utility bills

180%180%180%180%

Monthly Costs

Rate-of-Return

Resale Value

$170,000$170,000$170,000$170,000 $3,000$3,000$3,000$3,000

$8,650$8,650$8,650$8,650 $8,500$8,500$8,500$8,500

$0$0$0$0 $0$0$0$0

$150 $150 $150 $150 $8,500$8,500$8,500$8,500

$1,121$1,121$1,121$1,121

$8,150$8,150$8,150$8,150

$1,236$1,236$1,236$1,236

$135$135$135$135

$1,101$1,101$1,101$1,101

$20$20$20$20

$95$95$95$95

$1,216$1,216$1,216$1,216

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- =

- =

State-of-the-Art Technologies Track Record of Low Utility Bills ENERGY STAR Home Label

Monthly Cash Flow

How Do ENERGY STAR Homes Offer Lower Cost?Point of Sale Material from ENERGY STAR Homes

Cost Sheet

The Competition:

$1216/Month*

Quality Homes:

$1236/Month*

* based on monthly mortgage, utilities and taxes

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How Do ENERGY STAR Homes Offer Lower Cost? ENERGY STAR Homes Cost Sheet Example Two:

Sticker Price:

Percent Down:

Length of Loan:

Mortgage:

Interest Rate:

Monthly Utility Bills:

Competitor Quality Homes

$120,000 $122,500

5% 5%

30 Years 30 Years

Conventional Chase

7.25% 7.25%

$115 $85

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How Do ENERGY STAR Homes Offer Lower Cost?

“ENERGY STAR Home Calc” Sales Software

Easy to use computer tools for producing…Easy to use computer tools for producing… Customized Cost Benefits ENERGY STAR Mortgage Impacts Instant Affordability Analyses Point-of-Sale Material

Quality Homes: Featuring ENERGY STAR Homes

More Value for Less Cost!

The Competition:

$1570/Month*

Pulte Homes:

$1550/Month* and

$350 Less Down Payment* based on monthly mortgage, utilities and taxes

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More Value for Pennies a Day

More…

Comfort

Quiet

Safety

Durability

Peace of MindAll for 30¢ a day!*

*Based on cash flow from 30 year loan and lower utility bills

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III. How Does EIII. How Does ENERGYNERGY SSTARTAR Homes Offer a Homes Offer a

Value Advantage?Value Advantage?

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How Does ENERGY STAR Homes Offer a Value Advantage?

First look at the features that make ENERGY STAR Homes More Efficient...

Tightly Sealed Construction Improved Insulation High-Performance Windows Tightly-Sealed or Internal Ducts Right-Sized, Efficient Equipment

…in other words, tried and true technologies requiring no changes to preferred designs and layouts!

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Energy-Efficient Features:Energy-Efficient Features:Tightly Sealed ConstructionTightly Sealed Construction

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Energy-Efficient Features:Energy-Efficient Features:Tightly Sealed ConstructionTightly Sealed Construction

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Energy-Efficient Features: Energy-Efficient Features: Tightly Sealed Heating & Cooling DuctsTightly Sealed Heating & Cooling Ducts

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Energy-Efficient Features: Energy-Efficient Features: More/Improved InsulationMore/Improved Insulation

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Energy-Efficient Features: Energy-Efficient Features: More/Improved InsulationMore/Improved Insulation

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Energy-Efficient Features:Energy-Efficient Features:High-Performance WindowsHigh-Performance Windows

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Energy-Efficient Features:Energy-Efficient Features:Energy-Efficient HVAC EquipmentEnergy-Efficient HVAC Equipment

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Right-Sized HVAC EquipmentLower Operating Cost

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0 1 2 3 4 5 6 7 8 9 10 11

Run-Time (minutes)

EE

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Energy-Efficient Features: Energy-Efficient Features: Right-Sized HVAC EquipmentRight-Sized HVAC Equipment

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How Do ENERGY STAR Homes Offer a Value Advantage?

...Than Look at the Benefits to Your Buyers!

Features Tight Construction Improved Insulation High-Performance

Windows Tightly Sealed Ducts High-Efficiency

Equipment Third Party Verification

Benefits Lower Monthly Costs Improved Comfort Quieter Home Improved Indoor Air

Quality Increased Durability Quality Assurance Less Obsolescence Higher Resale Value

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How Do ENERGY STAR Homes Offer a Value Advantage?

Sales Truism...

People Buy on Emotion and People Buy on Emotion and Justify with the Facts…Justify with the Facts…

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How Do ENERGY STAR Homes Offer a Value Advantage?

So Make the Facts Obvious!

