Green-certified homes produce more green

Does a green-certified home really pay off?

A recent UCLA study considered homes sold in California from 2007 through early 2012. Of the 1.6 million homes sampled, 4,321 sold with Energy Star, LEED or GreenPoint ratings and certifications. Controlling for factors such as location, when the home was sold and its amenities, the study found these energy-efficient, green-certified homes sold for 9% more than non-certified homes.

The payoff was greater in areas where green efforts were already supported by community members (measured by the number of registered hybrid vehicles)and in warmer areas (where energy use adds up quickly due to the constant necessity for air conditioning), such as the Central Valley.

Despite the small number of green-certified homes identified in the study, some relish the idea of a mandatory, industry-wide rating scale for energy efficiency. The National Association of Home Builders encourages such a mandatory system, since full disclosure of energy ratings would benefit new homes, as newly constructed homes are required to be more energy efficient.

Related article:

New energy efficiency standards for building construction

first tuesday take

Should seller’s agents be mandated to disclose a home’s energy rating, as encouraged by the National Association of Home Builders?

No. While seller’s agents have a duty to disclose all known facts which may have an adverse effect on the value of the listed property, a property’s energy rating does not (and should not) make the list of mandatory disclosures. To the contrary, the disclosure a property has no energy rating would be the appropriate adverse effect disclosure.

On the other hand, a mandatory disclosure of home operating costs(which is readily available from the positive equity seller) would be most practical and informative for comparative home shopping purposes. A home’s operating costs directly indicate how much money the buyer will spend heating and cooling the property over the long haul.

A green rating sticker, which mostly reflects the social value of buying green, discloses little about monthly costs to heat and cool a property.

Only 0.3% of the homes surveyed in the UCLA study actually had green certifications, so the value of these certifications applies to very few agents. It’s likely the certified homes selling for 9% more were either bought (already updated) at a higher price than comparables or updated to be energy efficient at the home seller’s expense (and massive government subsidies) and reflect their greater investment.

However, a savvy agent can compare the savings of energy efficient homes, demonstrating to buyers that the home’s potentially higher resale value, along with the monthly energy savings, probably now justifies the greater price. [See first tuesday form 318]

Buyer’s agents interested in providing the best service for their green-minded clients might well advise their buyers to make an acceptable energy audit contingency in the purchase on the property they have under contract.

The energy audit is a cost-efficient way for a seller’s agent to provide concrete information to buyers on a home’s operating costs, without having to meet strict requirements for green certifications. This is a demand market, the supply of listed housing answering to the drummer with the cash.

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