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Green Building News

Giving Green Certification a Home in Real Estate Listings

Colorado’s plan to add certified energy efficiency features to listings aims to ensure proper valuations; meanwhile, data show certified homes are commanding a premium in and around Portland, Oregon

Average sales prices for certified and non-certified homes in the Portland, Oregon, metropolitan area.
Image Credit: Earth Advantage Institute, based on regional multiple listing service data

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.

One Comment

  1. Don Minehart | | #1

    Green certified real estate listings
    With over 23 years as a Real Estate agent/Broker and over 1000 audits performed certifying homes for Energy Star, I was excited to see realtors starting to embrace certification of homes for energy efficiency. I approached the Pittsburgh Board of Realtors offering to discuss energy audits, energy star, HERS scores and more at their annual conference and was told that realtors would prefer to stay clear of the subject. The National Association of Realtors offered a green certification in Pittsburgh and less than 5% of the realtors persued the certification.
    Recently I represented a buyer looking to build a home with a local home builder, There wasn;t any measures for energy efficiency beyond performance before energy star. After sharing what I know about energy efficiency , the buyer moved on to another builder.
    The difference between an energy star home and a traditionally constructed new home is night and day. It isn't just about product, it's about the inspections. Understanding the building envelope is paramount to building an energy efficient home.
    Thanks for the article and more importantly, Hats off to Colorado.

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