Resale Value

Prove to us that enhanced home energy performance translates into enhanced resale value!

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Where does the circle of participation begin? Realtors, Appraisers, Builders??? 5 Replies

In this group titled "Resale Value" we are all tasked to "demonstrate that enhanced home energy performance translates into enhanced resale value!"Even though most of us understand that the increased…Continue

Started by Jamie Kaye. Last reply by tedkidd Jul 21, 2011.

GreenMLS efforts one step closer to a platform for Green Value

NAR Releases Latest Version of GreenMLS Toolkit The National Association of REALTORs introduced the latest version of the…Continue

Tags: energy, cnt, value, greenmls

Started by Laura Reedy Stukel May 25, 2011.

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Comment by Evan Mills on July 29, 2012 at 9:09pm
Comment by Debra Little on May 2, 2012 at 5:37pm
Comment by Debra Little on May 2, 2012 at 5:34pm

New McGraw-Hill report:Green Homes, new & remodel trends UP!  This is press relsease.  I'll send full rept to anyone who would like.


Comment by Debra Little on March 26, 2012 at 9:04pm


This is a link to a press release I recently sent out:  "Do Energy Upgrades Add Value?"

My presentation at ACI Baltimore this Wed at 1:30 will be about this valuation study I recently completed.  3 upgraded homes in Los Angeles.

Comment by Evan Mills on June 2, 2011 at 11:55am
Researchers at Lawrence Berkeley National Lab recently released report, "An Analysis of the Effects of Residential Photovoltaic Energy Systems on Home Sales Prices in California". 

The report found that homes with PV in California have sold for a premium, expressed in dollars per watt of installed PV, of approximately $3.90 to $6.40/watt more than comparable homes without PV. This corresponds to an average home sales price premium of approximately $17,000 for a relatively new 3,100 watt PV system (the average size of PV systems in the LBNL dataset).

The research analyzed a dataset of more than 72,000 California homes that sold from 2000 through mid-2009, approximately 2,000 of which had a PV system at the time of sale.

The research also showed that, as PV systems age, the premium enjoyed at the time of home sale decreases. Additionally, existing homes with PV systems are found to have commanded a larger sales price premium than new homes with similarly sized PV systems.

The report can be downloaded from

A 2-page summary of the report's key findings can be found at:
Comment by Laura Reedy Stukel on May 5, 2011 at 7:28pm

MLS and the GreenMLS movement are getting a lot smarter about EE, and about Robert's point: 

appraisers don't create value, it is their job to measure value

Likewise, MLS don't create value.  But if the contractor shares info on what was done and the performance results, the home owner can communicate that and the listing agent can use the right fields in the MLS to promote it.  Then the appraiser has something to verify.  We have to start somewhere and we all play a role in creating the proof.  


NAR hosts the GreenMLS Toolkit as a best practice site.  Watch for a new version launch as early as next week that is designed all around the flow of data to support fair value for green homes at resale!


And if you are interested in the topic contact me about Efficiency First's real estate working group.  Tracking Value for Retrofits is one of our core themes.

Comment by Robert H on May 4, 2011 at 11:47am

From what I hear a lot of people expect value to be added to an appraisal become something was done ie added insualtion, etc


First off appraisers don't create value, it is their job to measure value. The appraiser observes and documents what buyers are paying for certain features.  I quit appraising several years ago because of the corruption in the lending market so I have a working knowledge of appraisals and lending


What I can say is that MLS does not pay any attention to energy efficiency. There is not a way for an appraiser to document that a home has energy efficient features, the benefits (savings, comfort, etc) and that buyer are willing to pay more for the home.  As an appraiser I could not assign a value without proof that it adds value.


Another complication is there are so many things that can be done for increased efficiency that comparing the value contributions of each is impossible. Then you have workmanship issues. What if insulation was added but there was not air sealing. What if a person bough windows thinking there were for energy efficiency when in most cases they don't do much for energy savings. What is the value of a radiant barrier in mixed heating and cooling areas (big waste of money).


What is the value of a ground source heat pump when a home leaks live a sieve. What is the value of solar when the home is an energy hog and still requires to much energy.


