Courtesy National Renewable Energy Laboratory (NREL)
Ten years ago environmentally and energy conscious homebuyers would have had a tough time finding “green” homes. Even though models were out there, builders and real estate agents had no idea how to market them and sometimes didn’t even know their benefits versus a conventionally built residence. But things have changed rapidly in the past few years with soaring energy prices and concerns about global warming and the building industry’s contribution to it.
As a result, green housing is no longer a buzz phrase, and more energy efficient home options are hitting the market all the time. According to John Stovall, vice president of EcoBroker, a firm that trains and certifies real estate professionals in the tenets of green design and energy efficient residential features, some neighborhoods with a high percentage of sustainably built homes on the market are actually seeing conventionally constructed homes drop dramatically in price in an effort to compete.
That’s not to say, however, that a green home is going to cost substantially more than a conventional home. In fact, according to Jay Marotte, branch vice president for Coldwell Banker Residential Brokerage in downtown Baltimore, green certified homes in his territory are only selling about 10 percent higher than conventionally built homes of the same size.
BUYER BEWARE
Of course, just because a home is marketed as “green” doesn’t mean it is. And with so much “greenwashing” out there and such a wide array of sustainable features, all with varying degrees of impact on one’s energy bills, it can be hard to navigate the green market. Stovall says the first thing green home buyers should look for is third-party certification. Someone other than the builder, owner, or real estate agent should have evaluated the home for its sustainability.
Only about 2,500 homes in the U.S. have been certified to date. More likely, you’ll see certifications from Energy Star® or regional or local programs. Third party certification indicates the home has been inspected and tested and shows substantial improvement in efficiency over a home of comparable size in the same area that has been conventionally constructed. Energy Star® certification means that a home is at least 15 percent more efficient than homes built to the 2004 International Residential Code.
It’s also important to work with an agent who understands green design and features as well as their benefits or potential drawbacks. EcoBroker and the Green REsource Council of the National Association of REALTORS® (NAR) both offer certification programs for green agents. Together the two programs have certified nearly 5,000 brokers, and, chances are, there is one in the community where you’re looking to buy. “Not only can certified realtors help you understand a home’s features, they can also make you aware of resources and credits that may be to your advantage,” says Al Medina, Director of NAR’s Green Designation.
With the passage of the American Recovery and Reinvestment Act of 2009, a host of new tax credits for green building and home improvements became available, and you may be able to request green upgrades as part of your contract on a new home or roll green home improvements into your mortgage. The Federal Housing Administration’s 203(k) program is one option that offers energy efficient mortgage add-ons, though many lenders aren’t aware of it. A real estate agent certified in green housing can make sure you’re aware of these resources and even help you educate your mortgage broker.
Tips for Buying Green:1. Work with an agent who has been certified in selling green real estate
2. Look for third-party certifications, such as LEED for Homes or Energy Star®
3. Request an energy audit along with a home inspection
4. Evaluate cumulative long-term savings in energy usage vs. the home’s list price; often green homes sell higher because they’re cheaper to live in
5. Educate yourself on local building codes—sometimes features marketed as “green” are actually requirements of the local codes
6. Ask your lender about special energy efficient mortgages
7. Request green upgrades to a conventionally built home as part of the contract
An affordable way to check a home's efficiency before buying it is to request an energy audit, which includes a blower door test to evaluate potential air leaks. Photo courtesy NREL
MAKE A GREEN EVALUATION
Of course, if you don’t have an agent certified in green housing, you can still make some evaluations on your own. Consider requesting an energy audit. They generally cost anywhere from $300 to $500. The auditor, in addition to inspecting the home for its energy efficient features, will also perform a blower-door test, which provides a pretty accurate picture of just how tight a home’s building envelope is.
Stovall considers the building envelope the most important home feature to consider. “How is it sealed?” he asks. “Insulation can be hard to measure, so we’re big fans of energy audits.” The most efficient HVAC system in the world won’t do you any good if your new home is riddled with air leaks and suffers from poor insulation.
Other often overlooked features that can have a big impact on a home’s efficiency are landscaping and location. Will the residence’s lawn require a lot of irrigation and maintenance? How close is the residence located to public transportation or to your workplace? “You may find a great green home in an outlying area,” Stovall points out, “but what are your transportation costs going to be?”
Most people who buy green homes do so at least in part to save money. So even if you pay a little more on the front end, you might be saving big in the long run. “The cost of living in a home is something to consider,” Stovall says. “What will be the cost of utilities? Think about that as well as your mortgage, insurance, and taxes.”
Just because a home is green, however, doesn’t mean it will necessarily cost more than its equally sized, conventionally built neighbor across the street. “You can only sell your house for what the market will bear,” Stovall points out. “Just because a house has $50,000 in solar panels, that’s not necessarily going to make it sell for more.”
SELLING GREEN
That’s one reason anyone looking to sell their home in the current market shouldn’t necessarily expect green features like a geothermal HVAC system to make a big impact on price. “Green upgrades may have some impact on your ability to sell,” says Marotte, “but don’t expect to get a dollar-for-dollar value.”
“When someone is buying a home, he or she sets up a price range in which they’re looking,” Stovall adds. “They’re not going to spend more on a house just because it’s energy efficient, but they might buy a smaller home that is energy efficient.”
That being said, sellers can’t expect to sell their homes for more per square foot just because they have green features in their residence. Buyers are going to be looking for proof, and that proof often means third-party certification. And third party green building certification typically only comes with new home construction.
Stovall says you shouldn’t expect a real estate appraiser to help you up the value of your home either based on its alternative energy systems or newly installed energy efficient windows. “The appraiser community isn’t yet allowed to consider green components separately,” he explains. “Home value is based on the market. There are no value add-ons for geothermal HVAC, for example.”
Nevertheless, you’ve probably got a better chance of drawing a buyer quicker with a green home. “Buyers are typically selecting green properties more readily than the ones down the street for the same price, so there is value in the purchaser’s mind,” Stovall says. He also points out that green homes tend to sell faster. “If average time on the market is six months, it makes a difference to have a stand-out house that sells in 45 days instead.”
Deborah Huso is a frequent contributor to ChesapeakeHome. For more of her coverage of green housing and energy efficiency visit ChesapeakeHome.com
Contacts:
Coldwell Banker Residential Brokerage (Baltimore City): cbmove.com or 410-327-2200 (Residential and commercial real estate office in downtown Baltimore)
EcoBroker International: ecobroker.com or 800-706-4321 (Green designation trainer and certifier for real estate professionals)
The Green REsource Council: greenresourcecouncil.org or 800-498-9422 (National Association of REALTORS® program promoting green designation for real estate professionals)
Resources:
Federal Housing Administration 203(k) Program: hud.gov/offices/hsg/sfh/203k/203kabou.cfm (Information on obtaining mortgages that allow for energy efficiency improvement add-ons to home mortgages)
Listed Green® Homes: listedgreen.com (MLS for sustainable, energy efficient properties)
National Renewable Energy Laboratory (NREL): nrel.gov or 202-488-2200 (US Department of Energy’s laboratory for the research and development of renewable energy and energy efficiency)
U.S. Green Building Council LEED for Homes: usgbc.org/leed/homes (Guidelines for green building that you can use to evaluate the “greenness” of houses on the market)
