By Sandra K. Adomatis, SRA, LEED Green Associate
The AI Reports® Residential Green and Energy Efficient Addendum has a new look and enhancements that make it more useful in the real estate industry. As building science changes the way homes are built, the Addendum also must change to remain relevant.
The appraisal form 1004 used by the mortgage industry does not address the current building methods or terms, and the use of the Addendum empowers appraisers to meet the appraisal standards in describing the property type and relevant characteristics.
Here are four updates that have been made to the Residential Green and Energy Efficient Addendum:
- Future potential auto-population of the MLS. If the Addendum is mapped to the Real Estate Standards Organization dictionary, it can be used in auto-populating the fields in the MLS. When the builder, energy or green rater and/or solar installer completes the Addendum, the data should be more accurate and result in better figures for the appraiser to use in selecting comparables. It also likely will lessen the liability real estate agents and appraisers are subject to in listing or valuing these properties. While auto-population is not yet in play in most of the 668 MLSes, it will no doubt be coming your way, and AI is at the forefront of the valuation profession by offering a RESO-compliant Addendum.
- Mapping ability. As more appraisers use the Addendum in their appraisal reports, it is important to ensure that it is mapped to the Mortgage Industry Standards Maintenance Organization to allow the secondary mortgage market to extract data from it when the appraisal report is uploaded.
- Multiple authors. The Addendum now allows for multiple authors completing the pages that apply to their specialty. For instance, the solar installer would complete the solar page. The updated Addendum lists batteries to the solar page because as the price declines and the innovation increases, appraisers will see more energy storing batteries in homes.
- Raters would complete one or both pages that apply to the ratings. The data is rearranged to line up more closely with the real estate industry’s MLS data. You will notice a few terms are removed that were not as accessible in the market, and some new features are included, such as electric car chargers.
The Addendum is gaining popularity and now, due to the updates, has a much wider use. It is being used by agents in marketing homes, by appraisers to supplement the current outdated appraisal forms and by borrowers to alert lenders that the property deserves an appraiser with knowledge of this property type. AI’s book, “Residential Green Valuation Tools,” has a section with resources for completing most of the features, and a guide on completing the Addendum is scheduled for release in early 2018.
Appraisers should send the Addendum to property owners before inspecting the home. Ask that they have it completed by the builder, rater, solar installer or a combination of these professionals. If property owners understand that appraisers need this data to understand what is behind the walls, they can provide the Addendum, and the work can be more complete.
Sandra K. Adomatis, SRA, LEED Green Associate, is a nationally recognized expert on green and energy-efficient valuation. She has developed residential green appraisal courses and seminars for the Appraisal Institute, and is the author of the AI-published book “Residential Green Valuation Tools.” Follow her on Twitter at @sadomatis.