June 27th, 2011 8:38 PM by Taydus Taydus, AHWD, CNE, CRS, GRI
When Boulder-area residents make costly improvements to their homes, it's often with the expectation that the real estate value will reflect the updates.
Up until now, however, solar panels, energy-efficient windows and other "green" changes were overlooked on the forms that brokers use to indicate characteristics of properties for sale.
Information and Real Estate Services LLC -- a multiple listing service system that serves northern Colorado -- is the first of 18 systems in the state to officially include an addendum to its data input sheet with searchable environmental fields. Four other systems are also making the change.
"There's a gut feeling that a home with tremendous energy features is worth more than one without those features," said Mike Moger, a broker with Wright Kingdom and past president of the Boulder Area Realtor Association. "But we have to prove that to appraisers; if (we don't), those features have no value whatsoever."
The new form includes Home Energy Rating Systems, Leadership in Energy and Environmental Design certifications and solar thermal energy technology.
Boulder's green building professionals have been pushing for such changes.
"This really is a huge step in the right direction for the green building industry," said Julie Herman, executive director for the Boulder Green Building Guild. "There's been a really big gap in our industry for those green builders who have been trying to promote the idea that energy efficiency ... will pay back for homeowners."
Herman said that previously, builders could only suggest the green changes would pay back in operating costs, and the investment was never translated into potential resale value for the homeowner or financing options for the home buyer.
"Empowering home buyers with access to sustainability information about the home they are considering for purchase will help transform how Coloradans shop for homes," said Thad Kurowski, residential program manager for the Governor's Energy Office. "The ultimate aim of this effort is to demonstrate that green features are valuable, which will in turn drive demand for homes that are built and remodeled with sustainability in mind."
The addendum is designed to provide consistent data to buyers, brokers and sellers looking for green features.
"We have to be talking the same language," said Lauren Emery, head of Information and Real Estate Services. "The appraiser who looks at the house that has lots of energy efficiency (can compare it to one) that hasn't had the same kind of energy efficiency introduced. Now we're translating the values of those fields to the value of the property."
Herman said the hope is that, over time, appraisers will see how the energy-efficient homes sell, in turn helping buyers get better bank loans for them.
Multiple listing services in Seattle and Portland have included green fields. David Scott, of Colorado Landmark Realtors, noted a study showing that homes listed with green features in those areas sold for 5 percent more than homes without them.
Underwriters use data provided by a home's appraisal to determine if they agree with the final estimated value. With the addition of green fields, the data sheet tells a more complete story.
"This information will assist us as we go forward, hopefully, with additional lending products," said Elizabeth Million, home loan manager for Bank of America.
National legislation may soon follow suit. Federal loan agencies would be required by the Sensible Accounting to Value Energy Act, if it's passed, to assess the expected energy costs for mortgage loan applicants.