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A Move Toward More Helpful Appraisals

Home buyers in some states will see the HERS Index listed on the appraisal form

Posted on Mar 16 2017 by Scott Gibson

Developers of the Home Energy Rating System and the Appraisal Institute are teaming up to give home buyers a better understanding of how much it will cost to live in the houses they're interested in buying.

The Insulation Institute said the collaboration between the Residential Energy Services Network and the appraisers association to include HERS scores on appraisal forms in some states would make energy efficiency more transparent to buyers. The move also could help convince skeptical builders that there's a return on constructing high-performance buildings.

The HERS Index is a numerical rating system that measures energy consumption relative to a standard reference house. The reference house, a standard new home, has a score of 100; a house with a HERS Index of 70 uses 30% less energy, while a house with a HERS index of 130 uses 30% more energy. The lower the HERS score, the lower the energy costs.

Builders of high-performance houses have long complained that standard appraisals fail to give enough credit for energy-saving features.

“One of the largest barriers to the building and selling of high energy performance homes is that the value of energy upgrades is too often not reflected in the real estate appraisal of a home,” RESNET Executive Director Steve Baden told the Insulation Institute. “Many of the features that make a home energy-efficient are hidden behind drywall and aren’t obvious to home buyers. Our goal is to make information, such as the HERS score of a home, visible in the appraisal so that consumers have more facts available to make their decisions.”

The HERS score will be added to an existing green-building addendum for appraisers, which lists such things as certification under the LEEDLeadership in Energy and Environmental Design. LEED for Homes is the residential green building program from the United States Green Building Council (USGBC). While this program is primarily designed for and applicable to new home projects, major gut rehabs can qualify. program, or the National Green Building StandardNational Green Building Standard Based on the NAHB Model Green Home Building Guidelines and passed through ANSI. This standard can be applied to both new homes, remodeling projects, and additions. . The Appraisal Institute will get access to RESNET’s data base of HERS-rated homes — initially in states like Texas with a larger number of HERS rated homes and in other states in the future.

In 2015, there were some 206,000 HERS-rated homes in the U.S. Texas had the highest state total (40,012).

Baden said when a home feature isn’t formally acknowledged in an appraisal, it can’t be financed through a mortgage. That means builders don’t see a financial return on including high-performance building features, a problem that this new effort seeks to fix.

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Image Credits:

  1. Kathy Kimpel / CC BY 2.0 / Flickr

Mar 16, 2017 10:52 AM ET

Since I see appraisals all day every working day I find this
by John Clark

interesting. My only question is with regards to assigning a monetary value to a HERs score or to the difference in HERS score.

Currently appraisers are limited with regards to rating condition and quality of construction differences between the subject and the comparable sales. I eagerly look forward to seeing how this turns out.

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