Energy Efficiency: What’s It Worth? To A Buyer?
It’s Energy Efficient!
So What!
To A Seller? To An Appraiser?
Our Hands Are Tied!
Appraisal Industry
We Haven’t Been Trained!
To The Bank? To Our Planet?
Please Help Us!
All Different What’s an Energy Wise Investor To Do? G r e e n E a r t h E q u i t i e s . C o m
© 2010
Saving The Planet One House At A Time
Mainstream Media Has Noticed The Problem The Following Slides are from CNN Notice the parts in yellow (You may want to increase the size of the image on your computer.)
G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
Home energy retrofits: The bottom line CNN Money By Steve Hargreaves, staff writer
February 4, 2010
NEW YORK (CNNMoney.com) -- Investing to make your home more energy efficient may lower the bills, but it may not boost its price, partly because these investments aren't fully valued by appraisers. "Everyone is talking about return on investment, it's the first thing customers want to know," said Jeff Geoghan, a Coldwell Banker realtor in Lancaster, Penn. "But the appraisal industry is not up to speed on this at all. Nearly everyone agrees that performing an energy retrofit will make your place more comfortable and save a lot on bills. But if the retrofits don't add value to the home's price, will homeowners make the improvements, regardless of whether or not the government decides to pick up half the tab, as they are considering? Details have yet to be ironed out and passage is not a sure thing, but it's thought a new jobs initiative being pursued by Democrats in Congress may funnel some $11 billion towards home energy efficiency. It's designed primarily to put contractors back to work, doing things like adding insulation, caulking windows and doors, and upgrading heating units, air conditioners, hot water heaters and other appliances But it would also cut down on pollution, and the monthly savings for homeowners could be substantial. If passed, homeowners may be eligible for a tax credit worth up to $12,000, or half the cost of the retrofits, which ever is lower. If a homeowner spends $24,000 and cuts its energy use in half - probably the most ambitions reduction that can reasonably be achieved - it would save the average homeowner $100 a month on their utility bills, said Lane Burt, manager of building energy policy at Natural Resources Defense Council. If they get $12,000 reimbursed from the government, then payback time would be 10 years. But if people spend that much and sell the house before 10 years, they may be out some money. Many homeowners would likely opt to spend less, going for the cheapest options that save the most energy. Contractors who perform energy retrofits say most people spend around $6,000 or $7,000, and the payback time is around 5 years. But assuming the full amount is spent and the savings are $100 a month, that should result in a substantial increase in home's valuation. After all, an extra $100 a month one could put towards a mortgage means an increase of $20,000 on the purchase price for a home, according to a calculation done on a purchase price calculator. Yet that extra $20,000 does not show up on a home's appraisal. 'It sounds good on paper, but it's just not how the American consumer makes choices," said Geoghan, the realtor. 'If you're buying a house, and you see a furnace has a 95% efficiency rating, are you really going to make your decision based on that?" Another realtor agreed. "How much can you really raise the value, maybe few thousand dollars," said Laurie Hassey of the Long Reality Company in Tucson, Ariz. "It's still all based on square footage." Part of the problem is that many real estate appraisers aren't trained to look for energy efficiency upgrades. "There are appraisers out there that have extremely minimal education," said Leslie Sellers, president of the the industry association the Appraisal Institute. Sellers said that about a quarter of all appraisers only have the most basic of qualifications - a level known as a "licensed appraiser." Up until 2008, when the standards were tightened, that meant all they needed was a high school diploma and half a semester of course work. Sellers said the institute is currently running green certification programs that will teach appraisers how to better Saving value upgrades like efficiency improvements. Sellers also suggested going with a better trained appraiser - a "certified appraiser" - when getting a home evaluated, even if they cost more money.
