Tag Archive for: appraisal

Consumers Believe Green Certified Homes have More Value

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“This Consumer Green Preferences Survey, conducted by Green Builder® Media, is aimed to understand the sustainable lifestyle preferences, attitudes, behaviors, and purchasing patterns of adults aged 35-55 with an active and healthy lifestyle who are interested in sustainable living. The survey was fielded from March 11-31, 2013, with a sample size of 582 adults. Respondents were 67% female/33% male; 85% between the ages of 31-60, spread equally throughout the country; 81% are homeowners, 60% of whom believe they live a green life. ” Certified Green Homes are More Valuable

“Respondents also realize that a green home is more valuable: 85% of respondents thought highlighting the energy efficiency features of their homes would help their house sell faster and 87% thought showcasing the durability of the products in their home would positively impact a home sale.”

Looking for practical advice on how to value you a green home?  Complete this form and give it to the appraiser! Youtube video explains Green Appraisals

If you are looking to learn more about Green Certified Homes in the Midwest and how you can get involved, give us a call 616 458 6733 ext 1 or info@allianceES.org. has 7 years of over 1,500 certified green homes in the Midwest.

Both of these charts and quotes come from a big thanks to Green Builder Magazine.  Learn more

http://www.greenbuildermag.com/News/Headlines/Survey–Green-Life-Wanted#.UXVeVbVHSSp

http://www.greenbuildermag.com/Blogs/Sara-Gutterman/April-2013/What-Consumers-Really-Want#.UXGTnrVHSSp

 

Green Homes Price Premium

Green Labels add Value to Homes

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More Evidence of Green Value

A recent analysis of homes done by UCLA Berkley researchers found that a green labeled home (LEED for Homes, NAHB Green, Energy Star, etc) had a mearurably higher value than non-green (standard) homes.

Green Homes Price Premium

Researchers from UC Berkeley and UCLA have found that green home labels typically add almost 9% to the value of a California home.

The “Value of Green Labels in the California Housing Market” study found that a typical California home valued at $400,000 sells for an average of 8.7%, or $34,800, more when it has a green certification label.

The study was conducted by researchers with UC Berkeley and UCLA who hoped to answer the question: Does the investment in an energy-efficient home pay off during resale? The short answer is yes.

According to the study, price premiums resulting from green certification were closer to 12% in hotter parts of the state. It also found the premiums were strongly correlated with an area’s environmental ideology as measured by the number of hybrid vehicle registrations — a phenomenon dubbed “the Prius effect” by visiting UC Berkeley professor Nils Kok, who led the study.

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Just as “people sometimes buy a Toyota Prius not just because of the fact that it’s more efficient but because of environmental virtue,” Kok said, “people might buy a green home because of ideology. In areas where the penetration of hybrid vehicles is higher, we find the premium paid for green homes is higher as well.”

Even though buyers of green homes were likely to save an average of $700 in energy bills annually, “consumers value aspects other than just energy savings alone when purchasing a green home,” said Kok, who cited intangibles such as enhanced indoor air quality and better insulation.

The study estimated that the cost of making a home 35% more efficient was $10,000, “so the benefit of green homes far outweighs the cost,” Kok said.

Green home labels seem to be increasing in value. Kok noted that green-label homes sold in the latter part of the five-year study period “seemed to have gone up relative to the beginning of the sample period.”

What about areas outside California?  Well increasingly as more regional areas add green MLS fields that support identification of green home features, it is becoming easier for real estate appraisers to identify the local impact on market value. Learn more at our Green Real Estate Toolkit.

Reprinted from LA Times Article

 

Determining Value of Solar Just Got Easier

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The additional property value of solar has always been an issue in the industry. Homeowners and professionals both recognize the inherent asset value of solar just as you realize asset value for other home improvements such as a kitchen remodel or bathroom addition.  But quantifying that for real estate appraisers, brokers, and lenders has been an issue – until now.

Consistent appraisals of homes and businesses outfitted with photovoltaic (PV) installations are a real challenge for the nation’s real estate industry, but a new tool developed by Sandia National Laboratories and Solar Power Electric™ and licensed by Sandia addresses that issue. Sandia scientists, in partnership with Jamie Johnson of Solar Power Electric™, have developed PV ValueTM, an electronic form to standardize appraisals. Funded by the Department of Energy’s Office of Energy Efficiency and Renewable Energy, the tool will provide appraisers, real estate agents and mortgage underwriters with more accurate values for PV systems.

