As a developer or a builder, if you are visiting this website, you probably are already building to some level of green, and may also have been burned more than once on an appraisal for a green or energy efficient home.  You may be looking for a solution or wishing to learn how to prevent a similar situation happening in the future.

image of a rain channel as part of a Low Impact Development subdivisionYou may even be concerned that with the pressure to upgrade State energy and building codes as a result of local climate and evironmental initiatives, you will not be able to recuperate the additional costs you incur to reach these higher standards through higher valuations.   These are considerable concerns.

Whether through legislative inititiaves or consumer preference, each year the data is revealing market share for green and energy efficient buildings is increasing.  How you then incorporate sustainability into the design and construction of your homes can have dramatically different outcomes for your business.

We would strongly recommend that you read all of the Valuation Topics to gain perspective on the appraisal process as it currently interacts with sustainable building.  We also strongly recommend that if you are working with a real estate broker firm, you insist they demonstrate they are educated to market this type of home or development, because if they are not, they are definitely costing you money, either through longer time on market or by failing to upsell the green features and benefits.  See Reports and Case Studies in the Real Estate Agent section for evidence of the effects of marketing on the price paid for a green certified home.

To certify or not to certify?

Finally when margins can be so slim, should you go the added cost of certification?  Not only yes, but ideally photograph of an Earth Advantage certified affordable home in Portlandcertification with third party verification (it’s the trust factor).  There have been counter arguments, citing the money spent on certification could be better used upgrading and increasing the number of green features for the project, but this argument fails on one simple count.  That green building then becomes lost as either an existing or future data set.

If you do not certify the home, we cannot use it to quantify market share – this is particularly important since while many custom green homes may not reach the sales market for decades, the fact that they have been built demonstrates consumer demand for this building type.  It’s sales performance cannot be analyzed, because it cannot be identified.  Appraisers cannot use it when searching for comparables.   It’s invisible.

Already fallen foul of an appraisal?

If you believe local market data shows support for green homes, and you have provided the appraiser with a clear list of green features and benefits, as well as any supporting documentation such as certification, performance testing, third party verification, or a home rating evaluation,  and feel the appraiser did not take into account any of this information, you can legitimately question the value of the appraisal under the Uniform Standards of Professional Appraisal Practice’s Competency Rule.

However, there may be other sound reasons why you are not seeing the value in the appraisal that you thought should be there.  Did you overbuild for the location and market?  Or did you really build in added value in a way that can be recognized in an appraisal?

Triple Bottom Line

Green Value shows that sustainability is not simply an ethic, it’s good business
Chris Corps BSc MRICS

Whether you are a custom home builder or a developer, here is where working with our team can positively affect your bottom line.

With our unique blend of green building and appraisal expertise, we should be included from the beginning in the Integrated Design process.  We can show you the most cost effective strategies to get to the higher levels of green, which at the same time have attributable value.  We can also work with your real estate marketing team to increase their level of knowledge and proficiency in marketing the green features and benefits of your homes.

Contact us to see how we can help.