The battle to capture the fair value of green features in homes took a turn in favor of home sellers and builders this month in Colorado, where a state government task force led an initiative to factor certified energy efficiency and renewable-energy features into real estate listings.
Announced September 9, the plan is the product of a coalition of appraisers, real estate brokers, builders and retrofit contractors, utility officials, the state’s two largest multiple listings service systems, and staffers in the Governor’s Energy Office, which was formed in 2007 by Governor Bill Ritter Jr. to advance energy efficiency and the use of renewable-energy systems. While it is expected to take time to implement the initiative statewide, it already has been adopted by Information and Real Estate Services, LLC, a large MLS in Northern Colorado.
A resource for all parties in the transaction
Prospective homebuyers, lenders, and appraisers can use the green MLS to determine whether a listed home has earned certification for energy efficiency improvements – including an Energy Star rating, LEED for Homes certification, NAHB Green certification, or a low HERS index rating – or has been equipped with a renewable-energy source such as a solar power and/or solar hot water system, or a wind power system. As long as the energy efficiency upgrade or certification is properly documented, it likely can be included in the MLS listing.
“Capturing market information about the transaction involving these properties will allow appraisers and lenders to recognize the value of higher-performing homes in appraisals and loans,” John Stovall, vice president of business development for EcoBroker International, said in a GEO press release about the listings initiative.
Stovall was on the team of experts, led by a task force known as the Residential Retrofit Working Group, that worked on the green listings plan. His comment reflects the hope that the initiative does in fact lead to appraisals that properly reflect the value of energy efficiency upgrades. If it does, it will help address an issue that, in many markets, has long frustrated homeowners, builders, and real estate professionals.
A premium for certified homes in northwest Oregon
Certification to green standards does seem to be generating a premium for sales of new and existing homes in at least a few markets. One of them, according to MLS data supplied to certification service Earth Advantage, is the Portland, Oregon, metropolitan area, where new homes certified to standards set by Earth Advantage, Energy Star, or LEED for Homes sold for from 5% to 17% over prices for conventionally built comparables from May 1, 2009, through April 30, 2010. The premium for certified existing homes in the region averaged 23% during the same period.
Certified new homes in the Portland metro area – which includes Multnomah, Clackamas, Columbia, Washington and Yamhill counties in Oregon and Clark County in Washington – actually are relatively abundant. The MLS data for new homes, for example, show that 23% of the new-home listings were certified by one of the three programs.
The 2009-2010 data, Earth Advantage adds, continue a three-year trend in which the market share of certified homes in the Portland region has increased.