This is a common statement when it comes to gaining value for a home which has a GREEN or Energy Efficient Certification or has GREEN upgrades. Over the past decade, the GREEN Alliance has been working with industry housing leaders who are successfully building and selling high-performance new and existing homes. This includes DOE Challenge Home, ENERGY STAR for Homes, numerous green building programs, and performance-focused remodeling projects through Home Performance with ENERGY STAR contractors.
However, there is still frustration with the transaction process of recognizing the value associated with lower cost of ownership, greater comfort, improved health, ensured combustion safety, and more durability. It is recognized that the process is in place, yet the use of it is still lagging behind. Change brings a learning curve, a gap between knowledge and application of the process tends to be the initial challenge.
The good news is, the various sectors in our industry have the tools in gaining better information during the sales transaction. The sooner we begin applying the knowledge to the process as a form of best practices, the sooner we can show you the money.
In effort of simplifying the process, let’s begin with the five steps in the transaction:
1) GREEN Builder or Contractor and Homeowner – Step One is the critical point of information gathering which will be used for multiple purposes throughout the transaction process. The information assembled at this point is to document the GREEN building certifications, upgrade features, recent energy assessment reports, utility usage records, pictures and most importantly – the Appraisal Institute’s Residential GREEN and Energy Efficient Addendum.
The Appraisal Institute’s Residential GREEN and Energy Efficient Addendum is an organized way to communicate the green and energy efficient features of a house. This form has recently been updated to describe “Green” features in a way that the lender, underwriter, appraiser, buyer and agent can use.
2) Listing Agent – As a licensed REALTOR, it is important that the documentation gathered and represented is verified. As most agents find, the GREEN and Energy Efficient features are hidden as part of the design, in the walls, attic, and equipment. While this isn’t as visible as nice granite counter top or a swimming pool, it is what delivers a quality home. Take a moment to show off these features in a flyer, a sign in the home, and emphasize in your marketing highlighting the benefits of an eco-friendly home with lower operating costs, better comfort and durable.
3) GREEN MLS – The documentation makes your job easier to list the information in the MLS utilizing the many GREEN fields currently available. Be sure to upload any GREEN Home or ENERGY STAR (and other) certifications, Appraisal Institute’s Residential GREEN and Energy Efficient Addendum, energy assessment, and pictures highlighting your listing’s features and benefits.
The data can aid in listing and finding homes with green features, help accurately price homes, homeowners can get credit for green features, and the data shows market trends such as salability and value. Green-educated real estate professionals can enhance reputation as go-to practitioners.
4) Buyer’s Agent- Appraiser and Lender – By effectively listing your client’s home, you make it easier for buyer agents to search GREEN and Energy Efficient homes for their clients. As well as, provide the needed data for appraisers and underwriters to do their job.
Similar to the GREEN Designation for REALTORS® there is training and certification available for the appraiser and lender profession. This training and education provides the skill set to appropriately and professionally perform the task of appraising a GREEN and Energy Efficient home. Confirm that the appraiser is trained in assessment of green home features.
NOTE: USPAP standards require that “an appraiser must be competent to perform the assignment, acquire the necessary competency to perform the assignment; or decline or withdraw from the assignment.” If the appraiser lacks the needed knowledge and experience, the homeowner/seller can ask for someone else.
5) Finish Line = Fair Value at Closing – The ultimate goal is to be able to support GREEN and Energy Efficient homes with a fair value at closing. The steps above provide the ammunition and tools needed for the lending and appraising profession to drive the transaction pass the finish line.
I’m confident this process is the key to ‘$howing You the Money’ and is the game changer in GREEN and Energy Efficient homes. I hope you find this information valuable and begin applying these tips to your daily practice.