’09 Opportunity: Home Comfort, Performance

Two years ago, I spent an afternoon with Michael Lotesto, a remodeler who had become a building performance expert. Lotesto walked me through the steps of a home energy audit.

At the time, Lotesto had recently relocated from upstate New York to Chicago to launch a new kind of exterior renovation/remodeling company. He hoped to create a firm where he would be paid not only for the installations he sold, but also earn a fee for the initial consultation, which would include analysis via thermal-imaging cameras, blower-door tests, etc. Today, Lotesto’s business, Performance Exteriors, is on a roll, and he’s among a handful of contractors I’ve spoken with lately who convey a genuine sense of excitement in their voices.

In 2008, the firm billed about $1.5 million in windows, siding, air sealing, insulation and energy auditing revenue. The audits, says Lotesto, are at the heart of it all. He charges anywhere from $475 to $675 (depending on the size of the home) to conduct the testing and issue a report. From there, the company will ask to prepare an estimate on work uncovered by the audit. If the resulting job amounts to $5,000 or more, the homeowner gets a credit back for the audit. Peformance Exteriors now converts 65 percent of its auditing customers into contracting jobs, says Lotesto.

Granted, these types of jobs may not hold the same design creativity opportunity as do larger, purely discretionary, remodeling projects, but the profits are certainly there. Outside of the occasional home show, Performance

Exteriors spends little on marketing. Lotesto’s knack for publicity has helped boost the company’s clicks from major Internet search engines. And word-of-mouth has been strong, too. So while many exterior contractors pay hundreds for each qualified lead, Performance Exteriors, in effect, pockets those funds. In addition, the cost of sales is typically absorbed within the fee of the energy audit. To be more precise, selling becomes a profit center.

One of the most satisfying feelings in life is to know that your timing has been correct. Lotesto and hundreds of other remodelers and contractors who perform energy audits can justifiably approach each business day feeling like they offer the right service for the times.

Energy prices have trended higher in recent years. The economy is very tight and people are more concerned about reducing their costs. The “green” movement has reached critical mass, and most people are now concerned about their impact on the environment. Lotesto calls it a “perfect storm” of factors that all point toward the building performance business as a solution perfectly suited to the moment.