POWER CONVERSION5 Strategies to Engage amp Convert Customers with Utility Cost Data

Includes new research revealing the hidden impact of utility bills on homeownership costs and profits

Utility costs seem about as certain as death and taxes Anyone who owns or rents a home knows those utility bills will inevitably show up each month and need to be paid to ensure continued electricity heat running water and waste removal

That inevitability often leaves homeowners and renters resigned to paying those utility bills each month without any long-term strategic plan for controlling costs or even mdash in the case of homeowners mdash adding value to their home that will benefit them financially in the long term

Meanwhile companies offering products and services that help control utility costs and potentially add value to a home have lacked the data needed to identify the homes and homeowners who could most benefit from their products and services mdash much less any data-driven research that verifies the benefit of those products and services

But an increased amount of utility cost data is now available and when combined with public record real estate records and other datasets is providing companies with the ammunition to better target engage and convert homeowners and renters who could most benefit from their products and services

ATTOM Data Solutions and UtilityScore wrote this report to increase transparency around how utility costs impact housing costs affordability and the wealth-building effect of homeownership

We believe that transparency will benefit not only real estate consumers but also businesses catering to those consumers With those businesses in mind wersquove structured the report around five strategies to leverage this information mdash much of it brand-new research mdash to better target and engage real estate consumers

Brian Gitt Founder amp CEO at UtilityScore

There is a massive untapped opportunity to target engage and convert customers using data-driven sales and marketing tools based on utility costsrdquo

P1

Introduction Shedding Light on Utility Costs amp Industry Opportunities

Table of Contents

Introduction Shedding Light on Utility Costs amp Industry Opportunities

Strategy 1 Illuminate the True Cost of Housing

Strategy 2 Accurately Assess Affordability Levels

Strategy 3 Heat Up Homeowner Profits

Strategy 4 Reduce Customer Acquisition Costs

Strategy 5 Empower Customer Engagement with Personalization

Conclusion The Transforming Value of Utility Cost Data

Detailed DataIf you are interested in purchasing the detailed data behind this report at the state metro county and zip level emailpowerconversionattomdatacom

Utility costs seem about as certain as death and taxes Anyone who owns or rents a home knows those utility bills will inevitably show up each month and need to be paid to ensure continued electricity heat running water and waste removal

That inevitability often leaves homeowners and renters resigned to paying those utility bills each month without any long-term strategic plan for controlling costs or even mdash in the case of homeowners mdash adding value to their home that will benefit them financially in the long term

Meanwhile companies offering products and services that help control utility costs and potentially add value to a home have lacked the data needed to identify the homes and homeowners who could most benefit from their products and services mdash much less any data-driven research that verifies the benefit of those products and services

But an increased amount of utility cost data is now available and when combined with public record real estate records and other datasets is providing companies with the ammunition to better target engage and convert homeowners and renters who could most benefit from their products and services

ATTOM Data Solutions and UtilityScore wrote this report to increase transparency around how utility costs impact housing costs affordability and the wealth-building effect of homeownership

We believe that transparency will benefit not only real estate consumers but also businesses catering to those consumers With those businesses in mind wersquove structured the report around five strategies to leverage this information mdash much of it brand-new research mdash to better target and engage real estate consumers

Brian Gitt Founder amp CEO at UtilityScore

There is a massive untapped opportunity to target engage and convert customers using data-driven sales and marketing tools based on utility costsrdquo

P1

Introduction Shedding Light on Utility Costs amp Industry Opportunities

Table of Contents

Introduction Shedding Light on Utility Costs amp Industry Opportunities

Strategy 1 Illuminate the True Cost of Housing

Strategy 2 Accurately Assess Affordability Levels

Strategy 3 Heat Up Homeowner Profits

Strategy 4 Reduce Customer Acquisition Costs

Strategy 5 Empower Customer Engagement with Personalization

Conclusion The Transforming Value of Utility Cost Data

Detailed DataIf you are interested in purchasing the detailed data behind this report at the state metro county and zip level emailpowerconversionattomdatacom

