The Appraisal Institute’s Residential Green and Energy Efficient Addendum is intended to help analyze values of energy-efficient home features and is the first form of its kind intended for appraisers’ use. The Appraisal Institute originally issued its form in 2011 as an optional addendum to Fannie Mae Form 1004, which is the appraisal profession’s most widely used form for mortgage lending purposes. [Read more…]
An academic study released last year found that homes with green labels provide a market premium of 9 percent compared to similar homes without the labels.
The study, “The Value of Green Labels in the California Housing Market,” examined how green and energy efficient features impacted the sale price of homes in California. It was published by Nils Kok, Maastricht University, Netherlands/University of California, Berkeley; and Matthew E. Kahn, University of California, Los Angeles.
The nation’s largest professional association of real estate appraisers has signed a memorandum of understanding with the state of Colorado to promote a wide use of tools to document home energy features. The groups also will jointly develop valuation studies.
The Appraisal Institute will work with the Colorado Energy Office to identify Colorado market-specific trends in energy valuation. The organizations plan to collect information about the impact of energy efficiency on the residential real estate market and to share that data as trends emerge.
The memorandum of understanding, signed by Colorado Gov. John Hickenlooper and Appraisal Institute CEO Frederick H. Grubbe, seeks to address a need for data in valuing homes with green and energy-efficient features. In addition to aiding appraisers, that data can help consumers decide which improvements to pursue as they seek to maximize the value of their homes. [Read more…]
The Appraisal Institute sent a letter to the Federal Housing Finance Agency Sept. 13 urging it to integrate a credible appraisal process into any plan involving loans backing properties with sustainable or energy-efficient features.
The letter was in regard to the Property Assessed Clean Energy program whose purpose is to encourage residential property owners to make energy-efficient improvements to their residences and finance those improvements through a tax lien. [Read more…]
Energy-efficient home features continue to increase in popularity among consumers, yet placing a value on these “green” products can be challenging.
The potential value of green features depends on the improvements made. Some green renovations, such as adding Energy Star appliances and extra insulation, or Energy Star-qualified windows, are likely to pay the homeowner back in lowered utility bills relatively quickly.
When appraising a green home, the appraiser evaluates supply and demand and competition in general, as well as specifically for green homes. Is the subject home the only green home in the area? Are typical purchasers in that market area knowledgeable about green building? Are they willing to pay more for a green home? Or, given the choice between a green home and a non-green home, are they more willing or likely to buy a green home? [Read more…]
With spring weather arriving, consumers may be thinking about undertaking a home improvement project. But not every renovation or remodeling effort will pay off when the owner sells their home.
According to Remodeling magazine’s “2011-12 Cost vs. Value Report,” conducted in cooperation with Realtor Magazine and the National Association of Realtors’ HouseLogic.com, the projects with the highest expected return on investment are siding replacement, entry door replacement, attic bedroom addition, kitchen (minor remodel) and garage door replacement.
Consumers should be aware that cost does not necessarily equal value. Here are some other tips for homeowners from the Appraisal Institute: [Read more…]
The Appraisal Institute this week announced its support for a new tool that will assist appraisers and others seeking to establish the value of a property’s solar-powered features. The spreadsheet was developed by Solar Power Electric and Sandia National Laboratories.
Finding a way to value residential and commercial properties with photovoltaic (PV) installations is a growing challenge facing the nation’s real estate industry. As more homes and businesses turn to solar power, the need grows for ways to develop reliable and credible opinions of value of the installations and the power they generate.
PV Value works within a Microsoft Excel spreadsheet to determine the value of a PV system. This is done using an income capitalization approach whereby the energy value is calculated over the lifetime of the PV module warranty. Inputs to PV Value include the zip code of the location, local utility rate and characteristics of the PV system. An appraisal range of value estimate is returned as a function of a pre-determined risk spread. This tool can be used to value a PV system at any location in the U.S. through its interface with the National Renewable Energy Laboratory’s PVWatts simulator. [Read more…]
The Appraisal Institute long has been the industry leader in green valuation. Along with creating and issuing the Residential Green and Energy Efficient Addendum in September 2011 and strongly supporting the federal Sensible Accounting to Value Energy (SAVE) Act introduced in October 2011, AI has been and remains at the forefront of energy-efficient and environmentally friendly valuation practices and thought leadership highlighted by the following:
Based on its benefits for consumers, the Appraisal Institute fully supports the Sensible Accounting to Value Energy (SAVE) Act, which is federal legislation recently introduced by Sens. Michael Bennet, D-Colo., and Johnny Isakson, R-Ga., that would improve the mortgage underwriting process by ensuring energy costs are included.
Under the SAVE Act, the U.S. Department of Housing and Urban Development would issue updated underwriting and appraisal guidelines for any loan issued, insured, purchased or securitized by the Federal Housing Administration or any other federal mortgage loan insurance agency. [Read more…]