Making Energy Efficient Upgrades Visible in Home Appraisals. Shaun Hassel Advanced Energy

Transcription

1 Making Energy Efficient Upgrades Visible in Home Appraisals Shaun Hassel Advanced Energy

2 What percentage of the nation s total energy consumption is consumed by buildings? 40%

3 RESIDENTIAL ENERGY CONSUMPTION SURVEY (RECS)

4 Electricity accounts for 61% of all energy consumed in commercial buildings

5 Agenda Introductions & Background Common Language National and Regional Efforts to Make Green Features Visible in the Real Estate Transaction Demonstrate how to identify energy efficient upgrades and better document these features Resources for Appraisers

6 Thanks for being here. Your role: Have fun! Participate Be honest Don t be afraid to ask questions!

7 Thanks to :

8 Introductions By a show of hands: Western Washington? Central/Eastern Washington? Primarily residential? Primarily commercial?

9 Introductions By a show of hands: Have you ever appraised an energy efficient or green building? Have you every had a specific request to complete an energy efficient or green appraisal? Do you maintain a green appraiser designation? Appraisal Institute Earth Advantage Green Valuation Specialist

10 Introductions Shaun Hassel Advanced Energy Trainer and Consultant

11

12

13

14 Common Language Green Building High Performance Building Energy Efficiency Third Party Professional HERS Rater LEED AP HERS Index HERS Score

15 What is a green building? 15

16 What is a green building? Environmental Protection Agency s (EPA) Definition: Green Building: A practice that expands and complements classic building design concerns of economy, utility, durability, and comfort. * *EPA at: 16

17 Elements of Green Building Site Water Energy Indoor Air Quality Materials Operations and Maintenance Valuing Green Homes, Appraiser Institute,

18 High Performance Defined Healthy Safe Durable Comfortable Energy Efficient Environmentally Responsible

19 Energy Efficiency Defined INTRODUCTION Energy efficiency, in its simplest form, means doing more work with less effort. An energy-efficient home does the same job as a standard home in your market while using less energy.

20 Home Energy Rater (HERS Rater) Duct blaster test measures the leakiness of ducts Blower door test measures air leakage in the building envelope

21 LEED Accredited Professional

22 HERS Index In the first half of 2016, the average HERS Score improved to

23 Questions

24 What is this stuff worth?

25 Electric Utility Investments in Energy Efficiency (2014) State Total $ s % of Electricity Revenues Washington $280 million 4.2% Oregon $160 million 3.9% Idaho $32 million 1.7% Montana $16 million 1.3%

26 Customer Advocates Satisfaction is a feeling, loyalty is a behavior

27 Desired Outcomes Prioritize training and job resources to assist stakeholders in selling, assessing and financing energy efficient homes, products and real estate services. Identify strategies for stimulating demand for energy-efficient homes, products, and services in the Northwest through partnerships with the real estate community.

28 Win-win Opportunities for the Real Estate Market

29

30

31

32

33

34 Clear & Reliable Metrics

35 Value Proposition

36 Price Premium Sale/Rental Price $ Time on Market

37 National Initiatives & Research Home Energy Information Accelerator

38

39 2011 N.C. Impact Study Summary ENERGY STAR: Sold for ~$3.00/ sq. ft. more Achieved a 2.5% price premium 39

40 2011 N.C. Impact Study Summary Spent 90 fewer days on the market 40

41 Energy Savings for a 1906 Mixed Use Commercial Building Retrofit (Wilmington, NC)

42 Regional Initiatives & Research

43 PRICE PREMIUMS OF THIRD PARTY CERTIFIED HOMES IN KING COUNTY WASHINGTON Geographic Area Certification Mean Premium ($) Mean Premium (%) Statistically significant? King County All Areas ENERGY STAR $25, % Yes King County All Areas Built Green $19, % Yes

44 Tools & Resources

45 Questions

46 APPRAISERS WIIFM? Green education and certifications differentiate you from other appraisers Staying up to date on trends is important if you want to be a market leader/expert Certifications, HERS Ratings and green features (if on MLS) will help provide valuable information and become a time saver Energy efficiency is an added component that can be used comparatively with other homes

47 APPRAISERS -- Obstacles Often don t know when we are looking at a green or energy efficient building because: No one tells us it is different! The data isn t in the MLS No documentation is provided on site There are no labels Too many shades of green and too much variances within each standard Lack of a reliable method to value energyefficient or green homes

48 APPRAISERS -- Obstacles Challenging to find comps; currently combining approaches (income, sales and cost) is not really happening in residential Much of the problem is outside major metro areas where there aren t incentives for builders to build green or enough demand to justify the investment Leased solar PV systems are causing problems for valuation of the property

