Green building is the practice of creating structures and using processes that are environmentally responsible and resource-efficient throughout a building’s lifecycle from siting to design, construction, operation, maintenance, renovation, and deconstruction. This practice expands and complements the classical building design concerns of economy, utility, durability, and comfort. Green building is also known as a sustainable or high performance building.
Green building is here to stay. Structures that are environmentally responsible and resource efficient throughout their entire life cycle will be the norm, not the exception. New construction will be designed to take full advantage of the latest energy-efficient technology, and existing buildings will be retrofitted to be more resource-conscious. Occupants of new and existing buildings alike will benefit from operation and maintenance practices that are ecologically sustainable. Federal, state, and local mandates, often in the form of stricter building codes, will make the green movement the standard, not an elective. ‘What once was shall no longer be’—an axiom that applies not only to buildings, but also to the way they are valued. – Marshall & Swift
Matt and Troy are both certified Accredited Earth Advantage Green Appraisers
Troy has completed the Appraisal Institute: Valuation of Sustainable Buildings Professional Development Program
Valuing Green Homes for What They’re Worth
Is your green or high-performance home being undervalued? Maybe it’s not the market, but the appraiser.
The problem of homes being undervalued during an appraisal can be particularly confounding when it’s a green or “high-performance” home. Such homes are known to be more energy and water efficient and even more durable than typical homes.
Theoretically, these characteristics should add real incremental value because they can save the occupant real money over time in utility bills and maintenance. However, too often features that make a home perform better aren’t considered in the appraisal process. There are several reasons for this, but ultimately the issue is that too many green appraisal jobs are going to appraisers who simply aren’t trained to recognize the features and adjust valuations accordingly. This is unfortunate, because it hinders growth in high-performance homes. Builders and owners are simply less likely to invest in features that they aren’t sure they can recapture when they sell.
Green homes often incorporate energy-efficiency features like insulation, windows and HVAC systems that exceed the requirements of local codes. These and other features sometimes contribute to their being more expensive than otherwise comparable homes.
Challenges facing Green Appraisals
Under current guidelines, appraisers base many of their valuations on what the market is willing to pay in a particular neighborhood. With the lack of green sales data, it’s difficult for appraisers to recognize the value of an environmentally friendly home or say with certainty that people are willing to pay more for it. Essentially, they can only work with what they know. Until green homes saturate more of the market, folks who have them or want to buy them will likely experience this discrepancy.
We are seeing improvement within the areas of education and awareness. The MLS systems in all of the areas that Premier Home Appraisals cover now have green data fields that can be used when listing a property. We are starting to see an increase in their usage.
Some Northern Virginia jurisdictions including the City of Vienna and Arlington County are starting to award green home distinctions and awards for high-performance homes. We anticipate this to only be the beginning.
Some other helpful links: