Tankless Builder, Charlie Russell is general manager of Quality Built Homes, a builder of single-family, move-up homes, headquartered in Prince Frederick, Md. Founded in 1987, the firm produces around 200 units annually with an average sales price of $400,000.
We recently spoke with Charlie to learn more about his business and his builder’s perspective on tankless water heaters, such as those manufactured by Noritz.
“Our company has been through several different types of markets.”
We survived those, fortunately, and have been successful as a result. Ironically, while everyone else shrunk during the recent economic downturn, we actually got a lot busier. We were at 140 homes the year before the 2009 downturn. We followed that with 210 and 240 units over the next two years. Our owners actually saw the downturn as an opportunity, so we were more aggressive in terms of starts and had more product on the market. Our pricing was fair, and that allowed us to be a little more successful.
“Conditions got a little out of hand with pricing before the downturn.”
We had to roll back prices, too. Everyone suffered losses, but we didn’t get anywhere close to how far others fell. When things get that easy, people can get sloppy. We never did, so the adjustments we had to make to get through the downturn were way less than what others had to do.
“We have been working with tankless heaters for roughly five years.”
The energy efficiency of these products spurred our involvement. Tankless water heating is by far the most energy-efficient product you can install in a home, in terms of dollar savings. It is now standard on every home we build. When we made the commitment to Energy Star, we embraced tankless heaters as a product that would enable us to achieve a lower HERS [Home Energy Rating System] score. Anything that provides savings and comfort for the customer helps differentiate us.
When we talk tankless options with a buyer, the main benefits we stress are energy efficiency and never running out of hot water. When a tank heater runs out, the user must wait through the recovery time to get hot water again. With tankless technology, there is no recovery time, because there is no storage. The space savings is not such a big factor in our new homes, which have basements equipped with utility rooms. It simply doesn’t come up as much as it would if we were doing retrofit work.
“The Energy Star rebate is very important to us.”
It doesn’t offset all of the costs of participating in the program, but it is certainly an incentive. That rebate helps drive our use of various Energy Star features. We actually recently won a 2016 Energy Star Partner of the Year award for our sustainability efforts.
The only buyer objection to tankless water heating I ever encounter — and it is very rare — comes from the consumer who just cannot bring himself to believe that little appliance is going to provide all the hot water his household will need. We have a lot of experience and knowledge, so we are usually able to reassure the buyer that the number of customer-service problems is very small. Our experience and credibility tend to quiet their concerns.
“The outlook for our market is definitely steady.”
The cost differential between tank water heaters and tankless water heaters are definitely a factor, but a couple of factors are changing that. For one, we are the market leader in this area, and the only one offering tankless options as standard, to my knowledge. Our competition must decide to follow our lead on sustainability and take on the extra costs. Typically, they will begin by offering energy-saving features as options, but not make them standard like we do.
The other factor involves the recently mandated energy-efficiency standards for tank-type water heaters [NAECA, or the National Appliance Energy Conservation Act]. That means their costs will rise, so the up-front cost differential between tank and tankless is bound to narrow.
For more information on Quality Built Homes, please visit qbhi.com