Appraisal Institute Supports USGBC’s ‘Green’ Home Report Findings
July 8, 2014 08:00 AM
CHICAGO (July 8, 2014) –The Appraisal Institute, the nation’s largest professional association of real estate appraisers, today announced its support for a U.S. Green Building Council report released June 19 that found green labeled homes can sell at higher prices.
According to the report, a green label adds an average 9 percent price premium, according to a study that analyzed 1.6 million homes sold in California between 2007 and 2012.The USGBC’s “LEED In Motion: Residential” report further noted that LEED-certified homes provide 20 to 30 percent savings in energy and water use compared to code-built homes.
The USGBC estimates that there are as many as 150,000 LEED-certified green housing units worldwide, a number that more than doubled between 2011 and 2012 and continues to grow steadily. Additionally, the green share of new single family residential construction has grown dramatically − increasing from 2 percent in 2005 to 23 percent in 2013. McGraw Hill Construction estimates the green market share will continue to increase, reaching 26 to 33 percent by 2016 based on MHC’s overall Dodge residential construction forecast as of January 2014, according to the USGBC report.
“The USGBC report clearly shows that consumer interest in green homes continues to increase, and the Appraisal Institute is proud to help educate real estate appraisers so they can provide credible, reliable opinions of value for these types of properties,” said Appraisal Institute President Ken P. Wilson, MAI, SRA. “As the market’s needs continue to grow, the Appraisal Institute will keep expanding its efforts to meet that need.”
The report also details the U.S. states with the most LEED-certified homes, with California in the No. 1 spot, followed by New York and Texas.
Wilson provided guidance for appraisers on the use of such findings within appraisal reports. “Professional appraisal standards require appraisers to only use reports or studies that are credible and appropriate for the local market. Appraisers should only rely on studies where they understand the methodology, explain it, and confirm it applies to their real estate market.”
According to its website, the U.S. Green Building Council is committed to a prosperous and sustainable future through cost-efficient and energy-saving green buildings, and works toward its mission of market transformation through its LEED green building program, robust educational offerings, a nationwide network of chapters and affiliates, the annual Greenbuild International Conference & Expo, and advocacy in support of public policy that encourages and enables green buildings and communities.
The report is currently available as a free download on the USGBC website.
Expressing support for the USGBC report findings is the most recent example of the Appraisal Institute’s leadership in green valuation:
Since June 2008, the Appraisal Institute has offered more than 400 individual programs on green and energy efficient valuation, and nearly 5,600 attendees have participated.
At the request of appraisers’ clients, in April 2014 the Appraisal Institute expanded its Valuation of Sustainable Buildings Professional Development Program’s online registries of residential and commercial appraisers to include everyone who has completed the course.
The Appraisal Institute and the Institute for Market Transformation issued guidance in January 2014 on valuing green and energy efficient buildings.
The Appraisal Institute released a new book, “Residential Green Valuation Tools,” by Sandra K. Adomatis, SRA, in April 2014. AI previously published “An Introduction to Green Homes” by Alan Simmons, SRPA, in 2010.
In October 2013, the Appraisal Institute partnered with the Colorado Energy Office to provide an analysis of the impact of solar PV systems on the home-buying process. The study sought to better understand the impact, if any, that solar PV has on the sales transaction process.
In March 2013, the Appraisal Institute released an update to the Residential Green and Energy Efficient Addendum, the first form of its kind intended for appraisers’ use. It is an optional addendum to Fannie Mae Form 1004, the appraisal profession’s most widely used form for mortgage lending purposes. The Appraisal Institute’s addendum allows appraisers to identify and describe a home’s green features, from solar panels to energy-saving appliances.
In February 2013, the Appraisal Institute added a new solar course to its Valuation of Sustainable Buildings Professional Development Program, which educates appraisers on the intricacies of valuing high-performance residential and commercial buildings, and consists of four courses: "Introduction to Green Buildings: Principles & Concepts;" "Case Studies in Appraising Residential Green Buildings;" "Case Studies in Appraising Commercial Green Buildings;" and “Residential and Commercial Value of Solar.”
In January 2012, the Appraisal Institute announced its support for PV Value, a spreadsheet developed by Solar Power Electric and Sandia National Laboratories that assists appraisers and others seeking to establish the value of a property’s solar-powered features.
The Appraisal Institute in October 2011 sponsored a report that outlined ways to finance $150 billion per year in energy efficiency projects that yield double-digit financial returns. “Energy Efficiency Financing: Models and Strategies”by Capital-E and partner organizations found that within 10 years, investment at this level would save U.S. businesses and households $200 billion annually and would create more than 1 million new full-time jobs.
In October 2011, the Appraisal Institute endorsed the federal Sensible Accounting to Value Energy (SAVE) Act, which would improve the mortgage underwriting process by ensuring energy costs are included. Sponsored by Sens. Michael Bennet, D-Colo., and Johnny Isakson, R-Ga., the SAVE Act would instruct federal loan agencies to assess a borrower’s expected energy costs when financing a house. IMT also is among the bill’s supporters.
The Appraisal Institute contributed to the Green MLS Tool Kit, issued in April 2010. The tool kit was created to help Realtors add a green initiative to their local multiple listing service. The tool kit provides guidance on enhancing data in the MLS, empowering appraisers to make well-supported comparisons, analyses and adjustments.
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The Appraisal Institute is a global professional association of real estate appraisers, with nearly 22,000 professionals in almost 60 countries throughout the world. Its mission is to advance professionalism and ethics, global standards, methodologies, and practices through the professional development of property economics worldwide. Organized in 1932, the Appraisal Institute advocates equal opportunity and nondiscrimination in the appraisal profession and conducts its activities in accordance with applicable federal, state and local laws. Individuals of the Appraisal Institute benefit from an array of professional education and advocacy programs, and may hold the prestigious MAI, SRPA, SRA, AI-GRS and AI-RRS designations. Learn more at www.appraisalinstitute.org.