Steve Hargreaves from CNN Money interviewed me this week as part of an investigation he was doing into a proposed federal program entitled "Home Star" (or "Cash For Caulkers" as the media has coined it).  He wanted to know my thoughts on whether home retrofitting for energy efficiency would substantially add to the bottom line at resale.

You can the read the article here:

Home energy retrofits: The bottom line - CNN Money.com

I'll be writing a complete analysis of the "Home Star" program in an upcoming post.  In the meantime, my discussion with CNN centered around 3 major roadblocks to the success of an incentive program for green retrofits, specifically as to the resale potential of homes:

1) The homebuyer's priorities - home buyers today are not focused on the "tech" of a typical home.  The example I give is that of a development with homes all in a given range, say $250,000.  Let's say there are a few homes for sale in that neighborhood and one of them has energy upgrades such as weathersealing, insulation and HVAC improvements.  The typical buyer will NOT take into consideration that house as being better; it's still going to be all about location, floorplan, style and the usual factors.  Even if the buyer DOES prefer the energy saving potential of that one house, it's unlikely that the seller will be able to command a significantly higher price than his comparable neighbors.

2) The home appraiser's priorities - to my knowledge home appraisers are by and large unskilled in evaluating green homes to any degree, let alone traditional homes with green improvements.  Residential appraisal reports (of which I have seen many) do not contain provisions for green compensating factors.  Odds are that that one retrofitting home will be valuated based on traditional scoring against recent sales and features such as central air or finished basements,etc.  The home appraiser's job has gotten harder in recent months as well, as lenders demand more detailed and fact-based reports to support their loan amounts.  These issues work against an appraiser giving a home a meaningful value reflective of the retrofit work.

3) The homeowner's priorities - The discussion at the consumer level still revolves around ROI for any given green home improvement, like it or not.  I know that many in the green homes industry would rather not have this conversation, but the good news is that return on investment times ARE coming down as technology and availability drive down costs for materials and installation.  Still, I see the high costs as a significant barrier to consumers otherwise interested in taking the plunge, despite government incentives.

There is still a lot of work to be done to help the residential homeowner get their money's worth.  I would like to see more appraisers getting on board - the Appraisal Institute offers a green residential valuation course that would be a good place for appraisers to start.  With the assurance of a higher appraised value versus comparable homes, a homeowner will be far more likely to invest personal funds in a retrofit project.  More consistent marketing of energy efficient features (I would not recommend the use of the word "green" without professional certification in hand) will help raise awareness in selling agents and their buyer clients.  These changes in the industry, I think, would help ameliorate the problem of ROI for homeowners.

Whether the "Home Star" proposals fly or not, the future of the home retrofit industry hinges on the free-market principles of supply & demand - as it should.

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 For Lancaster PA homes for sale click here. Jeff Geoghan is a top real estate expert in Lancaster County, PA, and an involved community member. Jeff's work has been featured in the Lancaster Newspapers, WGAL Channel 8, PA Business Journal and Wall Street Journal. Jeff's blog on Lancaster County and its homes is nationally-featured. Contact Jeff for more help with your Lancaster PA Real Estate needs. Jeff is also a photographer - view some of his lancaster pa photography portfolio. Comments are welcome!