The trees have lost their leaves, it is getting dark earlier and temperatures are below freezing. Now is the time to talk about the advantages of adding GREEN to your home. Not the Christmas holly, but using GREEN products to increase the energy efficiency of your home.
A pressing question has always been, “How does spending the extra money on energy-efficient products help the value of my home”? It is nice to lower heating bills, but how long does it take to recoup the extra expense of some of these products that would aid in investing in them.
There is finally a way to capture these improvements and assign them a value in an appraisal. Real estate appraisers finally have a new form that helps standardize the way that energy efficient features are included in their reports. Until now, Fannie Mae, Freddie Mac and the Federal Housing Administration used a form that centered on maintaining sound lending practices but did not have a way to capture what energy-efficiency improvements contributed to the value of a home. Including a narrative of any GREEN features in a description box was not always viewed by the lending institution.
In 2009, Fannie Mae prohibited mortgage brokers or loan officers from selecting an appraiser or having direct contact with them. However, Realtors®, buyers or sellers can meet with and can provide extra information directly to the appraiser. Lenders should request the new appraisal form and sellers should fill out the form with all pertinent information. Realtors® should include it in their listing data on the MLS for easy access by appraisers or for other agents who have buyers that are looking for the most energy efficient home. Agents can also meet the appraiser at the home to provide relevant comparable sales information.
GreenWorks Realty prepared a report using NWMLS data of new homes sold from Sept 2007 through February 2010 comparing homes that sold with an environmental certification and those without a certification. According to the collected data, environmentally certified homes in Seattle sold for 9.2 percent more per square foot in 24 percent less time and make up 34 percent of the market.
A nationwide survey by the Shelton Group released in 2006 found that “78 percent of U.S. consumers say they would choose one home over another based on energy efficiency.”
Most new home builders are adding GREEN features because they know that is what consumers are looking for. They can advertise extensively any energy saving features that they build-in to their homes For the re-sale market to compete, home owners should look at adding some of these features when they are doing any type of remodeling. Now, especially since appraisers have the opportunity to add value to each upgrade in a consistent manner, return on investment has improved.
Beside the high cost additions of heating systems, appliances and windows, there are many low cost upgrades that will help to add value to a home and can now be highlighted in an appraisal:
- Adding insulation to attics, exterior walls and floors
- Installing a whole house fan
- Sealing ducts and air leaks
- Improving water efficiency with low-flow toilets, shower heads and faucets
- Installing a more efficient water heater
- Installing landscaping that requires little or no irrigation
Joan Probala is the managing broker for Issaquah Windermere (Windermere Real Estate/East Inc.). She has 30 years of experience in real estate, construction and sales. She is president-elect (2012) of the Seattle King County Association of Realtors.