If you’re a conservation-minded homeowner and you go to the trouble, and expense, of installing a high-efficiency furnace or a truckload of insulation or other energy-saving features, you’d probably like to get credit for adding value to the place.
But that doesn’t tend to happen in a property appraisal because, among other reasons, the existing appraisal paperwork doesn’t spell out the range of features and upgrades that are increasingly available in our more green-conscious world.
Recently, however, the Appraisal Institute introduced an optional addendum form that should help some homes get credit for being green.
Sandra Adomatis, an appraiser in Punta Gorda, Fla., helped the trade group compile the form. She explained why it’s needed and how it can help appraisers and homeowners get a truer evaluation of homes that have green attributes:
Q: Why did the Appraisal Institute create this form?
A: A big complaint from builders and real estate agents has been that appraisers didn’t understand green or know to look for it in homes. The standard form used by Fannie Mae and Freddie Mac really doesn’t address green, other than two little lines for energy efficiency. I thought that (creating the addendum) would bring to the forefront for appraisers and agents that there are some things to think about.
With the new form, which is called the Residential Green and Energy Efficient Addendum, a lender can look and say, “OK, here are the special features of this house.” But in the existing form, the appraiser either wouldn’t describe the features at all or would have to do pages of written description. This is a check-box kind of form.
Q: Will its use mean that certain homes get higher valuations?
A: It might. That often depends on the area where the home is. In some markets, you may spend the money and hit a home run when you sell it because of the green features you’ve included. But in others, you might not reap as much as you hope to reap, simply because of a lack of public knowledge or appreciation.
But at the very least, this form will help the appraiser make an apples-to-apples comparison and help find homes that have sold that are truly comparable with the one being appraised.
Q: What kinds of green features does it take note of?
A: There are detailed checkoffs for insulation and the kinds of insulation used, and where it’s installed: floor, walls, ceiling, etc. It has a place to account for water-conservation features such as a reclaimed-water system, rain barrels or water-conserving landscaping.
It can detail high-efficiency windows, appliances, etc., and such systems as geothermal heating, radiant floor heating, passive solar and others.
There’s a place to note average annual and monthly utility costs. If the house has solar panels, it can describe their type and energy production in some detail. If the house has received some kind of energy certification, such as through the LEED program, there’s a place to note and explain it. Separate from utility bill issues, it also can credit a home for its access to public transportation.
Q: Is the form only for appraisers?
A: Homeowners and their real estate agents can download it from appraisalinstitute.org and fill in the information, then present it to the appraiser to be sure that he or she is aware of all the home’s energy-saving features.
Q: Do multiple listing services take green features into account?
A: More and more of them do. I have been involved with a group within the National Association of Realtors on “greening the MLS” that’s trying to get more of these features standardized in for-sale listings. For instance, as houses have changed, we’ve developed spaces within listings to specify things like cathedral ceilings. We need to make energy-efficient features more apparent in listings.
That’s one of the complaints that appraisers have had, that the MLS listings they use as a starting point in their appraisals haven’t contained this information, which makes it harder to find comparable sales. With the new form, a real estate agent can use the information in it to add to the listing.
I’m beginning to see a trend in listings. Multiple Listing Services are starting to point out that a home is green certified, and they put it in all capital letters. That tells me people want to know about these things or the agents wouldn’t make such a big deal out of it
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New form helps appraisers see green – Chicago Tribune