Energy efficiency retrofits help sell foreclosed homes
Two years ago, the Seattle entrepreneur Aaron Fairchild embarked on a gutsy business launch. He’d seen the value that energy-efficiency retrofits could create, so he formed G2B Ventures to buy undervalued and foreclosed homes, weatherize them, and market them to homebuyers – with the green improvements as a selling point. And despite the housing market collapse, he wanted to raise a $50 million fund to get started.
Prominent local investors like Michael Butler of Cascadia Capital told him he was naïve or crazy. He sought out funders anyway. He’d grown up in a family of bankers and had worked with Shorebank Enterprise Cascadia to develop the successful retrofit program Clean Energy Works Portland. He knew the concept was sound.
Sound or not, he quickly learned the timing was wrong for a capital-intensive real estate venture.
“Trying to raise $50 million in that market just wasn’t possible,” he told me in a café near his Fremont office. “We gave it our best shot, but I only did it for six months before realizing it wasn’t going to happen.”
He took comfort in the adage that it’s best to fail quickly if one’s going to fail and retooled the company to begin the same work on a smaller scale. Now the company, rechristened as Green Canopy Homes, is building up evidence that efficiency retrofits really can distinguish homes in the crowded rehab market.
Over the last year or so it bought and fixed up three Seattle houses, measuring the energy performance before and after the renovation to make it clear what the work has accomplished. Fairchild says that comparison provides a much more useful measurement than just estimating that a house consumes X less energy than a “typical” house in the area. In a city where builders are just as likely to tear down an old house and replace it with a fourplex, it’s key to show the money-saving and carbon-saving value of efficiency, he says.
He likes to repeat a rather clinical principle: “With products offered at price parity, non-toxic products always sell first.” In other words, green homes will outsell leaky ones, as long as the prices are comparable.
The homes are certified under the Built Green program of the Master Builders Association of King and Snohomish Counties – the dominant green certification for homes in the state.
But Fairchild is just as excited about the Green Canopy’s work beyond the property line, in the rest of the neighborhood. When it begins a project, it hands out leaflets on the block explaining what it’s doing. It invites neighbors to an open house where they can vote for one of six color schemes for the house. (The company learned to do this after discovering neighbors hated one color plan.) Then it asks if neighbors know of potential buyers – who quickly get a contact.
These may be obvious ways to sell a house and generate local goodwill, but their real value is in building up a distinctive brand, Fairchild says. Since the market size is plenty clear – some 85 to 90 percent of home sales in Seattle are resales – he sees claiming a niche and executing well as the keys to getting to the scale he first envisioned.
The neighborhood work brings broader benefits too, says Kevin Laycock of EcoFab, a Seattle building and energy auditing company that inspects Green Canopy’s properties.
“They can have a greater impact than just fixing up one home by changing the mindset of a whole neighborhood and showing what’s possible,” he said.
“They’re working with people who are concerned about environmental and energy issues and the health of their homes. So that market group may well look for a brand.”
Green Canopy sold a home in seven days in West Seattle last year, where the average home at the time sat on the market for 101 days. It sold a home in Burien in about 60 days, compared to an area average of 124 days, Fairchild said. It’s now got offers out on five houses, and he hopes to own three by the end of the month.
It’s not the $50 million start he had hoped for – but neither is it a pilot program. “Pilots are done to see if something works,” he said. “We know this works.”
The company raised an undisclosed sum last December from the Northwest Energy Angels and another investor. And Fairchild says he hopes to announce another significant funding or expansion plan later this spring.
“It’s been a slog,” he said of the last two years. “It’s been brutal. But we’re here. We’re doing it.”