Greening the Home Market in Phoenix: Looking at buying or selling a "green" home? We delve into the key considerations in the process...
Oct 31, 2013 03:33PM
● By By Eric Sells
It's no secret that housing in the Phoenix area is rebounding after a rough patch. So what is the market like for "green" homes these days? We interviewed some of the leading real estate professionals in the Valley to help educate consumers about what important considerations influence buying or selling a green/energy-efficient/sustainable home, how the process may differ from mainstream home sales and assess the different ancillary services involved, such as mortgage loans and home inspections.
Jan Green is a Realtor and certified EcoBroker with RE/MAX Excalibur Realty. Melisa Camp is a Realtor and holds Green Designation and LEED Green Associate credentials with HomeSmart Elite Group. Thomas Cochran is an Arizona account manager for Energy Inspectors. Traci Ranic is a mortgage broker at Frontier Financial of Arizona residential mortgage brokerage. All four are all members of the U.S. Green Building Council Arizona Chapter Central Branch.
“Arizona is in the top five in the nation for production-built green homes,” says Green. “We have 118,000 energy-smart homes here and a lot of people don’t know this. We’re the tops in the industry for energy efficiency.”
“The average existing home today without any green or energy-efficient upgrades has a HERS (home energy rating system index) score of about 130-180,” states Cochran. “New homes today average around 70, and a lot of Valley-area home builders are working to get this into the low 60s.”
“There is a wide degree of understanding what a green home is,” says Camp. “Some think it means the house is the color green. But energy efficiency is the number one thing people think of.”
When preparing to sell a green home, having related documentation is critical, says Green. “Green features need to be specifically listed by the homeowner, and certifications, receipts and two years of utility bills are important,” she says. “When you market your home with solar panels, the appraiser needs to see the energy usage data before solar was installed, as well as after, to demonstrate the real value. It’s best if this is documented and uploaded into the MLS (Multiple Listing Service) tab with the overall home listing.”
Placed with the property’s listing in the MLS, the Residential Green and Energy Efficient Addendum helps identify significant green and energy-efficient features within a home so that it can be credited with appropriate valuations when the property is sold. The addendum has been out since June 2011, but it’s a little-known factor that adds value. A green real estate agent knows this, but not everyone in the industry does.
“A big factor for energy-efficient homes and reducing costs for heating and cooling homes here in the Valley is reducing the air conditioning bill,” says Camp. “If the home’s utility costs are put into the MLS listing, it’s not just about whether the home is beautiful, has the right floor plan and is in the right location. Now buyers can look at the home’s operation costs, where one property may cost $20,000 a year to run and another may cost $5,000 a year to run. Once buyers are educated and understand the impact of their choices, we’re going to see much higher demand for higher performing homes.”
Still, “Some older consumers show more concern about the effect on the planet and look at the big picture of what they’re leaving behind for future generations,” says Camp.
“Next is: Does the property have recycled or repurposed materials?” says Camp. “Examples may be a 100 percent recycled backsplash in the kitchen, using carpet padding that contains recycled Nike shoes and then adhered to the floor with heat and not toxic glue that can release fumes into the air. You can very easily reuse things, like refinishing kitchen cabinets instead of buying brand-new ones.”
“When consumers visit the model homes at a new home builder, the only thing you can see is the bright, shiny new kitchen—the real energy-efficient solutions are behind the walls and not visible,” says Cochran. “You need to be able to compare one home versus another and its energy efficiency as verified by the designers and inspectors when it was installed on the site.”
“If the home has solar panels, for example, the listing agent needs to contact the appraiser before the appraiser even hits the door to do the appraisal,” says Green. “We have to know the appraiser’s familiarity with how to analyze and provide value for solar panels, and must request another appraiser if they don’t know how to do this—and provide them the Green and Energy Efficiency Addendum attached to the appraisal listing the green features, so the data can be transferred on.”
Consumers must be aware of greenwashing and companies saying they are building green homes or green features in homes without really investigating those claims. Says Camp, “Third-party certifications help, especially with new home builders. To say you are green is a big selling point today.”
Green explains, “When a home has a leased solar panel system, it’s more complicated. The buyer must qualify and have an average FICA score of 680 or better, and the sale is usually contingent upon the buyer to qualify for the program.”
When an agent walks into a home, they can identify and understand and explain the features and benefits so a consumer can make a choice. Green says, “While the home’s price may be two or three thousand more than comparable homes, but the utility bills will more than offset the cost over time, it’s important to understand this and understand the real value in the property.
“We provide a checklist for the homeowner during the home inspection phase which takes them through each room and identifies things to think about, from flooring, fixtures, equipment, water heater, etc., when the home inspection is done,” says Ranic. “The checklist provides a lot more education and value to uncover things that should go into the renovation that they may not have thought of.” Clients also receive a copy of the appraisal addendum, a five-page outline of all the things that are energy efficiency-related.
“We’ve talked to people who have sold a green home and their Realtor and other professionals did not have the addendum done and their Realtor and loan officer didn’t tell them to do it, so the seller received less in the sales price than what they could have in the full value of the house,” says Ranic. “If you are working with the right team of people, then you may realize a higher sale price.”
HomeSmart Elite Group
RE/MAX Excalibur Realty
Frontier Financial of Arizona
U.S. Green Building Council, Arizona Chapter