Energy Costs Effecting Property Values
When applying for a mortgage the lender never asks detailed questions about monthly energy costs, nor do they factor in the energy-efficient features of the home when coming up with a value.
This is about to change.
A new bipartisan effort on Capitol Hill could, for the first time, put energy costs and savings squarely into standard mortgage underwriting equations. A bill introduced Oct. 20 would force the three mortgage giants to take account of energy costs in every loan they insure, guarantee or buy. It would also require them to instruct appraisers to adjust their property valuations upward when accurate data on energy efficiency savings are available.
Titled the SAVE (Sensible Accounting to Value Energy) Act, the bill is bipartisan. For most houses that have not undergone independent energy audits, loan officers would be required to pull data either from previous utility bills — in the case of refinancing — or from a Department of Energy survey database to arrive at an estimated cost. This would then be factored into the debt-to-income ratios that lenders already use to determine whether a borrower can afford the monthly costs of the mortgage.
Dozens of housing, energy and environmental groups have endorsed the new legislation including appraisers, large home builders, the U.S. Green Building Council, the Natural Resources Defense Council, green-designated real estate brokers, the Institute for Market Transformation and the National Assn. of State Energy Officials, and now, this real estate agent!
I love the concept of healing homes, ones that don’t leave a big, nasty carbon footprint. Those healthy homes belong in a category I like to call heal estate. And heal estate should be rewarded. Outside of how good this could be for the world of heal estate, this bill is likely to be supported by both the democrats and the republicans in the house and the senate. A rare thing in this polarized congress.
In the meantime, for homeowners who think that their energy-efficiency and cost-saving improvements should be worth something, there is no rule barring you from asking a qualified appraiser or a lender to assess the added market value of those features. In fact, you should insist that they do this, in my opinion.
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