Home Improvements
Real Estate

'Green' homes, energy-saving upgrades factored into true appraised home value

(11/23/2011) - Installing a full-fledged solar panel system will get you a higher price when you sell your home, but if you can't afford to shell out tens of thousands of dollars, consider a series of smaller green improvements that can also add real appraised value to your home. Studies show buyers are willing to pay big premiums for expensive solar panel systems.

Compared to similar homes without solar panels, buyers are paying premiums of $17,000 to $20,000 on solar energy homes and that's as much as it can cost to install the system, after rebates and tax incentives.

But it's not just solar panel-equipped homes that are selling like hot cakes.

The U.S. Environmental Protection Agency (EPA) recently announced that 25 percent of all single-family homes built in 2010 earned EPA's Energy Star, up from 21 percent in 2009.

With so many energy efficient homes on the market it's no longer a crap shoot trying to determine the true value of new energy-miser homes or the added value energy upgrades bring to existing homes.

This year the Appraisal Institute (AI) introduced the first ever "Residential Green and Energy Efficient Addendum" (Form AI-820.03) to better analyze values of energy-efficient home features, along with the additional resources to aid in the valuation of green properties.

Form AI-820.03 is an addendum to Fannie Mae Form 1004, the appraisal industry's most widely used form for mortgage lending purposes. Form 1004 devotes limited attention to energy efficient features, so green data usually doesn't appear in the appraisal report, or it is included in a lengthy narrative that often is ignored, says AI.

The exhaustive AI-820.03 and related resources cover everything from appliances, energy audits and geothermal HVAC systems to rain barrels, solar systems and tankless water heaters.

More "green" is better than less

Consumer Reports (CR) recently reported that adding only a few energy efficient upgrades to an existing home doesn't have the payoff that you'll get from performing up to a half dozen upgrades including (CR subscribers can get CR test results and recommendations on all these items):

• Under-sink water filters - Under-sink filters can eliminate bad tastes, odors, even lead and chloroform while cutting out the use and expense of bottled water. Many bottle water purveyors sell filtered tap water as bottled water.

• Low VOC paint - Volatile organic compounds (VOCs) are the noxious chemicals that create that paint smell and they can cause headaches and dizziness and are linked to pollution, smog and respiratory problems. Find the VOC level listed on the paint can.

• Dual flush toilets - Replace your old toilet with a dual-flusher for $300 to $400 and get a small flush for Number 1 visits and a larger flush for Number 2 visits. With technology is in the toilet you'll save on both flushes, compared to older toilets.

• Water-saving shower heads - Likewise, you can save water with a low-flow model for $50. Shower heads with three settings allows you to get that near-massage feeling even while saving water.

• Energy Star appliances - Refrigerators run around the clock and washing machines and dishwashers use both water and heat. Energy Star appliances is a no-brainer energy upgrade and a good selling point.

Tips from real estate agents

Earlier this year HomeGain surveyed real estate agents for the top green do-it-yourself home improvements that provide a return for your money and came up with more items you can add to your energy efficient upgrade to-do list.

Don't forget to check for state and federal tax credits to help offset some costs.



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