The following post is by Kathleen O’Brien:
Last month in the DJC Green Building Blog, I discussed the smart move local leaders are making to help monetize social and environmental benefits available from real estate investment in new Living Buildings. But getting true value out of existing buildings built to more established green building standards can still be a challenge.
Even when major multiple listing services (MLS) incorporated environmental/green (e-cert) checkboxes were introduced for existing green homes in 2008 — and this region was the first in the nation to do so — the appraiser would often end up valuing the home just as they would any other home. So the added effort, and financial premiums invested in the home, would not be acknowledged. What a disincentive!
Two things were still needed to move the needle— credible data on the premiums for green buildings, and high quality education to produce appraisers competent in this building type. Not surprisingly, our region has been the first to coherently address these needs.
The Green Building Value Initiative — a collaborative effort of the Northwest EcoBuilding Guild, Built Green, Earth Advantage, and the Cascadia Green Building Council (GBC) — worked together between 2007-2009 hiring appraiser consultants to produce the first credible analysis identifying premiums for commercial buildings and green homes. Researchers were able to analyze green home sales because of the e-cert boxes on MLS forms. The resulting report and case studies for the residential sector are readily available from Earth Advantage Institute or SEEC LLC. The resulting report for the commercial sector is available from the Cascadia GBC.
SEEC and Earth Advantage are also addressing the second need head on for the residential sector. Both offer highly respected appraisal education. As a result there are now practicing appraisers that understand green building certifications and can effectively appraise homes that have earned them.
True story: Fiona Douglas-Hamilton, principal of SEEC, reports that the homeowner of a Built Green 5-star home (the highest certification level in that program), hoping to refinance, recently met with an appraiser to get their home valuated. As advised by SEEC, the homeowner had prepared a packet to give the appraiser. Upon review, the appraiser declined the job, saying she was not knowledgeable enough about Built Green. The Appraisal Management Company (AMC) then made contact with SEEC, which maintains a list of appraisers who have completed their continuing education courses on valuing green homes. The homeowners were able to get what they needed.
But appraisers are not the only sector needing information for green homes to be valued correctly. What if our Built Green home example had been for sale? It is the rare real estate broker who understands how to list correctly, let alone sell, this property type. With the recent McGraw Hill report estimating green building market share rising to 38% by 2016, we need educated brokers. There are, frankly, lots of courses for brokers on marketing green real estate and green building in general, but brokers still need something to help them prepare a green and/or energy efficient home properly for its appraisal — a hurdle every property needs to clear. There’s a new course launched this month that SEEC has created specifically for this purpose: Appraising Green and ENERGY STAR Homes: How Agents Affect the Process.
This coming fall the Northwest EcoBuilding Guild’s Olympia Chapter will be conducting a Green Valuation Symposium under the Chapter’s Vision2Action Series. Intended as a follow-up to a series of green valuation roundtables held in Washington and Idaho last year under the sponsorship of the Northwest ENERGY STAR Homes program, participants will develop action plans to resolve issues identified during the roundtables.
For someone who’s been in the green building arena for nearly 30 years, it’s a delight to see the “links” in the green building market chain starting to get fixed.
Kathleen O’Brien is a long time advocate for green building and sustainable development since before it was “cool.” She lives in a green home, and drives a hybrid when she drives at all. She continues to provide consulting on special projects for O’Brien & Company, the firm she founded over 20 years ago, and provides leadership training and mentoring through her legacy project: The Emerge Leadership Project.