“Previous methods for appraising PV installations on new or existing construction have been challenging because they were not using standard appraisal practices,” said Geoff Klise, the Sandia researcher who co-developed the tool. “Typically, appraisers develop the value of a property improvement based on comparable properties with similar improvements as well as prevailing market conditions. If there aren’t PV systems nearby, there is no way to make an improvement comparison. When a PV system is undervalued or not valued at all, it essentially ignores the value of the electricity being produced and the potential savings over the lifetime of the system. By developing a standard methodology for appraisers when comparables are not available, homeowners will have more incentive to install PV systems, even if they consider moving a few years after system installation.”

The tool uses an Excel spreadsheet, tied to real-time lending information and market fluctuations, to determine the worth of a PV system. An appraiser enters such variables as the ZIP code where the system is located, the system size in watts, the derate factor – which takes into account shading and other factors that affect a system’s output – tracking, tilt and azimuth, along with a few other factors, and the spreadsheet returns the value of the system as a function of a pre-determined risk spread. The solar resource calculation in the spreadsheet is based on the PVWattsTM simulator developed by the National Renewable Energy Laboratory, which allows the spreadsheet to value a PV system anywhere in the U.S.

“With PV Value™, appraisers can quickly calculate the present value of energy that a PV system can be estimated to produce during its remaining useful lifetime, similar to the appraisal industry’s income approach,” said Johnson. “Additionally, a property owner thinking about installing PV can now estimate the remaining present value of energy for their future PV system and what it could be worth to a purchaser of their property at any point in time in the event a sale of the property takes place before the estimated payback date is reached.”

The tool is being embraced by the Appraisal Institute, which is the nation’s largest professional association of real estate appraisers. “From my perspective as an appraiser, I see that this is a great tool to assist the appraiser in valuations, and it connects to the Appraisal Institute’s recent Residential Green and Energy Efficient Addendum. It’s an easy, user-friendly spreadsheet that will not bog the appraiser down with a lot of extra time in calculations, and if they fill out the addenda properly, they’ll be able to make the inputs and come up with some numbers fairly quickly,” said Sandy Adomatis, SRA, a real estate appraiser and member of the Appraisal Institute.

Although the tool is licensed for solar PV installations, it could be used for other large green features in a home that generate income, such as wind turbines. The spreadsheet, user manual and webinar explaining the tool are available for download at http://pv.sandia.gov/pvvalue.

Solar Power Electric™ located in Port Charlotte, Fla., is an electrical contracting and solar integration company specializing in the installation of commercial and residential photovoltaic systems.

New Appraisal Form details Green and Solar Features

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The Appraisal Institute, the nation’s largest professional association of real estate appraisers, has made it easier to identify attributes of green homes. Last week, they released a form intended to help analyze values of energy-efficient home features. It is the first of its kind intended for appraisers’ use.

The new form is intended to be used as an optional addendum to Fannie Mae Form 1004, the appraisal industry’s most widely used form for mortgage lending purposes. Used by Fannie Mae, Freddie Mac and the Federal Housing Administration, Form 1004 is completed by appraisers to uphold safe and sound lending. Currently, the contributory value of a home’s green features is rarely part of the equation.


“This addendum is another example of how the Appraisal Institute is at the forefront of real estate valuation,” said Appraisal Institute President Joseph C. Magdziarz, MAI, SRA. “It will help the industry standardize the way residential energy-efficient features are analyzed and reported.”

The Appraisal Institute’s addendum allows appraisers to identify and describe a home’s green features, from solar panels to energy-saving appliances. Form 1004 devotes limited attention to energy efficient features, so green data usually doesn’t appear in the appraisal report, or it is included in a lengthy narrative that often is ignored.

Magdziarz pointed out that the Appraisal Institute’s form also will make it easier for appraisers to determine whether recent home sales should be used as comparable sales. Sales that are truly comparable are key components in determining a property’s value.

While the addendum won’t guarantee that an appraiser will raise a property’s value by tens of thousands of dollars for energy-efficient upgrades, it should guarantee at a minimum that energy improvements will be taken into account based on value adjustments consistent with local market conditions. More importantly, appraisers using the new addendum should be better equipped to identify accurate, area-specific comparable sales.

