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Energy Efficient Items worth still not recognized

By Sara Goodwin

Real Estate Appraiser with Estimation Nation Corporation

March 14, 2007 11:06 AM

"[Appraiser's] don't calculate energy improvements made to homes because standards don't exist to accurately measure the increased value from energy upgrades."

Reference: http://www.bizjournals.com/sacramento/stories/2001/07/30/focus7.html

I was reading this old article on bizjournals.com about appraiser's and energy efficient items. The fact is, if it's not a standard in the MLS listing or tax information, appraiser's are unable to make the assumption that the comparable properties do or do not have energy efficient items, therefore, we are unable to make adjustments for them in our reports.

This is a conversation that I had months back with my neighbor, Kria, who has set up meetings with real estate professionals in the area in an attempt to get energy efficient items added to our local MLS listings.

If realtors and the rest of us could just show home owners this statistic, perhaps we really could change the public:

".... Evidence of Rational Market Evaluations For Home Energy Efficiency concludes that for every $1 a homeowner saves on his or her annual fuel bill, the resale home value will jump by $20 or more."

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Dena Stevens

Rocky Mountain Realty - Canon City, CO

Putting The Real Into Realtor Since 2004

It's so nice to hear an appraiser acknowledge this is a problem. Pueblo just changed MLS systems, the energy star was dropped! Unless, it's written into the description you would have no idea what the assets of a home might be. It is ashame because a house with an energy star should sell faster and for money, in my opinion.

Mar 14, 2007 04:31 PM

Sara Goodwin

Estimation Nation Corporation - Portland, OR

Portland, Oregon Appraiser

Hi Dena -

It's a northwest thing... we're all sorta green around these parts (could be all the moss and mildew) :-) -

That is sad that there was once an energy efficient space on the mls and it is now gone. Had you seen any appraisals with adjustments for energy efficient items when it was available? Were Realtors good about adding that information into mls? Our mls spans two states and it seems as if Realtors from Washington went to a 'different school' than those in Oregon and so the information that is provided varies from state to state. It would be nice to have as much information as possible filled out on the mls forms. In fact, I think that I'll add this post to the mls group...

Sara

Mar 15, 2007 04:02 AM

Dena Stevens

Rocky Mountain Realty - Canon City, CO

Putting The Real Into Realtor Since 2004

I've heard that before, northern Calif, Oregon and Washington are much better about the green stuff than the rest of the nation. But we can all do better.

I just heard the other day our only e-star guy in town is giving up. Must not be enough work for him. And I do have a wonderful inspector that does home inspections as well as a 'energy tune up evaluation'. His business is picking up but can always be better of course.

Keep us up on all the great stuff happening in the NW!

Mar 15, 2007 07:55 AM

Maryanne McCuin

M & M Appraisal Services - Phoenix, AZ

While I agree that unless there is specific discussion in the MLS text regarding energy efficient items it is hard to know that your subject is any more of less improved than a comparable. The one thing I do make adjustments for is an upgrade on older homes to Dual Pane/Low E windows. This is a significant deal in Arizona . . . an upgrade from a single pane to a dual pane and it is something that I can clearly see from the street when I am driving my comps.

Mar 16, 2007 06:53 AM

Sara Goodwin

Estimation Nation Corporation - Portland, OR

Portland, Oregon Appraiser

Dena - That's so sad... I thought Colorado enveloped some of the 'green thoughts' too...

Maryanne - That is a very good point. I will keep that in mind in future appraisals... however my own house has the original wood frame leaded glass windows while the rest of the house has new vinyl windows and so I'm not sure it would be caught from the street... It sure isn't caught by all the window sales people that knock on my door...

I do credit for forced air/heatpump heating vs. wall unit/electric baseboard/ceiling heating as well...

Mar 16, 2007 08:48 AM

David Hintz

Accurate Appraisals & Consulting of AZ - Maricopa, AZ

AZAppraiser

In most of Arizona, energy efficient or green thoughts lean more towards heat reduction (cooling) and drought prevention (water conservation).

In addition to dual pane windows, there are other energy efficient items that can be notated from the street most of the time - solar panels, separate refrigeration and evaporative cooling units and combination units (piggy-back), water conservation landscaping materials, solar or sun screens, and light colored reflective roofing.

What realtors need to include in their listings, besides ovious exterior items, are energy efficient items included in the interior. Ceiling fans are very common, but they are not always included in MLS. Of course not all homes (older and newer) have them, but a majority do. Energy saving appliances and water conservation items are among other items that can't be seen from the street that are included inside or in the back of the property.

Different regions have different market demands on energy efficiency and all items pertaining to a particular market area should be taken into consideration by both agents and appraisers.

Mar 16, 2007 05:41 PM

Sara Goodwin

Estimation Nation Corporation - Portland, OR

Portland, Oregon Appraiser

I think that's quite true, David - I think the best way to approach Realtors, is to have the options already listed in mls so that they remember ... and so it's easier for us Appraiser's to find on the sheets :-)

Mar 19, 2007 12:04 PM

David Abernathy

Waterfront Properties & Club Communities - Jupiter, FL

Palm Beach County Real Estate

Sara - thanks and good luck leading the change in this. It would be great to have more of this type information added to the properties on the MLS. I would far rather see what is the average monthly energy bill for a property than last years tax information - which at least in FLorida can mislead potential buyers!!!

Mar 25, 2007 05:22 AM

Christopher Parra

CMP Appraisals - Portland, OR

Christopher M. Parra

Ms. Goodwin and I go way back. I think as appraisers it IS something we should consider especially since - at least in these parts - upgrading items on older homes like windows and insulation are so important. In my experience, realtors use items like this as selling points. Newer high efficient furnaces in older homes do make a difference. Now that brings us back to an older discussion between us - even if you spend $20,000 on new windows, does that mean your sales price goes up $20,000? No, because every house still has to have windows - energy efficient or not. But I do make an adjustment for some of it.

As appraisers we are to drive by comparable sales and verify these items. In the big picture does it make a difference? Well, in my experience, in most cases - yes - in older homes. You see an unadjusted sales price of several homes that are similar to the subject, usually in three distinct categories; the "fixers," the average (we did some updating over the years) and the "ready to move in" that has recently been repainted inside and out, remodeled/updated floors, bathrooms, kitchens, windows, roofs and furnaces etc. Usually, there are distinct price differences. And, if so, what is the $ amount in the energy efficient area? I can usually quantify to a market recognized dollar amount.

Just my $0.02 (unadjusted in the energy efficient items)

Mar 28, 2007 05:05 PM

Sara Goodwin

Estimation Nation Corporation - Portland, OR

Portland, Oregon Appraiser

Hi David - Thanks... I'm not sure how in depth I will get into the cause, but I'll do what I can....

Yes, Mr. Parra, but they don't exactly put information about their utility bills in the report, do they? I've know renters or buyers to ask this when occupying a new residence...

As I've mentioned before on AR and to several window sales people that frequent my house.... I do have updated windows throughtout my house, with the exception of the two front windows (to keep character of the house)... Most likely, Appraisers like us 'shooting comps' would miss that, just as easily as a Realtor might miss a 'on demand' water tank or upgraded insulation in the listing. It just seems like it would do a justice to us all if these things were listed in MLS. All I'm proposing is that MLS add some fields for the sake of buyers and re-financers to show value and merit.

Mar 28, 2007 05:47 PM