Looking for a green home? Join the crowd. Sustainability is the hottest trend in real estate these days, and is expected to ramp up over the next few years. Many homebuyers would rather purchase a home that already has green features like solar panels, energy-efficient windows and native landscaping in place than have to install them later.
Until recently, the lack of standard guidelines for assessing the value of green homes has posed challenges for prospective buyers. For instance, in a neighborhood with only one solar home, how do you find comparable properties for assessment purposes? Taking sustainability into account also requires a shift in mindset toward long-term ROI. To make matters worse, it’s quite common for homes to be presented as greener than they really are (a phenomenon called “greenwashing.”) These issues can create obstacles both in determining whether and how much to offer for a home, and in securing financing from lending institutions.
Fortunately, there are things you can do to make hunting for a sustainable home much easier. Here are a few tips to help you navigate the tricky waters of green home buying.
Decide how you want to define “green”
“Green” means different things to different people. The three most common aspects of concern are:
- Energy and water efficiency. Energy- and water-saving features include such things as insulation, LED lighting, renewable energy installations and rain catchment systems. In the end, it all comes down to performance and ROI. If you can, try to determine how much the home will cost to run, and how much the home’s energy-efficiency upgrades are likely to save you over time. Past utility bills can help, but due to behavior differences the best energy-efficiency assessment tool available is an energy audit. These typically run about $500, but if energy efficiency is a high priority for you, it may be well worth the cost to make your purchase contingent on a satisfactory audit.
- Health. If health is your main concern, you will want to factor in the impact of features such as hardwood floors, daylighting and zero VOC paint. Subtract points for carpeting and materials like OSB that can off-gas unhealthy chemicals. How much value you place on this type of green feature depends on how important a healthy home is to you, but one way to do it is to consider what it would cost you to make these upgrades if they weren’t already in place.
- Environmental responsibility. If protecting the planet is important to you, you may be willing to pay more for a home that features locally sourced or recycled materials as well as other sustainable measures. Keep in mind, though, that lenders usually don’t care how sustainable the home is — so if you’re looking to get your home financed, it’s a good idea to try to pin a specific monetary advantage to these things. Fortunately, there is a tool for that (read on!)
Don’t reinvent the wheel
A new assessment form released recently by the Appraisal Institute promises to help streamline and standardize the process of green home valuation. The Residential Green and Energy Efficient Addendum allows an assessor or green homebuyer the means to systematically go through the home and inventory sustainable upgrades in six categories: site, water, energy, materials, indoor air quality, and maintenance and operation. It’s a useful tool when comparing the relative merits of homes you are considering. It can also help facilitate the process of financing your new green home.
Tap your people resources
Talking to people who know about green real estate is a great way to get to know the market. Your realtor can be one of your biggest assets in this regard. Do your best to find an agent knowledgeable about green real estate. There are green certifications for real estate agents, and that might be a good place to start. But be careful: A green real estate certificate might indicate that they’ve had only a couple hours of superficial training, so take the time to talk to them first. A better bet might be to ask around about which agents in your area are well versed in sustainability matters.
It may not occur to you to talk directly to the seller, but when it comes to green this can be a really good move. Homeowners who are truly passionate about sustainability are generally very willing to tell you all the details about why they installed particular green home features as well as all the benefits. If they don’t seem to know much about it, beware — they may not have the buyer’s best interest in mind.
Is the home green certified?
Green home certifications such as LEED have become popular in some areas. The nice thing about green certification is that it documents a home’s green status. This is proof that the upgrades are legitimate and can make financing a lot easier. However, keep in mind that certification is not the be all and end all of green homes. Many people forego having their house green certified due to the cost and time involved. Any given uncertified home with green upgrades may or may not actually be greener than one that is. You will need to investigate to compare them fairly. Again, an energy audit can help immensely.
Consider the entire property, not just the home
Location, orientation, prevailing winds, shade, sun and landscaping all can affect a home’s green score. Consider things such as native plantings vs. water-guzzling turf; the length of your commute and access to public transportation and/or bike paths; gardening potential; and whether the home site is suitable for solar or wind.
Is the solar installation purchased or leased?
Many people view solar panels as the ultimate sign of a green home. Solar definitely adds to the value of a home by an average of $15,000, according to recent research. Be very careful, however, when buying an existing solar home. That increased value is relevant for homes with purchased systems only. A leased solar system may actually lessen the value of the property.
As you can see, shopping for a green home can be a complex undertaking, but it’s worth it for many folks. Green homes typically sell for more than their conventional counterparts, and for good reason: Green home features are known for improving comfort, creating a healthier home environment and saving the homeowner money in the long run. Many of these benefits will more than cover the extra premium on the price tag. Plus, when you purchase a home that’s already equipped with solar panels or other sustainable perks, you can skip the hassle of installation — and just waltz in and enjoy the benefits. Overall, a pretty good deal … don’t you agree?
Ryan McNeill is the president of Renewable Energy Corporation, a Maryland-based solar energy company that is committed to installing quality, American-made solar panels and solar energy products.