Making Energy Efficient Upgrades
Visible in Home Appraisals
Shaun Hassel
Advanced Energy
[email protected]
503-477-0469
What percentage of the nation’s
total energy consumption is
consumed by buildings?
40%
RESIDENTIAL ENERGY
CONSUMPTION SURVEY (RECS)
Electricity accounts for 61% of all energy
consumed in commercial buildings
Agenda
• Introductions & Background
• Common Language
• National and Regional Efforts to Make Green
Features Visible in the Real Estate Transaction
• Demonstrate how to identify energy efficient
upgrades and better document these features
• Resources for Appraisers
Thanks for being here. Your role:
• Have fun!
• Participate
• Be honest
Don’t be afraid to ask questions!
Thanks to :
Introductions
By a show of hands:
• Western Washington?
• Central/Eastern Washington?
• Primarily residential?
• Primarily commercial?
Introductions
By a show of hands:
• Have you ever appraised an
energy efficient or green building?
• Have you every had a specific request to
complete an energy efficient or green appraisal?
• Do you maintain a green appraiser designation?
• Appraisal Institute
• Earth Advantage
• Green Valuation Specialist
Introductions
Shaun Hassel
Advanced Energy
Trainer and Consultant
[email protected]
503-477-0469
Common Language
• Green Building
• High Performance Building
• Energy Efficiency
• Third Party Professional
• HERS Rater
• LEED AP
• HERS Index
• HERS Score
What is a green building?
15
What is a green building?
Environmental Protection Agency’s (EPA)
Definition:
• Green Building: “A practice that expands and
complements classic building design concerns
of economy, utility, durability, and comfort.”*
*EPA at: www.ep.gov/greenbilding/pubs/about/htm
16
Elements of Green Building
• Site
• Water
• Energy
• Indoor Air Quality
• Materials
• Operations and
Maintenance
Valuing Green Homes, Appraiser Institute, 2009
17
High Performance Defined
• Healthy
• Safe
• Durable
• Comfortable
• Energy Efficient
• Environmentally
Responsible
INTRODUCTION
Energy
Efficiency Defined
• Energy efficiency, in its simplest form, means
doing more work with less effort.
• An energy-efficient home does the same job
as a “standard” home in your market while
using less energy.
Home Energy Rater (HERS Rater)
Duct blaster test measures the
leakiness of ducts
Blower door test
measures air leakage in
the building envelope
LEED Accredited Professional
HERS Index
In the first half of
2016, the average
HERS Score
improved to 61.
22
Questions
What is this stuff worth?
Electric Utility Investments in Energy Efficiency (2014)
State
Total $’s
% of
Electricity
Revenues
Washington
$280 million
4.2%
Oregon
$160 million
3.9%
Idaho
$32 million
1.7%
Montana
$16 million
1.3%
Customer Advocates
• Satisfaction is a feeling, loyalty is a behavior
Desired Outcomes
• Prioritize training and
job resources to assist
stakeholders in selling,
assessing and
financing energy
efficient homes,
products and real
estate services.
• Identify strategies for
stimulating demand for
energy-efficient
homes, products, and
services in the
Northwest through
partnerships with the
real estate community.
Win-win Opportunities for the
Real Estate Market
Clear & Reliable Metrics
Value Proposition
Price Premium
Sale/Rental
Price
$
Time on
Market
National Initiatives & Research
Home
Energy
Information
Accelerator
2011 N.C. Impact Study Summary
ENERGY STAR:
• Sold for
~$3.00/ sq. ft.
more
• Achieved a
2.5% price
premium
http://ncenergystar.org/whats-new/3081
39
2011 N.C. Impact Study Summary
• Spent 90
fewer days on
the market
http://ncenergystar.org/whats-new/3081
40
Energy Savings for a 1906 Mixed Use
Commercial Building Retrofit (Wilmington, NC)
Regional Initiatives & Research
PRICE PREMIUMS OF THIRD PARTY CERTIFIED
HOMES IN KING COUNTY WASHINGTON
Geographic
Area
Certification
Mean
Premium ($)
Mean
Premium (%)
Statistically
significant?
King County
– All Areas
ENERGY
STAR
$25,276
6.3%
Yes
King County
– All Areas
Built Green
$19,192
4.7%
Yes
Tools & Resources
Questions
APPRAISERS – WIIFM?
• “Green” education and certifications
differentiate you from other appraisers
• Staying up to date on trends is important if you
want to be a market leader/expert
• Certifications, HERS Ratings and green
features (if on MLS) will help provide valuable
information and become a time saver
• Energy efficiency is an added component that
can be used comparatively with other homes
APPRAISERS -- Obstacles
• Often don’t know when we are looking at a
green or energy efficient building because:
•
•
•
•
No one tells us it is different!
