Real Estate Agents

This website is designed to act as a resource for you, the real estate agent, concerning  green and energy efficient homes so that you are then able to give informed sales and purchases opinions to your clients.   Key to your business is accurately advising your clients on the market value of their home.

Is green worth more?

So is a green and energy efficient home worth more?  Analysis of the NWMLS sales data in Washington and the RMLS in Oregon, show premiums are clearly being paid for these types of homes and the time on market is generally less.

• For the most current analysis of the following sectors, Seattle, King County, Snohomish County, Pierce County, Kitsap and Thurston Counties in WA go to GreenWorks Realty’s e-cert reports
• For the most current reports on the greater metropolitan of Portland, Oregon go to: http://www.earthadvantage.org/uploads/CertifedHomesCommandPremium.pdf

But is this true of all markets analyzed?  And if not, why not?  A deeper inspection of the data, along with a number of market research studies (see below) reveals a number of interesting probabilities/lessons to be learned for professionals within the green building industry.

  • Why are green homes in Seattle and King County showing consistent premiums and less time on market? It would appear the more urban the market the greater the sophistication (awareness of environmental issues as well as exposure to information on green building) of the consumer.  When consumers are educated, or presented with information on green that makes sense to them financially, typically they will choose green and energy efficient homes.  Two of the reports below clearly show there is a direct correlation between realtor knowledge of green building, and effective communication and marketing of its features and benefits and the premium achieved for the home.  This point was also corroborated in the Agent Interviews section of all three case studies (see below CASE STUDIES).
  • Homes are achieving premiums in other counties in WA, but are taking much longer to sell.  Why? Since market share in the counties of Thurston, Pierce, Kitsap and Snohomish is considerably less than in Seattle and King county, it’s reasonable to assume these are less sophisticated (i.e. less informed) markets, not only from the consumer perspective, but also from those involved in delivering and marketing this product.   The analysis of sales in Pierce County in Feb 2010 dramatically illustrates this point.  The median certified home was 10.8% larger than the median conventional home, was almost 10% more expensive and took almost a month longer to sell.  The key concept of green, to build smaller to conserve resources, was obviously not understood.  Instead the concept of ‘if green gets a premium, then more green is surely better’ was instead embraced.
  • Perhaps the greatest lesson for the real estate community implicit in the story of premiums being paid for greenphotograph showing photovoltaic and evacuated tube solar installations on a garage homes is the following.  That the market (consumer) as it grows in its level of education is fully embracing green homes (i.e. is willing to pay more for homes demonstrating these qualities).  The longer term issue then revolves around how the construction industry should treat this premium as market share increases.  To apply the premium for green or discount the premium for non-green?  This will largely be decided when ‘a new norm has been established’.  The old paradigm of ‘more is better’ is counter-indicative to green building.  The new paradigm is to build more durable, more resource efficient, SMALLER homes.  As this market develops real estate agents will need to change their advice to builders that what sells consumers is more square footage, because the data is starting to tell a different story.

Regional Reports

  • Built Green & LEED – A Comparative Analysis by City of Seattle and King County GreenTools November 2008 – an analysis between Built Green, a local rating system, and LEED (Leadership in Energy and Environmental Design), a national rating system, for single family and multifamily projects at LEED Silver and Gold and at Built Green 4 & 5 star.
  • Built Green Value Analysis by Gardner Johnson January 2009 – examines in State of Washington environmental certifications’ effects on the values and consumer preferences for green residential housing units.
  • Built Green Consumer Survey by Robinson Research March 2009 – a telephone survey among households in the State of Washington.  The overall purpose of this study was to evaluate the public’s attitudes and perceptions regarding green building practices.
  • Green Building Marketing Analysis (Five Counties, Western WA) by Hamilton Investments April 2009 – examines the effects of marketing on premiums achieved for green homes.

Case Studies

Marketing billboard for a green home subdivisionThese highlighted case studies contain valuable marketing insights for the agent when selling green homes.  They also contain a precised version of an appraisal that was conducted on selected homes or units, which in all three instances identified premiums were paid for the green features.

The case studies were conducted as part of an overall initiative in the Cascadia region between 2007-2009 to investigate the hypothesis of the market paying premiums for green buildings.  For a detailed account of the Green Building Value Initiative, including findings of the first analysis work of sales data tracked for certified green homes through Oregon’s Regional Multiple Listing Service  and Washington’s Northwest Multiple Listing Service, see Valuation and Sustainability.

Education Courses for real estate agents available in WA and OR providing specific local market information

See our Green Classes page for details on the courses we currently offer.

 

Frank Dodd Act (formerly The Home Valuation Code of Conduct)

The Home Valuation Code of Conduct (HVCC), was sunsetted under the Frank Dodd Act in 2010, with Fannie Mae’s Appraiser Independence Guidelines coming into force April 2011.  All of these legal provisions have led to one thing – many real estate agents are still confused as to how, or if at all, they can interact with appraisers.  To be clear, Fannie’s guidelines prohibits any conversations regarding the value of the property with anyone other than the client.  However, the agent should provide clear details on all of the amenities of the property and particularly in the case of a green home be prepared to discuss in detail the features and benefits. Additional pertinent market information, such as an agent’s own identification of premiums being paid for green and/or energy efficient homes in their local market, should be provided to the appraiser.

For specific information on Green Home Appraising as it pertains to real estate agents go to the following three video shorts and attend our class ‘Getting the most out of a green appraisal’.

For a thorough overview of the challenges and constraints facing appraisers in how they appraise green and energy efficient homes and retrofits, it is suggested interested visitors should read all of the Valuation Topics.

Why a Green MLS?

The ability to analyze the sales performance of green and energy efficient homes as a sector, as well as to be able to identify and search for these types of homes, is crucial for the real estate professional.  Until 2006 when Oregon and Washington’s multiple listing services were the first in the country to incorporate environmental check boxes on their input forms, there was no way to virtually find these homes.  The impact of this fact on the appraisal process in particular, for regions with growing residential green building markets, cannot be underestimated.

The importance for appraisers to easily identify comparables when valuing green and/or energy efficient homes is further highlighted by the release of The Green MLS Toolkit, initiated by the National Association of REALTORS and NAR’s Green Resource Council,  in conjunction with the National Association of Home Builders (NAHB) and the Appraisal Institute.  While the toolkit was originally just a recommendation to multiple listing services, an update to be released late 2013 provides a road map for MLSs to follow and includes green fields and definitions defined by the Real Estate Standards Organization (RESO) to standardize data transfer.

An important point to be made here is the responsibility this lays on agents to accurately input information.  If you are not educated on the specifics of green and energy efficient homes and retrofits, how will you know to identify such features?