Point-of-Sale ENERGY STAR Homes Tools:Point-of-Sale ENERGY STAR Homes Tools: ENERGY STAR Homes Consumer Fact Sheets ENERGY STAR Homes Consumer Video

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How Do ENERGY STAR Homes Offer a Value Advantage?

So Make the Facts Obvious...

Point-of-Sale Customized Tools:Point-of-Sale Customized Tools: Mock-up/Open Wall Assemblies Technology Displays “Benefit” Labels Checklists “Value” Questions After-Sale “Feel Good” Meetings

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IV. How Do ENERGY STAR Homes Offer a “Brand” Advantage?

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How Does ENERGY STAR Homes Offer a “Brand” Advantage?

Marketing Tool Kit

ENERGY STAR Logo

Drop-in Ad Modules

Promotional Concepts

Sample Concept Ads

ENERGY STAR Homes Buyer File

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ENERGY STAR National Brand Campaign

ENERGY STAR Homes Editorial Campaign

ENERGY STAR Homes Consumer Workshops

How Does ENERGY STAR Homes Offer a “Brand” Advantage?

EPA Outreach Efforts

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ENERGY STAR Homes Certificate

ENERGY STAR Homes Plaque

HERS Rating

How Does ENERGY STAR Homes Offer a “Brand” Advantage?Product Differentiation Tools

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ENERGY STAR Homes Logo

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ENERGY STAR Homes Certificate

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Sample HERS CertificateHOME ENERGY RATING

Date: May 15, 1997 Rating No.: 1001367

Owner’s Name: NEW HOMEBUYER Rating Org.: TSIProperty: 49 HARVEST CT. Phone No.: 846-4655Address: DANVILLE, IN 46122 Rater’s Name: WILL MYERS

Rater’s No.: WM0231Builder’s Name: BEST HOMESWeather Site: Central Region, IN Rating Type: Site VisitBuilder’s File: WM0231.BLG Rating Date: 5-12-97

ANNUAL ENERGY COSTS

Heating $ 210 Rating 89.1Cooling $ 39

Water Heating $ 245Lights & Appliances $ 308Service Charges $ 85

Total $ 887 Estimated Annual $887Average Monthly $ 74 Energy Costs

Least 0-19 20-39 40-49 50-59 60-69 70-79 80-82 83-85 86-91 92-100 MostEfficient + + + + + Efficient

Rating Certificate No. Certified Home Energy Rater

This report is offered as an aid in comparing the energy efficiency of homes. This information does not constitute anywarranty, expressed or implied, as to the presence or absence of energy features in this house, the heating or coolingfuel used in the house and its costs, or the actual energy consumption or performance of the house.

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V. Wrap-Up

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ENERGY STAR Homes Sales Training Wrap-up:

Why Apply ENERGY STAR Homes Sales Training Tools?

Because everyone benefits…Because everyone benefits… Home Buyers can get more value for less cost and great

feeling they are contributing to a cleaner environment Builders can increase revenues/profits with more satisfied

customers Realtors/Sales agents can close sales quicker and increase

commissions EPA can prevent millions of tons of carbon emissions

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Sell cost, NOT Price

Sell Added Value

Differentiate Your Product with the ENERGY STAR “Brand”

ENERGY STAR Homes Sales Training Wrap-up:

Formula for Success

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Appendices

Latest ENERGY STAR Homes Update Newsletter

ENERGY STAR Mortgage Comparison Matrix

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How Do ENERGY STAR Homes Offer Product Differentiation?

Product Differentiation ToolsEnergy Bill Warranty

Guarantees annual space conditioning bill not to exceed set amount

Backs up positive-cash flow claim Typically entails extra quality assurance Differentiates energy efficient home builders Available from multiple sources:

– Utility programs

– Product manufacturers

– Home energy rating providers

– Directly from builder

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Fill out this checklist by asking other home builders if they provide the same state-of-the-arttechnologies and systems engineering features, because you should feel confident you are makinga smart consumer decision with the biggest purchase of a lifetime!

Watt Homes

Other Home Builders

High-Performance Home: Features

Sealed Tight Construction

R-30 Attic Insulation

R-22 Wall Assembly

Low-E Vinyl Window

Mastic Sealed Ducts

90% AFUE Gas Heating

12 SEER Air Conditioner

Engineered HVAC Sizing

Mechanical Ventilation

Third-Party Rating/Testing

ENERGY STAR Home Label

Benefits

Lower Ownership Cost $______/Mo. $______/Mo. $______/Mo. $______/Mo.

Lower Maintenance Costs

Blanket of Comfort/Quiet

Assured Indoor Air Quality

Increased Safety

Higher Resale Value

ENERGY STAR Homes Marketing Tool:Home Buyer Checklist