Housing can be expensive

A new analysis conducted by ATTOM Data Solutions and UtilityScore for this report found that average wage earners will need to spend more than one-third of their income (335 percent) buying a median-priced home in 2017 on average across 931 US counties analyzed

Utility costs make housing even more expensive

The median utility costs (electricity natural gas water sewer) across the aforementioned 931 counties is $238 per month according to data from UtilityScore That adds up to an additional 70 percent of an average wage earnerrsquos income on average across those counties (see Page 5 for more details)

Put another way the median monthly cost of utilities adds an average 25 percent to monthly housing costs for a median-priced home across nearly 13000 US zip codes analyzed by ATTOM and UtilityScore (see Page 3 for more details)

We are dubbing this the 257 rule when it comes to how much utilities cost homeowners 25 percent above and beyond their monthly house payment mdash an additional 70 percent of their average wages

For non-owner occupied investment properties homeowners typically pass on the additional cost of utilities to the renters Utility costs add another 21 percent to housing costs for renters on average across nearly 35000 zip codes analyzed (see Page 4 for more details)

Businesses that can provide consumers with more information to assess the true cost of housing ndash including utility costs ndash will have an edge over competitors not providing that same level of transparencyrdquo

How Much Utilities Add to Housing Costs

Additional Housing Costs (Owners)

Additional Housing Costs (Renters)

Additional Pct of Average Wages

25

21

7

Strategy 1 Illuminate the True Cost of Housing

P2

In a new analysis for this report ATTOM Data Solutions and UtilityScore crunched monthly housing costs mdash including mortgage property taxes insurance and utilities mdash for median-priced homes in 12932 US zip codes with more than 3 million single-family home sales in 2016

On average across all zip codes nationwide the median monthly utility cost represented an additional 25 percent above and beyond the monthly house payment for a median-priced home but the additional monthly burden was much bigger in some markets

Among 65 metropolitan statistical areas with at least 10000 single-family home sales in 2016 monthly utility costs as a percent of the monthly house payment on a median-priced home were highest in Birmingham Alabama (656 percent) Tulsa Oklahoma (450 percent) Atlanta (439 percent) Detroit (428 percent) and St Louis (428 percent)

Among those same 65 metro areas those with the highest average monthly utility costs in dollar amounts were Atlanta ($373) Tucson Arizona ($334) San Francisco ($320) San Diego ($313) and Charleston South Carolina ($306)

Strategy 1 Illuminate the True Cost of Housing Homeowners

We are impressed by UtilityScorersquos comprehensive nationwide data set covering both energy and water costs Coupled with information on our platform this data adds further transparency to the housing search process helping buyers and renters assess the true out-of-pocket costs of a home beyond monthly mortgage or rent paymentsrdquo

Maria Seredina Zillow Group Corporate Development

Heat Map How Much Utilities Add to Homeownership Costs

Pct Added to Homeownership Costs by Utility Costs

1 579

Click on graphic to view interactive nationwide heat map

P3

Strategy 1 Illuminate the True Cost of Housing Renters

ATTOM Data Solutions and UtilityScore also analyzed 2017 fair market rents for three-bedroom properties in nearly 35000 zip codes nationwide (34745) along with median monthly utility costs in those same zip codes

This analysis found that median monthly utility costs represent an additional 210 percent on average in monthly housing costs for renters across the nearly 35000 zip codes analyzed

In the same 65 major metropolitan statistical areas analyzed in ldquoIlluminate the True Cost of Housing Homeownersrdquo above monthly utility costs added the highest percentage to monthly housing costs for renters in Atlanta (308 percent) Birmingham Alabama (288 percent) Charleston North Carolina (253 percent) Pittsburgh Pennsylvania (251 percent) and Tucson Arizona (244 percent)

Among those same 65 metro areas those with the highest average monthly utility costs in dollar amounts were Atlanta ($382) San Diego ($329) Tucson Arizona ($328) San Francisco ($323) and Charleston South Carolina ($311)

