THE THREE TOP PROBLEMS GETTING AN APPRAISAL FOR GREEN BUILDING

Green-building pays off when annual utility cost savings offset the somewhat higher initial cost.  However, getting an appraiser to help you secure a home loan for Rapid City real estate that includes green-building features, may be difficult for three reasons:
1. Lack of education by appraisers about how to estimate future utility cost savings
2. Lack of verifiable data for appraisers to consider in "comparables"
3. Lack of sophistication of MLS' and local realty boards to know how (or want to) value green building.

According to Kevin Morrow, senior program manager for the National Association of Home Builders' green programs, "If a builder builds a home that may cost a little more than an identical home next door, yet it has all kinds of efficiency features that will eventually mean that it's less costly to operate, it often won't appraise [for a higher value]."  That was reported by the Christian Science Monitor April 7, 2010.

The Monitor went on to describe how Michael Chandler of Chapel Hill, NC "had to go back and strip out some energy features like the solar water heaters and cut back on insulation and add square footage, making it bigger and less [energy-] efficient to get to the $400,000 appraisal," 

I am a nationally certified EcoBroker real estate agent, the only one in the Black Hills, Rapid City, SD area.  I hold a Ph.D. in mechanical systems engineering and a background in solar energy systems evaluation and design.  So, of course, I am disappointed that most local realty boards do not provide for agents to enter data about the green-building features of homes they list for sale.  For example, it would be great if a buyer could check the online data when searching for homes, to identify those with legitimate cost-savings features like solar electric, geothermal, passive solar, solar hot water, high-R walls, etc.  (Those miniature "me-too" single-family wind turbines are cute.  But at $15-$35,000 with an ROI triple the length of warranty, they are of questionable economic or engineering utility.)  

As an example, I recently represented an extreme green home for sale, which incorporated straw bales for insulation.  The R-value of a 16" thick straw bale is enormous.  The structure is first constructed as stick-built on-site of conventional lumber as the skeleton, then straw bales are packed in between the wall frames.  The bales are then covered with concrete stucco, providing fire protection.  In  fact, contents of straw bales homes are often considered safer in forest fires than conventional stick built homes.

But the problem was, some insurers were naively simplistic ("You mean straw bales like the Three Little Pigs"?  Isn't that flimsy and a fire hazard?!)  The appraisal can be even more problematic, particularly when it comes to nearby com parables. Disclosure:  I am developing plans for a hybrid Earth-berm/strawbale home for my wife and I.

The lesson in all this?  Green-building of legitimate green homes is great for the owner occupant and for Mother Nature.  But only if the home is insurable at reasonable cost and if a lender can get underwriting for the loan.

If you have questions about green-building, green homes, environmentally friendly homes, green loans, solar thermal, geothermal, or passive solar in the Black Hills and Rapid City, SD area, I can be contacted at www.LeeAlleyRealEstate.com.  

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