The data isn’t in the MLS
No documentation is provided on site
There are no labels
• Too many “shades” of green and too much
variances within each standard
• Lack of a reliable method to value energyefficient or green homes
APPRAISERS -- Obstacles
• Challenging to find comps; currently combining
approaches (income, sales and cost) is not
really happening in residential
• Much of the problem is outside major metro
areas where there aren’t incentives for builders
to build green or enough demand to justify the
investment
• Leased solar PV systems are causing
problems for valuation of the property
APPRAISERS - NEEDS
• Market demand for green needs to catch up to
the construction market; especially owners of
existing buildings
• Listing agents and building owners need to put
upgrade details in the MLS
• Lenders need to ask for specific appraisals,
pay the appropriate fees and someone needs
to provide documented data
• Standardization of metrics, especially for
certifications and energy (look to Europe’s
Energy Performance Certification mandate)
APPRAISERS - NEEDS
• Property management companies need to
provide utility data on rental properties (Europe
has managed this over 12 countries)
• Need a trusted approach to translate the HERS
score to $ value
• More research showing the value of the
buildings over time, across markets
• Information on PV production of energy would
be helpful
APPRAISERS - NEEDS
• Appraisers need
education on green
features and how to
properly assess the
added value
• Builders and listing
agents need training on
how to fill out the green
fields and addendums
Buyer/Lender Perspective
“The use of an appraiser who has …access to the
appropriate data sources, and experience in
appraising specific property types …will help to ensure
that valuations are accurate and that appraisal
practices are appropriate.*
*from Fannie Mae’s selling guide, spring 2010 update
53
Buyer/Lender Perspective
“…appraisers must have the requisite knowledge to
perform a professional quality appraisal for…particular
property types. *
*from Fannie Mae’s selling guide, spring 2010
update
54
How will we identify and
assign appropriate value to
energy efficient features?
1.Things you can see
2.Certifications and labels
3.Scoring tools
4.Multiple Listing Service (MLS)
5.Educated appraisers
Energy Efficient Features
56
What is Effective Insulation?
57
ENERGY STAR Labeled
Windows
58
Tight Construction and Ducts
59
FEATURES &Hot
BENEFITS
Efficient
Water Systems
Conventional
Tankless
Hybrid
Solar Hot Water
High Performance Heating,
Cooling and Ventilation
 Costs less to operate
 More quiet than
standard systems
 Higher quality
components
 Improved comfort
Energy Efficient Appliances
and Lighting
Lighting
• Bulbs last 6-10 times
longer
• Use 75% less energy
Appliances
• Use 10-50% less water &
energy
NorthwestENERGYSTAR.com
62
3rd Party Certifications
• Training and diagnostic equipment allow a third-party
professional to confirm performance targets and verify
building details meet standards
1234 Jones Road
Anywhere, USA
Super Awesome Green Homes, Inc
Mr. Home Energy Rater
6 Months After CO
2000 square foot wine cellar
Scoring Tools
61
MLS and Real Estate
VALUE
Professionals
 More and more MLS organizations are adding
green and energy efficiency fields; these can be
helpful to buyers, agents, appraisers and lenders
 Builders, with help from the HERS rater, need to
provide documentation of features to listing agents
so they can fill in the appropriate green fields
 Seller’s agents need to populate the MLS if an
existing home has home energy upgrades or has
gone through a major retrofit or home performance
remodel
MLS and Real Estate
VALUE
Professionals
 Buyer’s agents, and builder’s sales agents,
need to be aware of green features, able to
identify them in the MLS and educating their
buyers so they understand their options
 Buyer’s agents (and the builder’s preferred
finance team where applicable) should request
a competent appraiser, one that has taken
courses and/or has experience in valuing these
type of homes
Multiple
VALUE Listing Service Example
3
4
2
1
5
Objectives of the Addendum
1. Standardize the reporting process
2. Organize the description and expand the
description
3. Provide a basis for comparable sale
selection
72
Section One: Green Features
73
Section Two: Energy Efficient Items
74
Section Two: Energy Efficient Items
(Continued)
75
Section Three: Solar Panels
76
Section Four: Location
77
Section 5: Incentives
78
Incentive Resources
www.dsireusa.org
79
Important Questions
• How do we get the attention of consumers and minimize
confusion?
• Where is the data?:
• How do we share data effectively and efficiently?
• Do we have proof that the products and certifications in the MLS
are legitimate?
• Are building really selling for more?
• How much do consumers really save in the long-run?
• Who is going to pay for the additional work?
• Filling out the green/efficiency addendum
• Completing a more complex appraisal
• Extra documentation for energy efficient loan products
Resources for Appraisers
• Appraisal Institute “Green” Resources
•
•
•
•
•
Commercial Green and Energy Efficient Addendum
Residential Green and Energy Efficient Addendum
Educational Info
Webinars
Publications
Resources for Appraisers
• What's green worth?
• Institute for Market Transformation (IMT) Green Building and Property Value
• DOE - Home Energy Information Accelerator
Resources for Appraisers
• ENERGY STAR
• BuiltGreen Washington Information
• LEED Buildings Site
• Home Energy Rating System (HERS®) Index
Questions
Thank You!
• Please contact me if you have any feedback or
questions:
Shaun Hassel
[email protected]
503-477-0469