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Pearl Certification has raised $9.5 million to expand third-party sustainability ratings for homeowners.

The Charlottesville, Virginia-based company has created a way to assess the energy efficiency and sustainability of homes. More than 72,000 homes have been certified already, and Pearl hopes the certifications will help raise the value of those homes as home buyers begin to understand the long-term value of having an energy-efficient home.

It’s also a way to motivate the public to care more about the environment and reduce harmful emissions, CEO Cynthia Adams said in an interview with VentureBeat. When marketed correctly, certification can add 5% or more to a home’s sale price, Adams said.

“In the course of many conversations about why residential energy efficiency wasn’t scaling, we came to an agreement that what was lacking in the space was a way to collect information on those high-performing features of the house and make that information transparent and relevant to other market actors, like real estate agents, appraisers, and homeowners,” Adams said. “And so we created a certification system that’s based on energy modeling. It looks at the home in the same way that an appraiser might look at the home, but it captures more performance and granular data on the home’s high-performing features so that we can put that information in a report, put it into an appraisal, and then ensure that that information is communicated to the homeowner.”

Clean Energy Ventures led the round, with participation from Keller Enterprises, the Felton Group, and the Clean Energy Ventures Group.

The company is now adding thousands of certifications of homes per month. The investment comes alongside strong customer growth and soon-to-be announced partnerships and will be used to expand the team, grow offerings, and drive future growth, Adams said.

A clean start

Above: Pearl Certification measures a home’s sustainability.

Image Credit: Pearl Certification

Adams and her friend Robin LeBaron started Pearl Certification in 2015 with about $250,000 in angel funds. They attacked the problem of upgrading home sustainability from a few angles, such as trying to convince realtors and contractors that homes would sell at higher values with the certification. They also stirred interest among consumers so they could become aware of the opportunity to raise the value of their homes and protect the environment at the same time, Adams said.

Adams said the company created software and built foundational relationships with the National Assocation of Realtors, which invested in Pearl, as well as the Appraisal Institute and the Energy Star program in the U.S. Department of Energy. This helped the company raise even more capital and hire people.

Clean Energy Ventures managing director David Miller said in a statement that improving home energy efficiency, energy generation, sustainability, and air quality is a multibillion-dollar opportunity. The easier part is reducing emissions from the building sector, but in the past consumers were concerned they wouldn’t get back the cost of high-quality energy-related improvements.

That’s where the certification comes in. Pearl Certification makes high-performance home value visible and increases both supply and demand for sustainable, energy-efficient housing across the country. Pearl can unite homeowners, contractors, solar installers, and realtors, Adams said.

“We think of the home as a living record,” Adams said. “If a contractor certifies my air conditioning replacement, we can update the certification.”

A long way to go

Pearl Certification

Above: Pearl Certification charges contractors for a software service.

Image Credit: Pearl Certification

Miller believes Pearl, contractors, solar installers, and realtors can help mitigate over 2.5 billion tons of carbon dioxide emissions between now and 2050.

In late 2020, Pearl launched its Green Door Web App, an online portal that enables homeowners to manage, maintain, and improve their home’s energy-efficient performance. Pearl works with homeowners, contractors, and real estate professionals to set the global standard in high-performing, high-ROI home improvements. Pearl Certification drives demand by showcasing home improvements — like efficient heating and cooling systems, solar, and smart home devices — and capturing their value for resale and appraisal.

Pearl is expanding its certification system to include other high-performing home features, like indoor air quality, energy storage, and resilience. Adams said the company will be announcing some interesting partnerships soon. Heating and cooling systems are key areas where people can improve their homes. They can switch to light-emitting diode (LED) bulbs and better insulate attics and walls, upgrade appliances and water heaters, and install solar batteries and roofs. They can also add Nest thermostats with internet of things (IoT) devices, which can lower heating and cooling use when people aren’t in the house.

Pearl qualifies a network of contractors who improve home performance and real estate professionals who ensure these homes are properly marketed and valued when sold. The company estimates certified homes sell for 5% more — based on a report from the Appraisal Institute. And Adams believes Pearl can get a flywheel going that will help more homes sell for even higher values.

Pearl Certification makes money through a software-as-a-service model for contractors, who pay a monthly fee. The company has raised a total of $12.5 million, and it has plenty of room to grow, as there are more than 100 million homes in the U.S.

“You can think of it like a preowned, dealer-certified car,” Adams said. “Purchasing that car has that kind of stamp of approval with third-party verification. It also educates homeowners about how to have a high-performing house in a space that is comfortable and inexpensive.”

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