Sustainability Emerges as a Business Model
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When pondering the question "how many ex-environmentalists do you know?" Village Associates real estate agent Ben Olsen's answer is immediate. "The answer is none--once your customers get it, they get it forever." That's why he's incorporating green strategies into his business plan.
Sustainability as a business practice and opportunity in real estate is just emerging. The industry is beginning to add green data into its Multiple Listing Service (MLS). If it's true that you are what you measure, then green is hitting the real estate radar. In addition, real estate transactions are paper-based--generating large paper files. And they've spent decades conditioning buyers that the key buying factors are location, price and square footage even though personal health, operating costs, commute distance and resale are major issues for home owners.
Olsen and other entrepreneurs are stepping away from traditional practices by adopting sustainability. Chris Bartle, president of Green Key Real Estate , is also jumping on this trend. He's starting a national franchise that establishes green-based brokerages.
According to Bartle, new home sales show that green homes sell for a premium and sell faster.
"We're still waiting for the data from the MLS to support this," Bartle says, "but shouldn't this be true for existing homes, too?"
A study produced by McGraw-Hill Construction in conjunction with the National Association of Home Builders found:
- The market for "true" green homes is expected to grow from $2 billion to $20 billion in the next five years.
- Existing homeowners are making their homes greener by using green products for 40 percent of their remodeling work.
Both Olsen and Bartle have seen increased sales from green marketing.
"What happens is that I get referrals and leads from environmentally conscious customers who are aware that I have been licensed as an EcoBroker," Olsen says.
He estimates that 10 percent to15 percent of his business is from green customers and about 25 percent of his marketing is green-focused.
Bartle's agency also attracts customers with shared environmental values. In fact, he says his franchise focuses on states like California or cities like Seattle, Portland, Ore., and Boulder, Colo., where customers are already biased toward buying green.
Changing the traditional mode of home-buying is a long-term process. But the goal is to educate and introduce customers to the cost, health and environmental benefits of going green, Bartle says.
This means introducing customers to higher efficiency appliances, compact fluorescent light bulbs, water conserving toilets, low VOC (volatile organic compounds) paint and other eco-friendly products.
"This doesn't cost any more, and in real estate, the goal is to have something to talk about," Bartle says. "What I am seeing is more and more customers wanting to talk about being green and about 90 percent of them responding positively to a home that is staged green."
For entrepreneurs looking to increase profits and save money, green is also cost-effective:
- Green is a strong and fast-growing niche market. In the next five years, the trend is projected to increase 10 fold. If your current market space doesn't afford this level of growth, you should be looking at going green.
- Going green is still a work-in-progress for most businesses and consumers. "Look, the keys of real estate are and will be: location, price and square footage," Olsen says. "In most cases, green is a buying influence and not a core buying decision driver."
- Going green can save. In terms of reduced paper use, water and energy across stakeholders, you can find savings for your business, your customers and your vendors.
- Gain a competitive advantage by going green. Village Partners is gaining sales and lowering costs through Olsen's passion for the environment. People identify with a company that values green agents and green homes.
- Buy green knowledge from other companies. Another way your business can go green is buying the knowledge from companies like Green Key Real Estate that have successfully developed a formula that works.
"My business goal is not to convert the masses," Bartle says. "I am focused on [maximizing] the existing green market and building data that will be compelling to later adopters."
If you want to participate in the green economic revolution, I would post that last quote someplace where you can see it and think about it every day.