Transparency has always been a top priority for us Bringing additional transparency with utility costs to our listings adds tremendous value to our users Now renters can have a truer picture of what the costs are to live in their next homerdquo

Douglas PopeCo-founder and general manager of HotPads

Heat Map How Much Utilities Add to Renter Housing Costs

Pct Added to Homeownership Costs by Utility Costs

5 118

Click on graphic to view interactive nationwide heat map

P4

ATTOM Data Solutions and UtilityScore analyzed at home affordability in 931 US counties with a combined population of 255 million (80 percent of the total US population) The analysis shows that average wage earners purchasing a median-priced home in 2017 would need to devote more than one-third (34 percent) of their income to monthly housing costs mdash including mortgage property taxes and insurance According to data from UtilityScore the median monthly utility cost across the aforementioned 931 counties is $244 That adds up to an additional 70 percent of the average wage earnerrsquos income on average across the 931 counties

In many markets buying a home requires a much bigger chunk of income In 201 of the 931 counties (22 percent) monthly housing costs require more than the 43 percent of income threshold used by the Consumer Financial Protection Bureau (CFPB) to determine the maximum debt-to-income ratio (DTI) allowed for a ldquoqualified mortgagerdquo

That makes lending in those markets inherently more risky mdash even before accounting for utility costs

With monthly utility costs included there were 323 counties out of the 931 (35 percent) where the monthly cost of homeownership for average wage earners was

above the 43 percent DTI threshold advocated by the CFPB Thatrsquos 122 additional counties with a combined population of more than 24 million including counties in the metro areas of Sacramento California Salt Lake City Utah Dallas Boston and Colorado Springs Colorado

Lenders would be prudent to incorporate property-level utility costs into their risk assessment during the underwriting process

Additionally utility costs mdash and how they affect affordability and risk mdash can help better inform marketing efforts by lenders and other companies offering products and services to homeowners Augmenting customer profiles with utility costs will help identify the best products and services fit for the customer

Strategy 2 Accurately Assess Affordability Levels

How Utility Costs Impact Home AffordabilityPct of Avg Wages to Make Median-Priced House Payment

California Washington Virginia Nevada Arizona Maryland New Jersey New York Florida Texas

Pct of Avg Wages to Make House Payment Plus Utilities

58 66

51

51

44

43

42

40

40

40

39

45

44

38

35

35

35

34

33

33

P5

The risk to homeowners and lenders is great The antidote is to understand utility costs and include them in underwriting assessmentsrdquo

Jacob Corvidae Manager at Rocky Mountain Institute

permit between the last two sales There were a total of 73717 single-family home sales in this control group of comparable ldquonon-solar salesrdquo

Homeowners in the ldquonon-solar salesrdquo group realized an average price gain between sales of $37000 representing an average 110 percent total return on their original purchase price Based on the number of years owned (650 on average) that total price gain translated into a $5691 gain each year mdash a 17 percent annualized return on the original purchase price A decent return considering many of these sales occurred before home prices in California bottomed out in 2012 and considering that these homeowners were also building equity by paying down the loan or loans secured by the property

Homeowners in the ldquosolar salesrdquo group realized an average price gain between sales of $105000 representing an average 259 percent return on their purchase price Based on the number of years owned (655 on average for this group) that translated into an average gain of $16041 each year mdash a 40 percent annualized return on the original purchase price

While costly homeownership can also be highly profitable

According to the ATTOM Data Solutions Year-End 2016 Home Sales Report US homeowners who sold in 2016 realized an average home price gain since purchase of $38206 which translated into an average 21 percent return on investment up from an average 13 percent gain in 2015 to the highest since 2007 a nine-year high

Utility costs also figure into the wealth-building effect of homeownership according to a new analysis for this report by ATTOM Data Solutions UtilityScore and Buildfax

From a universe of more than 400000 California homes with solar-related building permits between 2010 and 2017 the analysis focused on 10288 single-family home sales in 10 major metro areas statewide with a solar-related building permit between the two most recent sales of the home

