For years, M/I Homes has been touting its homes' energy efficiencies. In the 1990s, when the Columbus, Ohio-based builder was scouring the market for a way to differentiate itself from competitors, it switched to a house wrap that only luxury builders in the area were using. Then three years ago, M/I Homes signed on with the EPA's Energy Star program, whose energy conservation standards are 30 percent higher than the 1993 Model Energy Code and 15 percent higher than state codes.

Earlier this year, the company raised the bar again by adopting another of the industry's ever-evolving technologies -- a super-efficient heating and cooling system installed as standard on 60 percent of its homes. "We started down the home comfort path years ago," says Rick Mathews, president of sales. "Buyers were excited about the home wrap and Energy Star, and we wanted something else that would give us a selling advantage."

Energy efficiency is indeed a hot button for home buyers. According to the NAHB's study, "What 21st Century Home Buyers Want," it's buyers' No. 1 concern. And with interest costs creeping up and fuel oil, natural gas prices, and electricity costs approaching record levels, heating and cooling components that save on utility bills are likely to rise on consumers' lists of priorities.

For the past two years, M/I had been using 90 percent efficient furnaces with 10-"seer" air conditioners and programmable thermostats in every home. The seasonal energy efficiency ratio rating, applied to residential cooling systems, reflects a higher performance level than M/I had used previously. The company's latest introduction -- a Bryant Plus 90i variable-speed furnace that is 90 percent efficient and controls temperature and humidity via a continuous two-speed fan -- addresses air quality, too.

"It's self-intuitive," explains David Meyers, vice president of strategic accounts for Bryant Furnace, in Indianapolis. "It knows when to run high and low and when to humidify and dehumidify." The system also contains an air cleaner and a two-stage gas valve, which allows the furnace to run on low fire for most of the time.

Energy Mizer: Builders view higher-efficiency furnaces as a way to help maintain home buyer satisfaction. Courtesy Bryant Heating and Cooling Systems The Bryant furnace retails for about $2,000 more than the furnaces M/I Homes has typically included in its new homes, which range in price from $130,000 to $500,000. But with M/I Homes expecting to close on 2,400 homes in central Ohio this year, that extra cost is not insignificant. Yet M/I is opting to include the more expensive unit in all buts its bottom rung of entry-level homes. Why install it as standard at all homes rather than as an upgrade? "It's one of those things you say, 'Should you really offer your customer an option to have air quality in their home?' " says Mathews. "We felt it was better to have it as a standard feature."

Upping the Ante

Choice Homes, an Arlington, Texas, builder specializing in starter and move-up markets, believes efficient heating and cooling systems are particularly important to first-time buyers. "We've always had energy-efficient homes, and each year we seem to be upgrading," says Zack Jones, regional vice president for the Dallas division, where prices range from the $70,000s to the $190,000s. "We think high utility bills are of more concern to lower-end buyers, so we really need to offer a good energy package. It has a lot to do with how much house a person can afford."

The builder's homes typically include a Trane system with a 12-seer air conditioner and heat pump. About 20 percent of its buyers choose upgrades such as 13- or 14-seer air conditioners, heat recovery ventilators (HRVs), and energy recovery ventilators (ERVs), as well as programmable thermostats and variable-speed pumps and blowers. Usually they're opting for energy-saving components over air quality improvements.

As state energy codes have stepped up performance requirements over time, HVAC items that were once first-level upgrades are now being installed as standard. Eight months ago, the state of Florida mandated 12-seer air-conditioners -- formerly an upgrade item at Boca Raton-based Arvida/JMB Partners. Now, any heating and cooling upgrades are left to the buyer's discretion. "We're letting the customer choose where their money is going. That is a better sales strategy," says George Casey, president of Arvida/JMB's Mid-Atlantic division in Charlotte, N.C.

Upgrade Options
M/I Homes, Columbus, Ohio, whose homes range in price from $130,000 to $500,000, offers these heating-and-cooling upgrades on all of its products. Prices for the options vary depending on the size and model of home.
Humidifier: $450 to $500
UV light: $450 to $600
Puron 12-seer air conditioner: $1,900 to $2,400
Electronic air cleaner: $600 to $850
Zoning package: $2,500 to $3,500

About one third of his buyers choose add-ons such as programmable thermostats and humidistats, air scrubbers, and the capacity to create different temperature zones. "When we start to get 70 percent of people buying an option, then it's something we could include as standard. But it's not worth offering if people aren't valuing it," he says. "For each builder it's the chemistry-set thing; we're always experimenting, trying to figure it out."

According to Gopal Ahluwalia, the NAHB's head of research, the home buyers were willing to spend an extra $6,000 for energy features if they could save $1,000 a year on utility bills. In other words, a six-year payback on energy spending was acceptable. On the other hand, "they don't request energy efficiency because they take it for granted," Ahluwalia says. "When they start comparing energy efficiency with other features, it falls off. They all want more windows and fireplaces" -- items that typically increase energy loss.

Selling efficiency

The way M/I Homes sees it, the new furnace is another step toward maintaining customer satisfaction. Currently, a third of its buyers are repeat or referrals. That's also why it avoids a sales pitch that quotes a payback amount -- how much money the unit is likely to save buyers each month on utility bills. "Our homes are consistently testing out over 40 percent more efficient than building code," says Mathews. "Still, we're reluctant to get into hard numbers because there are so many variables involving the way the house is used." Rather, prospective buyers are given a Bryant marketing piece diagramming how the furnace works, and they can see it installed in a number of model homes. Posters in the basement also explain M/I Homes' Energy Star features, as do the sales reps.

For some consumers, energy-related HVAC choices that go above and beyond baseline efficiencies can't compete with the instant gratification of Jacuzzi and Corian. But no doubt a good portion of the population also understands that the $10 to $15 a month they'll save by buying a high-efficiency heating and cooling system can be applied to such luxuries -- especially if builders point it out. Whether it's part and parcel of a builder's strategy for selling homes or is offered in upgrade increments, energy efficiency is a concept that can add profits at all price points.