In today’s market, a house has to be in good condition and priced right just to get noticed. There also has to be “special” factor to get it sold. Certified Green Homes have that factor.
In a study of existing and new houses sold from May 2010 through April 2011, the Earth Advantage Institute in Portland, Ore., found that newly constructed homes with third-party certifications for sustainability and energy efficiency sold for 8 percent more on average than non-certified homes in the six-county Portland metropolitan area. Existing houses with certifications sold for 30 percent more.
The raw sales data in the study was provided by the Portland Regional Multiple Listing Service. “Certified” houses were defined as those carrying ENERGY STAR or LEED for Homes designations or Earth Advantage home certifications (an Oregon-based program). The latest study was the fourth in an annual series conducted by the Earth Advantage Institute, each of which has shown clear price premiums for certified houses. Homes marketed with energy-efficiency certifications appear to sell faster on average than those without.
Advice for Receiving and Accurate Appraisal
- Make sure the designated appraiser understands new construction and green building values.
- Develop a strong professional relationship with your appraiser.
- Don’t be afraid to provide all relevant information to appraisers including comps, upgrades and area sales information that you are aware of.
- Try to understand the appraiser’s challenges, particularly if there are no comps in the area.
Recognize this and talk to your appraisal about value. - Remind lenders that according to the Appraisal Institute, for every $1 in annual energy savings, a home goes up $20 in value.
- Ask your Home Energy Rating System rater to fill out a “Residential Energy Report” form, which is necessary when applying for an Energy Efficient Mortgage and an Energy Improvement Mortgage.
- Supply the appraiser with a copy of the new “Residential Green and Energy Efficient Addendum” from the Appraisal Institute. Provide them the information to fill it out if necessary.
- Keep a record of the data you give to the appraiser. If they don’t use the information, find out from the lender why it was not used. — Mary Love
Sources: National Association of Home Builders and Porterworks
In Atlanta, another study of green-certified home sales prices found more mixed results. Although certified homes sold for lower prices on average, they did sell faster and closer to asking price, according to the Atlanta Green Home Sales Report from local Realtor Carson Matthews. In 2010, certified homes spent an average of 97 days on the market, compared with 123 for traditionally built homes. The homes were certified by EarthCraft House, LEED for Homes and ENERGY STAR.
In WNC, a study of certified ENERGY STAR and HealthyBuilt homes also showed mixed results. Certified homes did not sell for more than non-certified homes of similar size and number of bedrooms. However, these houses did sell faster and closer to list price than similar non-certified homes.
In a recent Raleigh-Durham-area study, done by the North Carolina Energy Efficiency Alliance, 100 out of 400 homes were ENERGY STAR certified. The average selling price of the certified homes was $3-per-square-foot higher than non-certified ones, and the homes sold an average of 89 days faster.
Studies from the National Association of Home Builders and the National Association of Realtors have indicated that a major request for new homes construction is energy efficiency. Homeowners are willing to have less cosmetic upgrades and landscaping features in order to obtain ENERGY STAR certified homes. The Appraisal Institute is responding with its recent creation of the Residential Green and Energy Efficient Addendum for appraisers, so they can more easily assess value of green features.
Even with a down market, certified green homes are increasing in demand. Continual education for Realtors, lenders, appraisers and insurance companies is necessary in order for consumers to reap more financial advantages of green homes. Since consumers already understand that energy and water savings, along with improved indoor air quality, are value added features they are ultimately driving the market for certified green homes.
Mary Love is the Director for Keller Williams Green Division. She helped establish the NC HealthyBuilt Homes program and the Asheville Environmental Consultant designation. Love teaches NAR GREEN courses and combines her sustainability consultation skills with market knowledge.