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SW/W Michigan Green MLS by adding sustainability features to home listings

The South West Michigan Regional Information Center (SWMRIC), who represents many of the regions Realtor associations  “is addressing the “green features” in a residential property by adding a new “Green Features Section” to the Residential Data Input Form. This new section is divided into two parts: Green Features and Green Certification/Rating.”  *  To see the full list of all Green Features and Listed certifications please go to the SWMRIC link and scroll to page 4. http://www.swmrichelp.com/RESIdatainput.pdf

advocates for and helps Midwestern Realtor Associations find ways to incorporate green features and certification in their listings for  appropriate valuation of Green Homes. These Green MLS upgrades are  key in driving demand for affordable, healthy, durable and efficient home construction, remodeling and purchasing.

Currently we see many problematic issues facing undervalued green homes because local realtors, lenders and appraisers lack the education and awareness to properly assess value to these beyond code practices. The local Habitat for Humanity in Kent County that has committed to all LEED silver Homes since 2007 but has yet to have their home properly valued in comparison to non green homes in the neighborhood. I can also think of my own home which recently was certified Bronze under the MI GreenStar Program by adding $25,000 of green upgrades into a $75k house and increasing Energy/Water efficiency and improving Indoor Air Quality, only to be given less than 1% increase in home value.

Thanks to demand from the Kalamazoo and Grand Rapids Home Builders Associations, SWMRIC has decided to take this progressive approach and follow in the footsteps of places such as Chicago, Colorado, Florida, Traverse City and the recent Greening of the MLS  in Minnesota and Western Wisconsin.

Looking to Green your local MLS? Reach out to today to learn how we can help shape your program. 616 458 6733 ext 1 or info@allianceES.org

*Information pulled for this release can be seen here 

 

 

 

Green Homes Price Premium

Green Labels add Value to Homes

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

 

Finding Green Values

How to find a Green Appraiser

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

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.