Before you buy, sell or refinance, consider an accredited energy rating inspection.

Not only will it tell you where to plug energy leaks and how to decrease utility costs, the results can become a bargaining chip in today's energy-conscious market.

"Buyers are the ones demanding it more often right now, but I think sellers are eventually going to realize if they do something to make their home more energy efficient it will give them a competitive edge and it will sell quicker," says Greg B. Mays, president of Chesterfield,VA-based National Home Energy & Resources Organization, one of three U.S. Environmental Protection Agency-recognized national home energy rating organizations.

Unfortunately, most consumers don't learn about the inspections when the need to know is most crucial.

"The best time is when you are buying or refinancing because you can borrow the extra money, but the mortgage lending industry is doing a poor job of educating consumers. It's not really their job, but they are the only people who are getting in front of the consumer at the perfect time," says Mays, a former real estate agent, mortgage loan officer and appraiser.

The EPA says the true cost of a home is what it costs to own andoperate, not just the sticker price. Energy use is typically a home's greatest operating cost. Reduce energy costs and you reduce the cost of the home.

Not to be confused with an energy audit or home energy checkup home owners or anyone can perform to ferret out areas of energy loss and come up with general energy-loss mitigation ideas, an accredited energy rating inspection is performed by a trained specialist who will rate the energy efficiency of your home on a scale of 1 to 5 -- with the 1 rating going to the most energy inefficient homes.

An accompanying report details the monthly and annual utility savings based on any specific upgrades recommended. The report also indicates the home's value as it is rated and with the upgrades.

"The calculation is very similar to analyzing an income stream for an investment property when preparing an appraisal on such," says Mays.

The official energy rating inspection report is necessary to land an energy efficient mortgage, which lets you finance additional money for energy efficient home improvements and they help you qualify for more home buying funds if the home is already sufficiently energy efficient.

That's because lenders believe homeowners who spend less on energy will have more to spend on their mortgage -- a clear signal the lenders believe energy efficient homes are more valuable homes.

"The report that we produce for the borrower and lender details the monthly and annual utility savings when the upgrades have been made. If a seller were to have an energy rating performed he or she could certainly use it as a marketing tool," Mays says.

Unfortunately, energy efficient upgrades aren't as attractive as typical home improvements, because you often don't enjoy the visual impact of a remodeled bathroom, a new kitchen, or a master bedroom suite addition.

The League of California Homeowners says consumers also often overlook energy-conscious home improvements because cost-vs-value studies don't consider them.

"These are things that make the home more comfortable, but except for windows you don't see them," said Ken Willis, president of the league in Upland, CA.

Lenders are required to make energy efficient mortgages and the obligatory energy rating inspections known to borrowers, but few do more than shuffle the information to customers along with a ream of other mortgage papers and disclosures, says Mays who is also approaching the real estate agent industry for help.

"A two-hour class with a group of Realtors would bring them up to speed and a Realtor could say "Here's a program available to you," without any additional work on the Realtor's part," said Mays.

• To determine how you can save money and make your home more comfortable, visit EPA's Energy Star Home Improvement Toolbox.

• Get in touch with one of the three national energy rating inspection organizations to find an accredited inspector in your area.

• Perform your own energy audit online or with Mac and Windows software you can down load from the Alliance to Save Energy.

• Tighten up your home and make it more valuable.

For more articles by Broderick Perkins, please press here.

Published: March 1, 2001

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