Energy Performance Does Add Value! Just look at the HERS Rating!

Trying to demonstrate to the unknowing that enhanced home energy performance translates into enhanced resale value is not an easy task. But actually it is right there in the HERS Rating!?

Even though most of us 'energy pros' understand that the increased comfort, health, durability, and lower energy bills means that the property should be more desirable and more valuable, it is hard to get this going due to the true way that properties are valued.

We are all aware of the boom that ended abruptly in 2007ish where previously real estate prices skyrocketed with no perceived end in sight. Although there is a lot of room to lay blame, the truth of the matter is that if it didn't appraise, then it wasn't getting financed (those cash only situations are different). Mortgage bankers, realtors, and the like were pushing on appraisers to make the values work. I know appraisers that used to insert articles showing the market is expanding at "x" per month to help support the new, higher value. There was a higher value constantly being achieved. The circle fed itself. Now everyone is complaining because foreclosures and short sales are hurting values and appraisers still have to use the comps that are out there. They no longer can use articles to support inflated values and are searching for ways to get the numbers to work

I think we need to get the national association that represents appraisers to start working with RESNET and HERS Ratings to easily add this value to the houses that have the upgrades. We also need 3 line items on every MLS listing: (1) Green certifications (2) HERS Index Score (3) Estimated Yearly Energy Costs via Rem/Rate(etc...).

This would give appraisers a place to find those estimated values and allow them to use the old 1998 DOE study that stated for every $1 saved on a yearly basis adds $20 to the value of the home. (I would like to see what the value is today with the higher energy rates.) If the appraisers had a way to access those yearly estimated costs easily, they could estimate the value and add it confidently to the value of the house they are appraising.

I think the appraisers are the most important part of the whole circle and the ones that can really take home performance into the next phase of hyper-growth!! If you could show someone that not only does the upgrade have an ROI, but also it adds to the listing/selling value, then I think the sell to Builders, Realtors and Homeowners will become easier. The recently released study from LBNL that researched how to get people to act on home energy improvements stated that awareness and education are crucial, but not something that translates into action. Giving them the value they deserve could push that ball over the hill and really get things rolling.

I know there are some areas that have the participation of the local MLS and I have also heard of appraisers actually considering some value for the upgrades, but it's not without a fight and it is far from well known. It seems so simple, but why is there not a dollar value added for the things that help protect the home and make it more affordable to run and maintain? Just as I am writing this, CNN had a piece that stated remodeling doesn't add much value to the house and installing a new kitchen is one of the worst investments in upgrades you can make when it comes to a return, but that does not deter people from doing what the TV shows and The Jones's say. Although I agree that the nice creature comforts are a bonus and are things that I like, it is time for us to think about what we need and begin to use our money more wisely!