Those ldquosolar salesrdquo were each matched to a control group of comparable single-family home sales on the same street in the same zip code that occurred during the same timeframe but did not involve a solar-related building

40

17

Heating Up Homeowner ProfitsNo Solar Permit Between Sales

With Solar Building Permit Between Sales

Average Annual Price Gain

Average Annualized Return

$5691

$16041

Home sellers who had installed solar fared much better realizing price gains and profits that were more than twice those of the sellers who did not install solarrdquo

Strategy 3 Heat Up Homeowner Profits

P6

The sales-solar building permit analysis in California included a breakdown of 10 metro areas and the trend of stronger price gains and profits for homes with solar building permits between the last two sales was mostly consistent across the majority of the metro areas with a few key exceptions

In terms of dollar price gains both overall and by year nine of the 10 metros had stronger numbers for homes with solar-related building permits than the control group of comparable non-solar sales The only exception was Ventura County just north of Los Angeles

Meanwhile home sellers who installed solar in the Inland Empire of Southern California mdash Riverside and San Bernardino counties mdash gained nearly $26000 more per year than home sellers who did not install solar the biggest price gain advantage among the 10 markets

Home sellers who installed solar saw bigger percent returns than home sellers who did not install solar in all but two of the markets Ventura County and Los Angeles the latter comprising Los Angeles and Orange counties The difference in both markets was less than 1 percentage point a year

In some markets hardest hit by the last housing downturn homes without solar installed saw average price declines between the last two sales while homes with solar installed saw price gains The most dramatic examples of this were the aforementioned Inland Empire and Stockton which posted the nationrsquos highest metro foreclosure rate in 2012

Strategy 2 Heat Up Homeowner Profits

$20

050

$97

47

$12

079

$10

202

$31

247

$21

525

$16

119

-$9

867

-$4

447

$13

163

$33

099

$18

874

$13

308

$14

359

$19

224

$23

395

$81

42$26

76

$796

$0

Solar amp Home Price Appreciation by MarketAvg Price Gain Per Year With Solar Permit Between Sales

Avg Price Gain Per Year Without Solar Permit Between Sales

San Diego Los Angeles SanFrancisco

Ventura County

Vallejo- Fairfield

Inland Empire

Sacramento San Jose Bakersfield Stockton

P7

As solar technology becomes more turnkey reliable and cost effective we are seeing a huge increase in homeowner adoption Since 2010 we have seen a staggering 3-X increase in solar installation permits for residential properties ndash no other trend in construction has seen this steep of an adoption curve in recent memory

Holly Tachovsky CEO at Buildfax

Solar and home improvement companies spend a substantial part of their revenue on sales and marketing1 In residential solar sales and marketing expenses represent 17 percent of the system purchase price Therefore for a typical $20000 residential system the solar installer spends $3400 on customer acquisition Window heating and air conditioning and other home improvement contractors with high-volume business models also require large sales and marketing budgets

Research conducted by UtilityScore in conjunction with national regional and local solar providers has demonstrated that the residential solar industry can reduce customer acquisition costs through data-driven target marketing and engagement strategies powered by utility cost data

TargetingIdentifying and targeting homes with high estimated energy bills can boost customer conversion for direct mail door-to-door sales and outbound phone call campaigns Because UtilityScore estimates the energy bill of every home in the United States based on each homersquos individual characteristics this data set can help solar and home improvement companies target only those households most likely to convert to a completed project

Using actual completed solar installations and customer leads from a local solar installer in New York City UtilityScore found that conversion among single-family homes with estimated electricity bills of $120 per month or more was 220 percent higher than the solar companyrsquos overall conversion rate A similar study with a regional solar provider in Arizona revealed conversion rates 69 percent higher than normal for homes with estimated electricity bills of $350 per month or more and 78 percent higher at the $550 per month threshold Lastly in an analysis of conversions from leads in Southern California by a large

national solar installer UtilityScore found that households with estimated electricity bills of $250 per month or more converted 53 percent more frequently than the total pool of leads In each study UtilityScorersquos estimated electricity bills were a better predictor of conversion than home size home age home value ZIP code median income or any combination of these other data points

