Home builder Sean Smith feels like Sisyphus – the Greek mythological figure doomed for eternity to push boulders uphill only for them to crash downhill when he neared the top. Smith’s boulder? Higher appraisal prices for the green homes he builds in metro Denver.
“We built a house a couple of years ago, and the bank didn’t want to value the solar panels and insulation improvements. We went through the bank that was doing the construction loan and had them deal with the appraiser,” he said, noting that with construction loans, it’s particularly hard to get green homes valued. “The bank took our word for it [that the panels added value to the home]. They went to the appraiser and passed on the information we had.”
Smith is an anomaly, one of a handful of builders and Realtors who know how to get the “green premium” – the price bump for green homes and features – recognized in an appraisal. But navigating this isn’t easy, and there are lots of moving parts that must synch.
That process got easier in May.
Last month, the Colorado Energy Office subsidized classes in green residential appraisal – two days’ worth of training taught by Florida appraiser and former vice-chair of the National Education Committee for the Appraisal Institute, Sandy Adomatis. The classes, capped at 60 each day, were full. And while neither Peter Rusin, the Residential Program Associate of the CEO, nor Adomatis will discuss the exam pass rates for either class, literally scores of appraisers competent to value green homes and buildings hit the streets in Colorado’s real estate market overnight. Before Adomatis’s class, Colorado had precisely none – zero appraisers with the required 14 hours of training and testing to appraise green homes and features.
The pieces are coming together quickly in Colorado, at least. In 2010, the CEO developed the “green-field addendum” (GFA) – a green-feature data capture for listings on all Colorado’s 18 multiple listing services. Rusin says that today, 97 percent of the MLSs statewide have this. And the Colorado Real Estate Commission, the regulatory body for real estate sales, this year grafted the GFA into the state residential real estate contract.
Last summer, Rusin and the CEO signed a memorandum with the Colorado Coalition of Appraisers and the Appraisal Institute to fill the void in the appraisal community. Rusin has also been conducting market studies on green-home and feature sales throughout the state, including a soon-to-be-released one on solar electric valuation.
IMAGES - Home builder Sean Smith (above). Appraiser Sandy Adomatis (left).
In the meanwhile, Adomatis says anyone seeking to have energy adjustments and green homes valued must pound the table with lenders and insist on appraisers who are trained and tested in these “complex” properties. One example often cited is horse properties – for example, a Realtor or builder who sells condos downtown probably has no ability to properly value something this specialized.
‘Same with green. “Competency in green valuation starts with green valuation education, and it takes more than a one-hour webinar on green to become competent,” says Adomatis. And if lenders don’t send appraisers with the requisite training, it’s completely legit to ask for a reload, she says.
She also recommends that anyone with knowledge of energy-efficiency and/or properties fill out not only the GFA for the MLS (real estate transaction), but also the five-pager targeted at the appraisers (from the Appraisal Institute). Hand it to ‘em, she says, and the appraiser can use it, verify it, replicate it, or whatever.
Smith looks forward to the day when this is easy. “I don’t think I’ll have to keep fighting. If we can get an understanding of why these tighter homes are worth more, that becomes the standard and not the exception,” he says.
“If homes that didn’t have a HERS score are more negatively hit versus we who are doing [green] improvements seeing zero benefit, that’d be pretty awesome.”
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- CLICK HERE to find a green appraiser. Those listed are Designated Members of the Appraisal Institute.
- CLICK HERE for Fannie Mae guidelines and requirements that appraisers have the necessary competence to appraise in a category.
- CLICK HERE for Sandy Adomatis’ excellent blog on filling out the appraisers’ green-field addendum (GFA).