Oct
19

The Challenges of Appraising Green Real Estate

October 19, 2012

challenges of appraising green chicago real estateIn the past year, ‘green’ construction of single-family homes made up 17 percent of the entire home building market. According to a study by McGraw-Hill Construction, this number is double the rate from 2008. Researchers believe that by 2016, green home construction will most likely account for 29 to 38 percent of the entire home building market.

Yet pricing and putting a value on green properties has not been easy. Since green building is still relatively new, it can be somewhat of a challenge to figure out an appropriate price for a sustainable home.

Recently Midwest Real Estate Data LLC added a ‘green’ section to its listing service so that buyers are able to find more environmentally friendly homes. The Appraisal Institute also created a special addendum that will be used to appraise green homes. Even lenders have been keeping track of mortgages on green homes to figure out whether or not defaults on green homes are lower than on standard homes.

In spite of these changes, there is still more work to be done in the area of green home appraisals.  Since 2008, more than 4,900 appraisers have enrolled in more than 275 courses that focus on green and energy-efficient appraising.

So how can builders and homeowners streamline the process?
First of all, it is recommended that any green feature added to a home should be carefully documented. Builders and homeowners should also consider obtaining third-party certification regarding a new home’s energy efficiency. Lastly, buyers should be on the lookout for lenders who will approve homes with green features.

Would you ever consider buying a green home?

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Jessica Thom

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