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Community and Q&A

Green appraisal valuation for single family homes

zero energy america | Posted in General Questions on

Tampa, FL
Marc Rutenberg Homes, Zero Energy America and Zero Energy America Village

Is there new legislation for single family homes in Florida or Federal concerning appraisers giving fair value for net zero, energy and water conservation, green building products?

Is there a green/renewable energy Mortgage available for single family homes including Fannie Mae, Freddie Mac, VA, FHA, conventional conforming and conventional jumbo loans for both rate and closing costs?

Is there new underwriting criteria that will require single family home lenders to use energy cost and repair cost in calculating debt to income ration?

Ron Schulte


  1. user-1140531 | | #1

    "Is there new legislation for single family homes in Florida or Federal concerning appraisers giving fair value for net zero, energy and water conservation, green building products?"

    What do you mean by "fair value"?

  2. GBA Editor
    Martin Holladay | | #2

    The U.S. Senate is considering a bill. Roger Normand wrote, "In the future, perhaps getting a fair shake on green properties will be the rule rather than the exception — that is, if Congress adopts and the President signs a bipartisan bill recently introduced into the U.S. Senate to account for energy costs in mortgage underwriting. The Sensible Accounting to Value Energy Act would include the homeowner’s expected energy costs when evaluating a homeowner’s ability to make mortgage payments. In effect, the traditional PITI (principal, interest, taxes, insurance) mortgage lending ratio would become PIETI — with the “E” representing the home’s energy costs."

    This information comes from Roger Normand's blog, Seeing Red on a Green Property Appraisal — Part 3.

    For more information on the topic, see:

    Seeing Red on a Green Property Appraisal — Part 1

    Seeing Red on a Green Property Appraisal — Part 2

    Green Building Appraisal and Financing Issues

    Green Home Appraisal Woes

    A Step Toward Fairer Green Home Valuations

    When Green Poses an Appraisal Problem

    Getting a Grip on Green-Home Appraisals and Insurance

    Q&A: Bad Appraisal on a New Green Home

    Q&A: Refinance and Appraisal of Net-Zero Home

  3. zero energy america | | #3

    By fair value on the appraisal:
    1. will the appraiser accept my verified list of specifications and cost for renewable energy/green/healthy/sustainable home features then factor in added value for said?
    2. is the Appraisal Institute training the appraises on green, energy efficient and sustainable housing methods and value?
    3. if our HERS rating of -0- verifies a legitimate per month saving on the electric bil,l can the appraiser at minimum compute the savings over a specific period of time then add said savings to the appraised value?
    4. looking for better ideas on how to get the appraisal to reflect fair market, cost and income value-anybody have "a plan"?
    Thanks for your reply Ron Keagle

  4. user-1140531 | | #4


    I have no idea what might come about in the way of new laws on this, but the value is presently determined by what the market will pay, and what you are suggesting is that it be determined partly or wholly on the cost of construction. For security for the loan, a financer can only rely on what the market will pay. So if you increase the appraised value (and the loan) by including enhanced costs that the market will not pay for, then it puts the lender at a higher risk.

    When you consider the valuation being based upon what the market will pay, and that being needed to secure the loan, you can see that there really is no fairness issue here.

    I think the way to bring about the change you seek is to spread the knowledge and popularity of this higher performance housing. As more people learn of it, become interested, and seek it; that will naturally cause the appraised value to rise in reflection of that increasing interest and demand.

  5. zero energy america | | #5

    Thank you so much for your help Ron.
    Fortunately, I have a strong sales pace so I am adding comps to the market. This combined with thorough disclosure to the appraisers on specifications and cost should "score" for all parties involved.

  6. BobHr | | #6

    Unique home present problems for appraisers. Unique implies that there are few if any similar properties. Therefore there is a lack of data. Depending on where you live there may or may not be market data to support value.

    Appraisers have what is called USPAP, standards of appraisal practice. It sets for the ground rules for the appraiser to follow when performing an appraisal.

    there are many problems in the appraisal and lending arena. The lenders have driven fees so low that may not be an appraiser that has the experience to do a green appraisal. The way the appraisals are ordered are another problem. This is from fed regulations, HVCC, it makes it hard for an appraiser to specialize on say green homes as the lenders cant cherry pick an appraiser even if he is the most qualified.

    What the lay person doesnt recognize is what can be used as a comparable. A home has to be listed on the market and sold for it to be considered a market sale work longer on the appraisal. The amount of work may dictate a fee that is 2x or 3x of a standard appraisal. I dont know of lenders that are willing to pay that. Are green buyers willing to pay a higher fee.

    In many cases there will be no market data to allow the appraiser measure the value of green features. The appraiser can not just make up a value. The underwriter will not accept the appraisal and the appraiser will likely be blacklisted and loss a client and a lot of money. As an appraiser I wouldnt stick my neck out.

    Until there is a proven market data I think the solution is to let the underwriting adjust the appraisal to reflect the green features. Borrowers should expect to put more of their own coin in to the project.

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