By Marilyn Kennedy Melia, CTW Features
Buyers favor homes with green features, and are willing to pay more for them, studies find.
But sellers whose energy bills are lower than their neighbors because they’ve made energy-saving improvements can miss out on a higher sales price, because their home isn’t marketed properly or energy savings aren’t properly documented for appraisers, says Melrose, MA-based Craig Foley, broker and chief sustainability officer, Laer Realty.
Homeowners are expected to up their spending on green improvements, motivated by up to a $1200 tax credit that can be taken annually that was part of the Inflation Reduction Act.
When making improvements, carefully collect all the information from manufacturers and installers, like certifications and efficiency numbers, says Foley, who’s renovated his own older home with green features.
First Lines
When it’s time to sell, that documentation can be turned into a marketing tool and given to the appraiser when the home goes under contract. “Agents should be highlighting efficiency features in the first two lines of the public comments in a listing,” says Sandra Adomatis, president of the Appraisal Institute.
Efficiency Threshold
Just what or how many features color a home as green enough to capture a higher value? “If you just have energy-efficient windows, then that might not be enough,” Foley explains. “But if someone has high-performance windows, they probably have done some insulation and building envelope features that a qualified appraiser would be interested in,” he adds.
Fueling Value
“The greatest challenge for an appraiser,” says Danny Wiley, Freddie Mac’s senior director of property valuation, is having the ability to objectively calculate how green features add value. Freddie Mac, which sets lending standards, has been developing a data set that calculates value based on energy savings, the possible opportunity to sell back energy, and other factors.
Right now, says Foley, the Appraisal Institute has released an addendum for valuing efficiency that sellers should ensure the appraiser uses. Although the buyer’s lender typically selects an appraiser, sellers can “demand a qualified appraiser,” who has demonstrated experience in green homes.