Bling, Ka-ching and Green in New Appraisals
A hypothetical look at two homes of the same vintage, in comparable condition, in the same neighborhood -- with some key differences:
- The first has an addition and has never had an energy audit. The second has no addition but did have an energy audit and subsequent insulation improvements.
- The first has high-end appliances that are a decade old; the second has all new Energy Star-rated appliances.
- The first has its original single-pane windows; the second has double-pane windows with solar shades.
- The first has elaborate landscaping and built-in sprinklers; the second has low-maintenance natural landscaping.
- The first has noticeably higher utility bills than the second.
Could the second home -- even though it's smaller and less impressive, by some measures -- receive a comparable or higher valuation for its green and energy-efficient features? Are the features being evaluated the right ones?
In response to the first question: possibly. Last week, the Appraisal Institute took the unprecedented step of providing real estate appraisers with a voluntary addendum to help analyze values of energy-efficient features. Currently, the Institute noted in a press release, "the contributory value of a home's green features is rarely part of the equation."
As for whether the features being evaluated are the right ones, green remodeler and consultant Michael Anschel, of Otogawa-Anschel Design-Build and Verified Green, gives the Appraisal Institute's new form a solid B.
For instance, Anschel likes that the form calls out R-values for locations and insulation types, separates energy efficiency from other aspects of green building, and asks about HERS ratings, utility costs and energy audits.
Anschel is disappointed, though, in the form's oversight of triple-pane windows along with the broader categories of indoor environmental quality and water conservation.
Green trainer, blogger and consultant Carl Seville, a partner at Verified Green, likes that the form asks about a home's "Walk Score" and access to public transportation. "It looks like an interesting start," he said in an email Friday, "but not unexpectedly, their priorities are skewed towards the things that people want (the bling), rather than what is really most important."
Notably, Seville, said, the form doesn't address air-sealing and overemphasizes "blingy" features such as solar photovoltaics and tankless water heaters -- features that when applied to "otherwise poorly performing buildings, they are not that much better," as he blogged in this popular post on Green Building Advisor a few weeks ago.
Anschel noted that Realtor groups "are also advocating for including the kind of tiny green features that Carl likes to call eco-bling (bamboo floors, recycled wood floor, etc). And, while some of them are in fact great things that the market values and therefore should be called out, they don’t belong in the 'green' category necessarily since they don’t address the whole-systems approach which is the core of green building."
The Appraisal Institute's new form is three pages long. Click here to download it. The first page is shown below.
Appraisers' use of the form is voluntary, according to Ken Chicester, director of communications for the Appraisal Institute. "They certainly can use it whenever they’d like," he said in an email Thursday.
"Hopefully lenders will consider it as part of the appraisal report. Not all properties will have energy-efficient features, of course, but even so, the form will help ensure comps are truly comps."