Most, if not all, energy auditors that I come across in the real estate world have an energy auditing company that that is also a home performance contractor that complete many if not all of the upgrades and repairs that they recommend. Usually it is a contractor such as a HVAC, insulation, general contractor, etc that has energy auditors on staff though there are several companies that emphasize the home performance testing first with the ability to contract or sub-contract the work outl

Is third party energy auditing a viable stand-alone business model in this day and age (I'm looking for answers from those in areas where a third party energy audit is not required for the sale or purchase of a home)?

Thanks in advance.

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We have a stand alone model that is working, but your definitions need clarification. Do you mean a company that does audits then walks away? If so, read Brad's comment. I'd take his comment further. Not only is knowledge needed, accountability is needed also. So auditing firms that create reports and walk away are generating expensive toilet paper.

By stand alone do you mean "works without programs" because that is what we do. We do diagnostics, design, but we take it end to end. We provide implementation oversight and quality control, and add the important step of data tracking.

In fact, I'm not sure our model would work in an environment that has programs as they tend to monopolize and pervert the process in their rush to get what they want. In NY for example, the state controls price and participants in the Energy Audit marketplace. We can't compete with "free" audits.
Oh, we are also finding EVERY effort towards radical transparency accelerates achievement of trust and confidence. We built case studies for our jobs and subsequently​ realized that to be fully within integrity, every job must be a case study.

Energy auditing as a stand alone business is not a sustainable business model. The biggest factor is consumer behavior, and much like the auto industry follows the cost of energy. With cheap gas prices today, we understand the big SUV's sell while the hybrids sit in the lot. To the homeowner, is it the attic insulation with a 2 year payback or the granite counter top? Granite usually wins....

There are and continue to be considerable efforts to somehow motivate or offer subsidized incentives for energy upgrades. My own utility for example sends me a letter monthly  showing my electric usage as compared to my neighbors (no actual names of course). The DOE is trying to get more states to adopt the DOE Energy Score Tool which rates similar homes with a simple 1 - 10 score. The plan is to use that score to motivate the homeowner to make improvements and include that home score in a MLS listing so that a prospective buyer can get a snapshot of how energy efficient the listed home is which could affect a buying decision. Many of the state/utility incentives/rebates have had mixed results as well.  

We should probably better understand the original question. If "Energy Audit" is specifically for saving energy only, I'm with Jose - these are services that people aren't interested in.

Our work is comprehensive home performance. Part of that requires diagnostics and design often called an energy audit, but more accurately it should be called a home performance audit rather than an energy audit.

We are doing this work in an atmosphere of cheap energy and no government welfare programs (incentives, financing, rebates, freebees). Like doctors, our services are linear. We get paid for each step but #4, and the closing ratio from one step to the next is in the 90% range:

First is a visit with education and light testing. (physical)
Second are diagnostics, modeling, design, and more education. (mri, ekg, xrays, blood test, etc...)
Third is implementation leadership and quality control.
Fourth is tracking outcomes.

The only piece we get paid indirectly rather than directly for is step 4. But that provides feedback, which improves our expertise, and proof of delivery, accountability which builds trust in the marketplace.

I think that it depends entirely on where you do business, the size you want to be, and the range of services you are willing to offer.  We are fortunate enough to be located where we can easily reach into 4 states.  We work in both new houses and existing houses as raters, auditors, consultants and contractors.  We work where we have government programs for existing and new houses, existing house programs only - both effective and ineffective, and no programs at all, so we see a large range of operations.

We audit and complete our own jobs, perform audits for HVAC guys, plumbers, solar installers and home renovators, complete contracting for those that only audit, supply ratings for some new homes, and ratings and air sealing for other new homes.  Last year we completed about 1300 retrofits, about 1200 Energy Star certifications, and about 1500 other new houses that were not Energy Star.

What I see is that most firms that audit-only are content to stay small and work in a couple of dozen houses a year.  They give a high level of service to these few customers, and are able to keep going on a network of referrals in large part.  

We have chosen to serve as many as possible to as high a standard as we can, and there is the rub.  Serving so many means that we have to be training and checking our 55 employees constantly, which means we have staff that does nothing but that.  Can be a hassle at times, but saving billions of BTU's is pretty cool.  We never give away an audit.

Important to not think about "competition".  There are enough houses out there to go around and there is nothing standing in the way of you being as big or small as you would like.  Doing good work is the easy part - the big problem is marketing yourself.

Is third party energy auditing a viable stand-alone business model in this day and age? Is any business model that is stand alone, viable? NO , not a good business model to put all your eggs in just one basket. Much less a business that is predominantly run, organized or funded by the Federal government, State programs or utility companies. Everyone of these entities do not have your wallet as even a minor concern to them. Much less your value.  Whether your involved with a program or not. You will probably be competing against one in one form or another for work and dollars. Think about adding other services if you want to survive. Home inspections, Healthy Home evaluations, Window or solar sales.

Question for the day!

What is MacDonald's business model? 

Selling fast food? Hamburgs, right. 

Nope ! Real Estate. Think about it, Mickie D's owns prime property all over the world. Some of the best locations in every town all across the land. And you thought their business was stand alone selling burgers...... JM2C.


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