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How to make Energy Efficiency Improvements Visible

Updated: 4 days ago

How to make Energy Efficiency Improvements Visible in the Real Estate Market and improve the value of your property

Consumer demand for energy efficient homes that feature lower energy costs, greater comfort, and other benefits, has been growing steadily during the past decade. The success of energy efficiency programs in markets across the country has contributed to a growing inventory of improved existing homes. Yet, it seems that there isn’t a connection currently existing between the energy efficiency program implementer, the real estate community, and the home buyer and seller. Energy efficiency programs have not found ways to transmit consistent, standardized data about energy efficiency features in existing homes to the real estate industry so that these features can be taken into account by buyers, appraisers, lenders, and others during the home sales transaction. A property owner could benefit from having added energy efficiency improvements to his or her property when reselling the property, as most of the improvement can change, in a positive way, the value of the property.

Making information about energy efficiency improvements visible to home buyers and others involved in a home sale transaction will play a crucial role in ensuring that improvements are fairly valued at the time an existing home is sold. Growing inventories of existing energy efficient homes create an opportunity for the energy efficiency and real estate industries to collaborate and help home buyers and sellers understand the fair value of these improvements and also, helps establish what premium (if any) markets place on energy efficient existing homes.

As the system is not quite coordinated and the program implementer and the real estate community are not always acknowledging the energy efficiency improvements, the homeowner must make sure, for the time being, that upon completion of improvements to an existing home, the homeowner should document the improvement (keep documents pertaining to the improvement, under the form of receipt, guarantees, government approved certification, program implementer documentation, etc…). The contractor and homeowner should prepare and keep a complete, detailed list of the energy efficiency improvements made to the home with their accreditation. If you bought energy efficiency appliances or accessories which are considered part of the building, therefore are to be included in the sale of your property, keep your paperwork (for example; appliances with EnergyStar accreditation, energy efficient alarm system, HVAC, air conditioner, etc…)

When planning to sell your energy efficiency improved property, do not take for granted that the realtor knows, make sure to inform your realtor and provide him or her with a copy of the list and details and when available, add a copy of the government issued certification for all energy efficiency additions made to the property. Make sure this information is added to your MLS listing as it may translate in added value to your property.

Ensure that the data about home energy efficiency improvements are incorporated into the appraisal process whether you are selling or refinancing the property. Remember, these improvements could have an impact on the value of your property.

There is a growing demand for newly constructed homes with energy efficient features. Studies in California and North Carolina show that newly built energy efficient homes trend toward shorter sale times and/or higher prices than comparable code-built homes. A study by the National Association of Home Builders found that ENERGY STAR® appliances and the ENERGY STAR® for New Homes label were ranked “very important” by 94 percent and 91 percent of new home buyers respectively, putting them both in the top five “must haves” among 120 features.

The demand for energy efficient characteristics in existing homes is growing as well. The NAR annual Home Buyer/Seller Profile found that 87 percent surveyed said a home’s heating and cooling costs were “important” or “very important” regardless of the age of the home. The energy efficiency industry has been working to supply this rapidly growing demand.

Currently, energy efficiency is evolving and considered a novel advancement in the housing inventory. Some of these homes may receive a premium at resale or refinancing, if they are carefully documented. But if supply of these homes continues to grow and starts to represent 20 and ideally 50 percent or more of the market, energy efficient home sales will be easily compared with other recent sales and a premium (if any) will become much more visible in the market. As the inventory tips over 50 percent of the market, the homes without efficiency improvements will sell for less because they are considered non-conforming compared to the overall inventory of homes. Both appraisers and real estate agents need data to confirm the inventory of energy efficient homes in the local market and how these general benchmarks apply.

The energy efficiency industry and the real estate community are now starting to collaborate, as Energy efficiency programs have upgraded an unprecedented number of existing homes, fueled by the DOE’s Better Buildings Neighborhood Program grants and other initiatives. The volume of transactions will grow as the market rebounds. The time is now for energy efficiency programs to collaborate with real estate partners to create an infrastructure that makes efficiency improvements to existing homes visible in the real estate transaction. The role of the energy efficiency industry is to increase the number of existing energy efficient homes in the marketplace. However, energy efficient organizations and programs also need to develop strategies to communicate information about these homes to the marketplace, and to support training that will allow real estate professionals to understand and use this information during the sales process so that the value of the energy efficient home is no longer questioned or misunderstood.

This will enable buyers and sellers to come together in an informed market and captures any contributory value for energy efficiency improvements. As a premium emerges, this will encourage homeowners to invest in these improvements because they understand the potential for capturing the value at the time of sale.

Energy efficiency programs will move together to a standard path where the contributory value of energy efficiency improvements is visible, triggering an increase in the number of existing energy efficient homes across the U.S.

Ref: 2013 CNT Energy and the National Home Performance Council – “Unlocking the Value of Energy Efficient Home”


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