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Architects and builders of Passive House and zero energy homes (ZEH) come face to face with certain challenges in their interactions with nearly every prospect. Here’s a prime example: when presented with a choice between a $325,000 passive house or zero energy home and a $300,000 conventional house, the prospect usually sees the conventional house as the more affordable option. This is the result of an unconscious bias that causes most people to focus on initial price without considering the significant long-term costs of the conventional house.This gives the homebuyer a distorted picture of reality, influences their decision-making process, and lowers the perceived value of the architect’s and builder’s services.

In our study of Passive House and ZEH adoption, Erase40 has found that most of the barriers to widespread adoption of Passive House buildings are behavioral in nature, not financial, and that the best way to address these barriers is to apply principles of behavioral science. Using behavioral science we can address such biases and reduce common misconceptions in the decision making process so that developers and home buyers make decisions based on their best long-term outcomes.

 

Errors in the Decision Making Process

In order to be effective, architects and builders need to focus on what occurs in the decision-making process and on how potential buyers and developers measure value and discount costs. Some decisions are more difficult to make and more subject to error than others. The decision about what house to buy is a particularly complicated one and most people need help in order to avoid making common errors in decision making. In fact, many errors are predictable and systematic. The good news is that because we can anticipate these errors, we can be prepared for them and address them when they occur.

One common error is the implicit acceptance of certain risks and costs, and the tendency to discount the value of these costs and risk over time as well as the impact they can have on their lives. Among these costs and risks are higher energy costs, worsening respiratory ailments, discomfort from cold zones and drafts, and increased repair bills due to poor build quality. In essence, the buyer’s perceived needs at the time of the purchase are often very different from the actual needs years after the decision has been made. The result for the homebuyer is unexpected costs, regrets, and unmet needs.

 

The Importance of Client Meetings

However, the time architects and builders spend with their clients is an enormous opportunity to address these errors and reduce the barriers standing in the way of a smarter home purchase. Each time a potential homebuyer or developer walks out of a builder or architect’s office without seeing the full value of energy and repair savings—or without seeing the full value of the financial, health, and comfort benefits—is a lost opportunity. Clients who assign a low value to energy and repair savings or are unaware of the risks to health or comfort, for example, are more likely to opt for a conventional home. Erase40 is currently working on tools that will reduce the incidence of these common errors and get potential buyers to place a higher value on the services of Passive House and ZEH architects and builders so that more people end up at a “yes” when they make their decision.

A decision is often thought of as occurring in an instant in time but a decision is not a flash. It’s more like a train that follows a track and is diverted one way or another by switches along the way. How do we steer the train along a certain route in order to increase the likelihood that a person  will opt for a Passive House? How do we reduce people’s tolerance for the risks and costs associated with conventional building?

 

Risk Behavior

To put what occurs with the prospect in context, let’s borrow a concept from the field of health, where every day social scientists investigate behaviors that cost people their lives. They are called risk behaviors. Risk behavior is a term used to describe actions tied to certain negative outcomes. For example, smoking and poor eating habits are considered risk behaviors. Once a risk behavior is identified, social scientists use behavioral models to help them see what is behind the behavior and how to find ways to address it. The process used is rigorous, evidence-based, and effective for improving outcomes.

The risks associated with selecting a conventional building over a Passive House or zero energy building, while not as severe as smoking, are nonetheless serious and affect the majority of the population. Energy efficient homes cost less to own and under some circumstances can even cost less to buy, whereas conventional homes are more expensive to own, less comfortable and involve health risks. Radon is the second leading cause of lung disease behind smoking. Indoor air pollution is a risk for allergies and for lung, heart, and other diseases. Noise affects our health, as does the financial stress of an unpaid utility bills. Finally, conventional buildings are often less durable because they fail to use the latest building science.

Erase40 looked at the behaviors and decision-making processes of home buyers, renters, developers, and others through the lens of these same behavioral models and, with the help of peer reviewed behavioral research, looked for ways to change some key behaviors. We found a number of attitudes, behaviors, and beliefs that support people in accepting these risks and direct them away from choosing a passive building. For example, home buyers often:

  • Fall in love with a house before even thinking about the efficacy of its systems
  • Discount operating costs or fail to think about the full cost of ownership
  • Use flawed methods to determine affordability
  • Focus narrowly on the home’s aesthetics while viewing the property
  • Fail to ask for a schedule of operating costs prior to purchase
  • Fail to detect potential for drafts and temperature extremes that could impair comfort
  • Fail to evaluate the potential noise level of the home
  • Ignore the health risks and sources of indoor air pollution
  • Fail to look for conditions favorable for mold growth during evaluation of a building
  • Focus on price instead of the monthly aggregate payments that result from ownership

 

Changing Risk Behaviors

The good news is, changing these risk behaviors will increase the perceived costs of conventional construction while increasing the perceived value of passive buildings. However, it’s not enough to simply tell a potential homebuyer or developer what they need to know. Knowledge alone is rarely enough to change behavior as most architects and builders can attest. This is why it is so important to employ science-based behavioral and decision making tools when conducting client meetings.

 

Science Based Decision Making Tools

Currently, Erase40 is developing a set of scientifically based decision making tools and interventions for architects and builders to use in their meetings to help clients understand, evaluate, and change risk behaviors and perceptions. We expect our first set to be available in the fall of 2018. With state-of-the-art presentations of information about what contributes to a risk behavior and about the monetary, health, and comfort risks of conventional homes, it’s possible to address that behavior in a highly effective manner. In short, we can equip high-performance building professionals, including architects, builders, apartment owners, developers, and Realtors® with what they need to help their clients make better decisions. The goal is to make it easier for Passive House and zero energy professionals to guide clients to choose these high performance homes and buildings and to settle for nothing less.

For a more in-depth look into this subject please read our study of the market and check out Erase40.org for new developments.

James Geppner is Executive Director at Erase40.org. Following his years in project finance, where he evaluated companies and studied markets, Geppner advised small and large companies on what’s shaping a market or a behavior. Recently, he started Erase40.org to increase demand for passive buildings using behavioral science. He is currently developing tools to help architects and builders in their interactions with home buyers and developers so they can be better at identifying likely buyers and get them to place a higher value on the attributes of passive buildings. He is a graduate of NYU and of SGIB’s investment banking program. Geppner will be speaking at the North American Passive House Conference and the North American Passive House Network.

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