Missed Opportunity? Energy Audits @ Home Purchase

It may be the best-kept secret in home real estate: For a couple of hundred dollars, a prospective buyer can add a formal energy audit to the standard inspection.

Ken Harney's article in the Washington Post on Friday addressed the value of an energy audit, and evaluated why they are not commonly part of the home purchase process.

In Energy Audit can alert home buyer to problems  that could be costly... he covers just the right perspective on this topic.  Not the home seller's perspective, or ideas on a required "miles per gallon" sticker on homes for sale - but why an energy audit could be so helpful to a home buyer.

Of the three Realtors interviewed, only one understands the value of the energy audit and includes it when working with clients.  In fact, Leland DiMeco in Boston found that when one of his sellers proactively obtained a HERS score it lead to a higher sale in a shorter amount of time than the comparables.  He explained the value for buyers too,

It just makes sense. Most buyers want to feel comfortable that they’ve done their due diligence and know what they’re getting.

I couldn't agree more!  To fully represent our clients, Realtors need to help consumers ask the right questions before deciding on a home. NAR's annual Buyer/Seller profile shows that about 80% of buyers consider heating and cooling costs when purchasing a ....  Realtors can meet the needs of clients by knowing how an energy audit fits into the picture.

I offer a free energy audit as a closing gift to clients, and I explain why it's a good idea so you can customize the home after move-in.  New homeowners are the best prospects for energy efficient upgrades.  They have the longest timeframe to enjoy the payback, and are willing to invest in doing the work the right way.  Sellers on the other hand are looking to only do the minimum upgrades required to make a sale - lowest scope and lowest bid.

One reason energy audits are not part of the transaction is because Realtors like most consumers don't realize the diagnostic tools are out there to make smart, targeted improvements. (You don't have to live with the bulky sweaters!)

It's important to understand that an energy audit + a home inspection empowers home buyers with a strategic home improvement plan for their new home. But an energy audit and a home inspection are very different.  A home inspection is part of the legal review process.  It is a binary process focused on identifying safety issues and major repairs.

Are there issues or not?

So a faulty deck or a cracked furnace are in scope.  Potential for more insulation is not.  True, inspectors often point out options for improving the home, but this is all up to the buyer to scope in after closing, not a requirement for buyer and seller to resolve during the transaction.

Energy audits are much different, pointing to options for improvement ranging from simple do-it-yourself projects to in-depth upgrades.  An energy audit is all about shades of gray (or green actually!). How much improvement are you after?

So there are two keys.

  • First, Realtors need to understand what an important tool an energy audit is to empower clients to own and operate a home rather than simply acquiring one as we have historically done.  (In my humble opinion - No foreclosure crisis if we had been more focused on home ownership than home acquisition.)
  • Second, an energy audit is comparable not to doing a home inspection, but measuring for drapes during the home inspection.  It's about making the home your own once you move in, not a part of the legal review preceding a transaction.

Energy audits are a powerful tool for home buyers. They are also an exceptional tool for offering service above and beyond to clients that sets a Realtor apart and encourages referral business.

Republished with permission by Laura Stukel, Not Yet Green.  See original at NotYETGreen.com.

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Tags: estate, real

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Comment by Laura Reedy Stukel on May 10, 2012 at 2:29pm

Great catch Tom. Thanks.  Energy updates are not a dependency for closing like an appraisal or an attorney's legal review. I will edit to say "requirement" instead of "consideration".

However, related to your second point I think proactive, consumer-focused Realtors will begin to see that the ability to help clients ask the right questions about energy efficiency will be a differentiating factor for them.  They'll sell better homes. They'll generate more referrals.  

For home performance professionals, the best way to identify these agents is to ask them how they generate business. Agents who use tools like open houses are not in the sweet spot.  But if you find Realtors in your community who use monthly newsletters or tell you they do more than 50% of their business through past clients or their referrals...those are the ones you want to keep on speed dial. Those agents are all about delivering something extra to clients so clients remember them and make a referral, and they are the ones most eager to educate consumers on the best options for improving and enjoying their homes! 

Comment by Tom White on May 10, 2012 at 12:23pm

Thanks for pointing out Ken Harney's WP article.  You mention that options for energy upgrades are: 

not a consideration for buyer and seller to resolve during the transaction.

but how ofter do you find or recommend that buyers complete energy audits before closing?  You also mention that realtors need to help consumers ask the right questions about heating/cooling costs before deciding on a home. 

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