How Important is HERS to Appraised Value?

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By Sandra K. Adomatis, SRA, LEED Green Associate, and Ryan Meres, RESNET program director

Most builders and sales agents admit that in the homebuying process, the decision is usually all “hers”! That’s also true in the valuation process of a new construction home that is touted as an energy efficient or green home: a key part of the process should be HERS – the Home Energy Rating System report.

An appraiser will have limited knowledge of the energy efficient features without the Home Energy Rating System report. Appraisers are not trained in building science and energy evaluations. They do not carry a blower door, duct blaster or infrared camera in their bag of tools when inspecting a home. However, the appraiser can rely on an independent, third-party opinion of the home’s energy efficiency by understanding the home’s HERS rating.

The HERS Index was created in 2006 by the Residential Energy Services Network, known as RESNET, and has become the gold standard for rating the energy efficiency of a home. A HERS rating is based on a scale from 0 to 100+, where a lower number means the home will be more energy efficient. A HERS Index score of 100 represents a home built in compliance with 2006 energy efficiency standards, while a score of 0 represents a home that produces about as much energy as it consumes on an annual basis.

While more MLSs are seeing the HERS searchable field populated, that is not the only place appraisers, agents or buyers can find the energy rating. RESNET and the Appraisal Institute will be launching an Appraiser Portal, which is a new online portal that will allow AI professionals focused on residential valuation to access important information about the energy efficiency of more than 2 million homes across the U.S. As buyers become more aware of how useful the HERS rating is to their buying decisions and estimating monthly energy costs, sales data will quickly show why a property sold for more with a low HERS rating compared to a similar house with a higher HERS rating.

Appraisal Institute Portal Screenshot

View a short video that explains the portal here.

For new construction, the appraisal is typically done from plans and specifications when a mortgage is required. Because a Confirmed Rating, which is included in the Appraiser Portal, is not possible until the house is built, the appraiser usually never sees the HERS Rating – and therefore never considers energy efficiency as a feature to be analyzed.

This will change as the secondary mortgage market guidelines continue to change with more emphasis on energy and green features. Fannie Mae, Freddie Mac, and FHA already require the appraiser to describe and analyze energy or green features. What better way to describe and analyze than to have a HERS Rating that takes the guessing out of the opinion!

To kick off the launch of the Appraiser Portal, RESNET and the Appraisal Institute are co-hosting a webinar for AI professionals at 2 p.m. EDT March 28. A few days prior to the webinar, all AI professionals focused on residential valuation will receive an email with a username and password to access the portal. The webinar will provide an overview of valuing green and energy efficient homes and a demonstration of how to use the new portal.

Register to attend the webinar here.

Adomatis 2017Sandra 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.   




Ryan Meres headshotRyan Meres, RESNET program director, has 10 years of experience in energy efficiency, energy policy and building energy codes and has published more than two dozen case studies, reports and resources on those topics. He is a LEED Accredited Professional, an ICC Certified Residential Energy Inspector/Plans Examiner and holds a bachelor’s degree in architecture from the Savannah College of Art and Design. Follow him on Twitter at @RyanMeres