Homebuyers have a lot to think about when considering their budget — including the annual cost of utilities, which averages $2,200 annually in the U.S. That’s a large amount of money that often seems set in stone due to the regulation of the power industry.
For homeowners in some states, however, the traditional utility business model has been shaken up by the onset of deregulation.
Now in addition to figuring out ways to conserve energy on a day-to-day basis, some homeowners are able to save even more by making smart choices about their energy providers.
Real estate agents are in the ideal position to help clients make the most of the options presented by deregulated markets. If you can educate potential buyers on how to translate a competitively diverse energy market into cost savings and other perks, you’ll have an edge over the competition in your field.
1. Know your state’s regulatory status
In most U.S. states, municipalities partner with specific energy providers, regulating how — and at what cost — citizens get their power. A single local utility company handles transportation and distribution expenses as well as the prices for natural gas and electricity, leaving customers with no other options.
Over the past few decades, however, a number of states have moved to deregulated markets, meaning multiple power providers can occupy the market and compete for consumers.
In some states deregulation applies only to natural gas, while in others it applies to electricity or a combination of the two. No state is completely deregulated, though Texas comes the closest: around 85 percent of the state can choose between multiple energy suppliers.
Take the time to find out what the situation is in in the city and state where you’re selling, and then pass that information on to your clients. To know how they can benefit from this unique system, they need to know it exists.
2. Familiarize yourself with the players
Once your buyers understand deregulation, the next step is illustrating how it can save them money. If you meet with a potential homebuyer and tell them about the choices that could save them dollars, it speaks volumes about your commitment to their happiness.
Although families should do their own research on what works best for them, you can give them a head start with a simple list of popular providers. You might also share more details about the competitive angles at play in the community or even the actual costs or types of plans offered by energy suppliers.
Here are two of the most common:
- Fixed pricing: A fixed price is just that — the quoted cost for an energy supply is guaranteed and unchangeable for the duration of the contract. A benefit to this plan is that the costs are a known entity, and the consumer is protected should energy costs rise.
- Variable pricing: A variable-price plan will fluctuate monthly based on changes in the wholesale cost of energy. Although some consumers may not want to be surprised by month-to-month changes in their utility bills, they will reap the rewards that come from a dip in the overall market price.
Some suppliers have other options available too, including time-of-use plans and prepaid offerings. Get a read on what local providers offer so you can clue your clients in on what will be available to them.
3. Consider what else appeals to your client
Low prices aren’t the only way to attract new customers. Other considerations, including how providers treat their customers and what companies do to stand out, can strongly influence the decision one way or the other.
Here’s what to watch for from energy vendors in the areas where you’re selling:
- Added incentives: Companies add to their appeal with incentives including discounts on energy-efficient products like energy-saving light bulbs or smart thermostats. These types of devices provide a tangible way for buyers to take control of their energy use.
- Reliable customer service: A 2016 survey from J.D. Power found that utility companies fall behind all other industries in customer service. Having reliable access to electricity and natural gas is a big deal to most homebuyers, so they’ll want to sign on with a company that commits to caring for its users.
You can make things easier on your clients by doing some research on these two points — look at reviews of energy providers in your region, and find out which companies have certain offerings that can motivate business.
4. Factor in the desire to go green
Deregulation, by its nature, clears a path for retailers to offer green energy products like renewable energy credits, and it encourages providers to develop more alternative energy.
Additionally, having easy access to alternative providers can encourage homebuyers to invest in green upgrades at the time of purchase so that they can also access these savings.
If you often work with eco-conscious clients, read up on the green energy offerings on the market. And if you want to go one step further in helping your clients prioritize efficient home energy performance, you can also seek credentials like NAR’s Green Designation, which provides education and resources for green building practices.
How will deregulation impact your business?
The ins and outs of energy deregulation can be murky, but real estate agents can make the potential benefits to homebuyers crystal clear.
Whether you’ve already had experience in deregulated markets or are looking for advice from those who have, take advantage of the comments section here. Or consider sharing stories about how this new approach to energy service has affected sales in your real estate company.