Why/What REALTOR® and Consumers Need To Know

A guide of important tips for consumers and Realtors

What You Need To Know

  • Consumer demand for this type of home is increasing.

  • Building codes may require replacement of old materials and systems with newer, more resource-efficient parts and materials.

  • National study about the market performance of Energy Star homes found these results:

o   Less time on market – certified homes tend to sell faster

o   Price premium – in some markets, particularly those that have a high degree of environmental awareness, certified homes can demand higher prices.

o   Higher percentage of list price – even when certified homes do not command a price premium, they tend to sell at a high percentage of list price.

o   Maintain value in a down market – when home values are depressed, a certified home tends to sustain its market value better than a non-certified home.

  • Greenwashing - Falsely promoting or exaggerating the greenness of a product or service.

Energy Star Appliances

Most consumers recognize the Energy Star® label for appliances.  Energy Star® appliances lower energy costs and provides opportunities for tax credits, incentives, and product rebates.  The EPA estimates the following savings for Energy Star® appliances.

o   Refrigerators – 20%

o   Clothes washers – 37%

o   Dehumidifiers – 15%

o   Dishwashers – 10%

o   Freezers – 10%

o   Room air conditioners and purifiers – 40%

o   Water Heaters – 10 – 20%

o   Water Coolers – 45%

Buyers Should Know

  • When listing or showing homes, it’s important to note the following facts about Energy Star® applicances.

o   Although Energy Star® appliances certainly contribute to energy savings, their presence does not constitute an Energy Star® qualified home.

o   The EPA has been labeling Energy Star® appliances since 1992 and energy-efficiency standards have changed a lot over two decades; an old appliance may carry an Energy Star® label, but fall short of current standards.

Three National Home Certifications:

o   Energy Star® - awarded by U.S. Environment Protection Agency (EPA) and Department of Energy (DOE).  Key areas of inspection: thermal enclosure, HVAC system, energy-efficient lighting and appliances and water management

o   Leadership in Energy & Environmental Design (LEED) – awarded by U.S. Green Building Council (USGBC).  4 levels:  Certified, Silver, Gold and Platinum.  Areas of inspection:  envelope leakage, duct leakage, HVAC refrigerant charge, outdoor air flow, local exhaust and supply air flow.

o   National Green Building Standard Green Certification – awarded by Home Innovation Research Labs, a subsidiary of the National Association of Home Builders (NAHB).  4 levels:  Bronze, Silver, Gold and Emerald.  Areas of inspection:  site design, resource efficiency, water efficiency, energy efficiency, indoor environmental quality and building operation and maintenance.

Obligations of Real Estate Professionals:

  • Understand the benefits provided by energy efficient features and how best to communicate with clients about the efficiency.

  • Advise and refer clients to additional actions that can be taken to further impact home performance.

  • Under Article 11 of the Code of Ethics, an agent shall not undertake to provide professional services concerning a type of property or service that is outside their field of competence unless they engage the assistance of one who is competent on such types of property or service, or unless the facts are fully disclosed to the client.”

  • Input the pertinent green features of a home into the MLS to demonstrate added value.

Appraisal Institute Residential Green and Energy Efficient Addendum

  • The Uniform Residential Appraisal Report (URAR) form offers only the “additional features” line to list important resource-efficiency factors that add value. The comprehensive addendum that can be attached to the appraisal report, captures the important information about the attributes of a resource-efficient, high performance home.  Real estate professionals can use it as a guideline for pulling together documentation about the property.  You can find the appraisal addendum at www.appraisalinstitute.org/assets/1/7/interactive820.04-ResidentialGreenandEnergyEfficientAddendum.pdf

Appraised Value and Energy Efficiency

  • One way to peg the efficiency of a home is to know which energy code it was built to, or ask the homeowner if the home has earned an energy or green certification.

  • A quick address search of the Residential Energy Services Network (RESNET) HERS index database is a good place to start. If rated July 2012 or later, the RESNET registry will reveal the home’s HERS index.

  • According to the U.S. Department of Energy, homes built to the 2012 or 2015 International Energy Conservation Code (IECC) are 15-16% more efficient than those built to the 2009. They will typically be more comfortable to live in, have better overall performance, and lower monthly energy bills.

  • Appraisers won’t take energy efficient and green features into account if they are not aware of them. This is where the listing agent must be sure that such features are accurately identified in searchable MLS fields and appropriate documents are attached for potential buyers and appraisers to review.

o   What is Documentation:

  • Home certifications

  • Ratings - HERS®

  • Photographs – before and after

  • Specs and invoices

  • Utility company reports

  • Energy audits and tests (blower door, duct blaster, infrared imaging)

  • Before and after results for fixes and upgrades recommended by an energy audit

  • Energy bills before and after installation of systems such as solar PV or geothermal

  • Solar leasing documents

  • Energy Star® ratings for appliances

  • Labels – windows, appliances, certified materials

Marketing a Resource-Efficient Home:

  • Showing the home’s operating costs (utility bills) is a powerful marketing tool. Use objective information such as an energy audit because if the new owner’s consumption differs from the sellers, potential disclosure issues could arise.

  • Document green features of the community

  • Add items that may not be listed in the MLS, such as smart home features.

  • If documentation is not available, homeowners can check the Energy Star® website for data on average savings for the appliance (look up by model number)

Working with Buyers

  • Buyers won’t ask for a “green” home they will ask for benefits associated with resource-efficient and high-performance homes. When one or two of these features is high on a buyer’s list of needs and wants, consider it a signal that other green features might be important for your buyer.  For example:

o   Energy efficiency in heating, cooling, water-heating systems, lighting, and appliances (cost savings)

o   Efficient building envelope with high-performance windows and well-insulated walls, floors and attic (cost savings and comfort)

o   Big enough to meet all occupant’s needs but not too large (comfort)

o   Non-toxic building materials and finishes, low and zero VOC paints and sealants (health)

o   Good indoor air quality that reduces and removes allergens and harmful fumes (health)

o   Use of recycled materials and renewable woods (sustainability)

o   Landscaping features with native plants that thrive without chemical fertilizers or excessive watering (cost savings)

o   Walkability with pedestrian-friendly walkways connecting places people want to go (cost savings, health, ease of daily routine)

o   Location efficiency with employment and needs of daily life accessible without a car (cost savings, health, ease of daily routine)

o   Prepare the buyer to notify the lender that they require a qualified appraiser for this special type of construction

What Can Agents Do?

  • Encouage sellers to complete the Appraisal Institutes Green and Energy Efficient Addendum form.

  • Provide a copy of a complete Home Energy Rating System (HERS) report (if available).

  • If a home has solar photovoltaic (PV) system, review the U.S. Department of Energy’s Informational guide addressing solar PV.