49

50 APPRAISERS - NEEDS Market demand for green needs to catch up to the construction market; especially owners of existing buildings Listing agents and building owners need to put upgrade details in the MLS Lenders need to ask for specific appraisals, pay the appropriate fees and someone needs to provide documented data Standardization of metrics, especially for certifications and energy (look to Europe s Energy Performance Certification mandate)

51 APPRAISERS - NEEDS Property management companies need to provide utility data on rental properties (Europe has managed this over 12 countries) Need a trusted approach to translate the HERS score to $ value More research showing the value of the buildings over time, across markets Information on PV production of energy would be helpful

52 APPRAISERS - NEEDS Appraisers need education on green features and how to properly assess the added value Builders and listing agents need training on how to fill out the green fields and addendums

53 Buyer/Lender Perspective The use of an appraiser who has access to the appropriate data sources, and experience in appraising specific property types will help to ensure that valuations are accurate and that appraisal practices are appropriate.* *from Fannie Mae s selling guide, spring 2010 update 53

54 Buyer/Lender Perspective appraisers must have the requisite knowledge to perform a professional quality appraisal for particular property types. * *from Fannie Mae s selling guide, spring 2010 update 54

55 How will we identify and assign appropriate value to energy efficient features? 1.Things you can see 2.Certifications and labels 3.Scoring tools 4.Multiple Listing Service (MLS) 5.Educated appraisers

56 Energy Efficient Features 56

57 What is Effective Insulation? 57

58 ENERGY STAR Labeled Windows 58

59 Tight Construction and Ducts 59

60 Efficient Hot Water Systems FEATURES & BENEFITS Conventional Tankless Hybrid Solar Hot Water

61 High Performance Heating, Cooling and Ventilation Costs less to operate More quiet than standard systems Higher quality components Improved comfort

62 Energy Efficient Appliances and Lighting Lighting Bulbs last 6-10 times longer Use 75% less energy Appliances Use 10-50% less water & energy NorthwestENERGYSTAR.com 62

63 3 rd Party Certifications Training and diagnostic equipment allow a third-party professional to confirm performance targets and verify building details meet standards

64

65 1234 Jones Road Anywhere, USA Super Awesome Green Homes, Inc Mr. Home Energy Rater 6 Months After CO 2000 square foot wine cellar

66 Scoring Tools 61

67

68 MLS and Real Estate Professionals VALUE More and more MLS organizations are adding green and energy efficiency fields; these can be helpful to buyers, agents, appraisers and lenders Builders, with help from the HERS rater, need to provide documentation of features to listing agents so they can fill in the appropriate green fields Seller s agents need to populate the MLS if an existing home has home energy upgrades or has gone through a major retrofit or home performance remodel

69 MLS and Real Estate Professionals VALUE Buyer s agents, and builder s sales agents, need to be aware of green features, able to identify them in the MLS and educating their buyers so they understand their options Buyer s agents (and the builder s preferred finance team where applicable) should request a competent appraiser, one that has taken courses and/or has experience in valuing these type of homes

70 Multiple Listing Service Example VALUE

71

72 Objectives of the Addendum 1. Standardize the reporting process 2. Organize the description and expand the description 3. Provide a basis for comparable sale selection 72

73 Section One: Green Features 73

74 Section Two: Energy Efficient Items 74

75 Section Two: Energy Efficient Items (Continued) 75

76 Section Three: Solar Panels 76

77 Section Four: Location 77

78 Section 5: Incentives 78

79 Incentive Resources 79

80 Important Questions How do we get the attention of consumers and minimize confusion? Where is the data?: How do we share data effectively and efficiently? Do we have proof that the products and certifications in the MLS are legitimate? Are building really selling for more? How much do consumers really save in the long-run? Who is going to pay for the additional work? Filling out the green/efficiency addendum Completing a more complex appraisal Extra documentation for energy efficient loan products

81 Resources for Appraisers Appraisal Institute Green Resources Commercial Green and Energy Efficient Addendum Residential Green and Energy Efficient Addendum Educational Info Webinars Publications

82 Resources for Appraisers What's green worth? Institute for Market Transformation (IMT) - Green Building and Property Value DOE - Home Energy Information Accelerator

83 Resources for Appraisers ENERGY STAR BuiltGreen Washington Information LEED Buildings Site Home Energy Rating System (HERS ) Index

84 Questions

85 Thank You! Please contact me if you have any feedback or questions: Shaun Hassel