By Jeffrey Gephart, Real Estate Trade Ally Outreach, Efficiency Vermont
The benefits of a high-performance home include affordability, comfort, and durability. These homes have lower energy bills resulting from high insulation values, low air infiltration, high efficiency mechanical systems, and in some cases renewable energy. They’re also healthier due to ventilation systems that reduce pollutants, control humidity, and provide fresh air for occupants. Unfortunately, these benefits don’t always result in a higher market value for the home.
Appraisers look to the recent past for comparable home sales, looking for homes in a similar location, square footage, and number of bedrooms. For years, new homes were built with little change in energy efficiency so appraisers have grown accustomed to simply performing the sales comparison method of appraisal. This works fine when, to quote the song Little Boxes, “they’re all made out of ticky-tacky and they all look just the same.”
High-performance homes are built and perform much better for their occupants. While they are typically more expensive to build up front (or to retrofit after they’re built), the savings in energy costs often offsets the higher mortgage cost and can provide their owners a lower total cost of ownership.
In Vermont and New Hampshire, few appraisers have had training in appraising high-performance homes. Training can help appraisers know where to look for comparable, high-performance homes or how to use other tools in their tool box, such as the cost or income capitalization methods of appraisal.
So if you’re looking to sell or buy a high-performance home, what can you do to ensure you’re getting the value?
- If you’re a seller, you can verify your home’s energy efficiency features using a qualified, independent, 3rd party verifier such as a Home Energy Rater or a Building Performance Institute certified auditor. Reach out to Efficiency Vermonti in Vermont or NHSavesii in New Hampshire to identify a verifier that will work for you. Information from these energy efficiency professionals should be transferred to the Appraisal Institute’s Residential Green and Energy Efficient Addendumiii to provide to a potential buyer or to your real estate agent who can include features in your MLS listing.
- If you’re a buyer, look for energy efficient and renewable features that will save you money while increasing health, comfort, and durability. If there are opportunities for energy upgrades, rebates exist through state programs like Efficiency Vermont and NHSaves to help cover the costs of improvements and in some cases provide financing. You can also look for “green” loan products through area lenders.
Vital Communities based in the Upper Valley of New Hampshire and Vermont has helpful tips for buyers and sellers through Green Real Estate content on their websiteiv.
- If you’re seeking financing, providing the Green Addendum with information on green features early in the process notifies the lender that they have a special property type that requires additional research and likely expense in hiring a competent appraiser. The Appraisal Institute has a cover letterv template to accompany the Green Addendum explaining its purpose for lenders who may not be familiar with it.
The Vermont Association of Realtors® will be conducting their third, Vermont Green Real Estate Symposiumvi on October 23, 2019 at Killington Mountain Resort, Killington, VT. The Symposium offers a day’s worth of continuing education credits for real estate professionals. For those seeking to buy, sell, or build a high-performance home, the Symposium will cover what is needed to realize the true contributory value of high-performance home features.
iii Residential Green and Energy Efficient Addendum –
iv Vital Communities – https://vitalcommunities.org/energy/greenrealestate/
v Appraised Value and Energy Efficiency: Getting It Right –