One of the interesting aspects of the form is the emphasis given to describing renewable energy systems such as solar photovoltaic. The form has an area where data collected by the appraiser could easily be used to calculate the net present value (NPV) of the energy savings from a solar energy system.  Other aspects include identification for third-party certifications such as LEED for homes.

Green Homes Cost of Ownership Research

Research – LEED Homes Cost of Ownership

It’s worth noting that this is an optional addendum to a traditional 1004 appraisal form. Hopefully the lending community will embrace this and builders, architects, lenders, appraisers, and other real estate professionals all find value in encouraging the use of this form for green homes.

Download the Appraisal Institute’s two-page green addendum,  which is also listed as part of the Green Real Estate Toolkit.

Learn more about the Green Addendum and how it will be used at a free event on Oct 24, 2012 in Oak Brook, IL.

And don’t forget to review the Green Home Institute research report showing the total cost of ownership savings found from building healthy, efficient green homes.

Finding Green Values

How to find a Green Appraiser

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Finding Green ValuesOne of the key players in the real estate transaction process is the appraiser. Much like a certified green home has a third-party verification, an appraiser provides an independent third-party financial analysis of a home.

However, it’s often difficult for buyers and builders of high-performance green homes to find appraisers that are knowledgeable about the characteristics of the home, can find appropriate sales comps on the Green MLS, and more importantly, who are able to attribute market value based on the home’s performance.

Fortunately this is starting to change. On Earth Day, the Appraisal Institute, a membership and professional development organization for appraisers, announced a call for collaboration to the real estate community. The goal is to facilitate data sharing for others in the financial transaction process (brokers, lenders, mortgage brokers, underwriters, etc). The thinking is that if appraisers can more easily have access to information about a LEED-certified home, that could serve as useful information as a comparable property for another high-performance home that is the subject of a valuation assignment.

An April 28 FoxBusiness.com story discussed how the need for green lending products and proper appraisals is driving a new market niche. The story reached a potential audience of nearly 1.75 million unique online visitors.

To find the best financing for green projects, the article recommended working with brokers, lenders and appraisers who are familiar with energy-efficient products, advising readers to turn to organizations like the Appraisal Institute to find qualified appraisers.

What you can do

So, what can you do to help the process along? First, make sure the appraiser assigned to your case is trained in green building. And second, help the valuation expert find homes that are comparable to yours. If you know of other homes that have been built in your area to any kind of green building standard or energy rated with third-party verification, let the appraiser know about this. It may not be a great comparable property, but then again, maybe it is.

Encourage your lender to share green education events or open houses so their loan officers and appraisers can learn more about local market activity.

Green builders can also help the real estate community by populating their local databases when available. Even a custom home built-to-suit can be listed on an MLS with a listing time of 1 day if the homeowner is comfortable sharing their price data. This can provide one more data point that will help support local market values.

All this and more will help lead to more data on high-performance green homes, such as LEED-certified, which will allow appraisers to identify appropriate adjustments to market value for green homes.

Certified Green Homes Have Price Premium

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In 2007, the Portland Regional Multiple Listing Service (“RMLS”) began tracking sales of homes with a green certification such as Energy Star, LEED for Homes, or Earth Advantage New Homes. The Earth Advantage Institute, an Oregon-based non-profit doing work in the green building sector, annually reviews this information in order to glean home valuation trends.

Specifically, Earth Advantage found that existing homes with a green certification sold for 30% more than homes without such a certification. Earth Advantage also found that new homes with a green certification sold for 8% more than new homes without a certification. The research is based on sales between May 1, 2010 and April 30, 2011.

In addition, Earth Advantage found that of 2,237 new homes sold in the last year in the Portland RMLS area, 408 of those homes were certified to some green standard.  Thus, the Portland area is seeing about 18-20% market share of certified new homes and these homes all have a sizable price premium.

Read the report summary by Earth Advantage Institute.

How does that impact Green homes located in the Midwest? Well first it provides support for general market trends. Furthermore, when you have appraisers calling for collaboration on green home values, and an increasing number of real estate boards adding Green MLS features, local research on cost of ownership, and lenders starting to offer green financing, it paints a pretty rosy picture for continued growth in the green homes market.

New analysis: Green Homes Outsell the Market

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In a real estate market such as this, any edge helps. What if your home sold for 9.1% percent more than the competition? Why might a home do this you ask – because it is a certified green home, such as a LEED home. Read more