In addition to demonstrating that solar providers can boost their conversion by focusing on homes with higher estimated monthly electricity bills these results show that the electricity bill threshold associated with highest solar conversion varies widely by location $120 in New York City $250 in Southern California and $350 in Arizona

For door-to-door campaigns identifying and targeting high propensity block groups (gt75 of homes on the block are high propensity homes) is most effective to limit driving and walking time for the field sales representatives

1 httpswwwgreentechmediacomarticlesreadUS-Residential-Solar-Is-Set-for-a-Radical-Makeover

P8

Strategy 4 Reduce Customer Acquisition Costs

in New York City UtilityScore found that conversion among single-family homes with estimated electricity bills of $120 per month or more was 220 percent higher than the solar companyrsquos overall conversion raterdquo

Once a high-propensity home has been targeted utility cost data merged with public record data can help further boost conversion with personalized and engaging content unique to each household Email web and campaign landing pages can be customized based on a home address and provide neighborhood comparisons that motivate homeowners to take action to lower their utility bills UtilityScore worked with a large national solar provider on a digital engagement campaign driven by these content and personalization strategies Email open rates increased 36 percent compared to previous campaigns with the same audience when the leadrsquos home address was included in the subject line Displaying relevant content such as potential utility bill improvement and neighborhood comparisons based on the customerrsquos home address increased total clicks by over 240 percent

This personalized digital content included a map that showed each recipient how their home stacked up to neighbors Interactive maps engage customers and enhance a contractorrsquos credibility by showcasing all of their installed projects in a community Maps can also be used to apply social pressure by highlighting how a customerrsquos home utility costs compares to other homes in the neighborhood

Strategy 5 Empower Engagement with Personalization

UtilityScorersquos personalized content has increased our email open rates 36 percent and improved our click rate by 34X (240 percent)rdquo

Adam Smith SunrunDigital Director

httpsiframemyutilityscorecomSunpowerDemo68-Humboldt-Street-Simi-Valley-CA-93065

P9

Sample UtilityScore Home Report

The increased availability of data around utility costs and how those impact housing costs affordability and the wealth-building effect of homeownership will help real estate consumers make more-informed decisions that help them save money and invest smartly

That increased data transparency will also help businesses providing products and services to those real estate consumers better target engage and convert those consumers including buyers renters and homeownersThe five strategies presented in this report mdash many of them based on brand-new research grounded in newly available data mdash help demonstrate the transforming power of this type of data transparency in the world of utility costs and energy efficiency

But ATTOM Data Solutions and UtilityScore know this report is just the tip of the iceberg when it comes to utilizing this emerging dataset to transform consumer decisions and business strategy Wersquore already seeing evidence of this transformation in consumer behavior on websites providing transparent utility cost data as well as in the more targeted marketing efforts employed by entrepreneurial-minded businesses mdash and the powerful lift in conversions those marketing efforts are producing

Conclusion The Transforming Value of Utility Cost Data

Daren Blomquist SVP at ATTOM Data Solutions

Reducing utility costs can help homeowners not only properly assess and even possibly lower the true cost of homeownership it also can help them accelerate the wealth-building effect of homeownership Businesses able to help homeowners reduce utility costs can do well by doing good mdash and help their customers do the samerdquo

P10

US Housing and Utility Data By the Numbers

Total market size

843 million single-family homes $285495 average value $241 trillion

30 million sales in 2016 $220000 median sale price $6691 billion

11 million HELOCs in 2016 $182384 average loan amount $1998 billion

84205 single-family construction (rehab) loans in 2016

$312740 average loan amount $263 billion

Detailed DataIf you are interested in purchasing the detailed data behind this report at the state metro county and zip level email powerconversionattomdatacom