Until such a time as it becomes clearly evident that the market is placing  value on certain features then it is not up to the appraiser to create value in the appraisal.


As an investor I would hate to purchase a pool of loans in which the market value of the properties are inflated because someone thought that value was added yet it could not be proved. 


As it currently stands lenders have driven appraisal prices so low that the good appraisers have fled the mortgage lending business. There is a discussion on an appraisers forum about a new contract appraisers are being asked to sign in order to keep getting work from Landsafe (B of A). Basically it allows Landsafe access to an appraisers entire practice, all their files, billings etc, for 10 years. It creates large liability issues in favor of LAndsafe and at the expense of the appraiser. The lenders are fortifying their stranglehold of the appraisal business.  Any appraiser in their right mind will not give value to something so hard to prove as energy efficiency.  The big leners are raping appraisers and consumers





Comment by John Nicholas on February 8, 2011 at 8:07pm

There was a study published in the Appraisal Journal 10-1998.  The last 3 paragraphs summarize:

The convergence of the fuel expenditure coefficients around -20 is consistent with re- search findings that the selling price of homes increased by $20.73 for every $1 decrease in annual fuel bills.2 Other research supports the underlying conclusion that energy efficiency increases home value by an amount that re- flects annual fuel savings discounted at the prevailing after-tax mortgage interest rate.3

The implication for home buyers is that they can profit by investing in energy-effi- cient homes even if they do not know how long they might stay in their homes. If their reduction in monthly fuel bills exceeds the after-tax mortgage interest paid to finance energy efficiency investments, then they will enjoy positive cash flow for as long as they live in their homes and can also expect to recover their investment in energy efficiency when they sell their homes.

The implication for appraisers is that cost-effective energy efficiency investments do appear to be reflected in residential hous- ing market values. Therefore, the appraised value of energy-efficient homes could under- state their actual resale value if the comparables used in the appraisal do not reflect the value of a cost-effective energy efficiency investment.




Comment by Debra Little on February 7, 2011 at 10:03pm

Evan, I noticed your studies added Dec 8 are about commercial buildings. (and written 2001!)  The 2001 date is indicative as commercial buildings use NOI in most valuation scenarios where residential don't.  The appraisal approaches are very different.  We're focusing on residential in this group right?  In 2001 commercial bldgs valuations wheels were starting to really chug along in recognition of EE effect on operating exp. In some ways residential appraising is more difficult.  Certainly less formulaic. And, I think more variables in the

"imperfect market".

In understanding residential appraising & the challenges of res appraiser's, keep this in mind:  Their job is to "Report what the market is doing."  Its not about their own personal opinion or value system.  If they adore gold plated swimming pools in AK but there is no proof in the market to build the case & present to the bank...  their work wont stand review.   Appraisers need to be able to identify EE features in homes and comprehend their benefits, then they must be able to find similar or similarly valued features out in the market, in the comparables they select to support value in their reports.  This can be nearly impossible. Empirical evidence can carry weight and always helps. Until the buying public speaks with their agreed upon sales prices of existing stock, appraisers will have a tough go, even for those who have a solid understanding of bldg science.

EEMs and their cousins give us some options to bring effects on NOI to the forefront.  The SAVE act, currently being considered in the Senate advocates for changes in underwriting guidelines, awarding homes that via EE features have lower operating expenses which effects their owner's bottom line and ability to make and keep up w/ their mortgage payments. This could boost the appraiser's tool kit in opportunity to assign value by monetizing net savings in a more formal way recognized by underwriters.


Comment by Evan Mills on February 2, 2011 at 6:45pm

Following up on Rick's comment below, I'm pretty sure the 20x rule-of-thumb comes from the real-estate investment perspective (aka "investment properties").  The underlying notion is that there is an expected cash-on-cash return, defined as a % of the net operating income (total income - total expenses). Those returns can be around 5% (or less in this market; better in boom markets).  So, if you save a $ on a utility bill then NOI goes up by $1.  $1/5% = 20.

The buyer of a home intending to occupy it (rather than rent it to others) will have a different, less systematic calculus....


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