G r e e n E a r t h E q u i t i e s . C o m
Š 2010
The Planet One House At A Time
Discussion Points: 1. Allowing Big Media to frame the terms of the discussion. = Bad Idea This type of reporting only makes the problem worse. The “experts” they chose to showcase are a disgrace to their professions.... Realtors and Appraisers that I know and are present on this call are much more enlightened. G r e e n E a r t h E q u i t i e s . C o m
© 2010
Saving The Planet One House At A Time
ROI, What’s That Got To Do With It? 2. Framing the Discussion around Return On Investment (only) (ROI) = Bad Idea #2 If I want to be comfortable*, or safe*, or healthier*, or proud of my home* or my contribution*, I* dont * ask, “What’s my return on my investment? We dont ask the ROI of a flat screen, or granite counters. Buyers value these because they want them. Value is established by buyer and seller agreeing. It should be the same for Energy Savers.
* comes along with Energy Improvements
ROI is not irrelevant but It is only ONE component of value
G r e e n E a r t h E q u i t i e s . C o m
© 2010
Saving The Planet One House At A Time
People Spend Less.... Yes, that has been my experience for 30 years. And with reporting like this that trend will continue Why dont you (CNN) report about the people who are buying the complete energy packages and getting correct valuation from knowledgable appraisers and are LOVING the results? While you’re at it, CNN, you could report on the green jobs, the carbon footprint and the increased tax base and improved communities created when people are allowed to finance Complete Energy Packages G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
“The Improvements Dont Show Up On The Appraisal” This is true when uneducated Appraisers make it true. (in the next paragraph, their spokesperson confirms this) “It’s still based on square footage” This is so last century. I’m surprised they printed it. It’s time to demand educated appraisers. G r e e n E a r t h E q u i t i e s . C o m
© 2010
Saving The Planet One House At A Time
Green homes face a red light
By Les Christie, staff writer March 10, 2010 (CNNMoney.com) --
Lots of people, especially those trying to battle high utility bills, believe in energy-efficient homebuilding. But there's something holding green technology back: It simply costs more to include it than it adds to resale value Appraisals for newly built green homes do not fully reflect the cost of green technology, and the lower appraisal values mean buyers often cannot get the full financing they need from banks. That discourages developers from using green technology, in turn diminishing the market for more green products. "We can't get lenders to appreciate the value, and if we can't get the values recognized, manufacturers can't justify moving these products forward," said Bill Nolan, a Florida home building consultant. How that works is illustrated in the case of clients of Michael Chandler, a North Carolina-based green building adviser, who wanted to build a $400,000 home incorporating many green features. The house was designed to include passive solar heat, solar hot water, radiant floor, high-performance windows and insulation. But the bank's appraiser told them that the appraisal would come in for less than the cost to construct. In that case, the buyers would need to come up with a bigger down payment. "Our best guess is that it will appraise at $380,000," said Chandler. At 90% financing, the bank would put up $342,000, leaving the would-be buyers with a down payment of $58,000, instead of the $40,000 needed if the house was assessed at the full price. "With 10% down, the clients would have to come up with (an extra) $18,000," Chandler said. "They can't do that." Appraisers feel their hands are tied. "It doesn't do a lot of good to simply add value based on cost," said David Snook, a California-based appraiser who serves on the real property committee on education for the American Society of Appraisers. "The question is 'How much will the market pay on resale?'" The appraiser's job is to accurately assess the value of the home. If a feature costs $50,000 to install but only adds $25,000 to the price when the home is resold, the appraisal cannot reflect the full $50,000 spent. "Appraisers don't make the market, they reflect it," said Jim Amorin, spokesman for the Appraisal Institute. "Cost does not necessarily equal value. It depends on how the market reacts to the feature." Not under the influence Also complicating appraisals these days are new rules to prevent loan originators from influencing appraisals. Builders cannot demand specific appraisers, ones more experienced at evaluating green building. With Chandler's client, the house is in a rural zip code, one where few energy efficient homes have been constructed. The appraiser had little idea of how much building green adds to value. "The appraiser has no experience with green building," he said. Another problem is that appraisers also rely frequently on foreclosed homes for comparison, especially in places hit hard by defaults. These homes sell at big discounts to the regular market and even bigger discounts to green homes. Low cost alternatives Because of the appraisal issues, developers often opt for installing only the lowest-cost green features. "Some can be incorporated without much additional cost," said Curt Jones, a Connecticut-based civil engineer and green building consultant. As he describes the process for green certification, points are given for a wide variety of factors, some costing a lot, others costing nothing. Angling the home differently, for example, to catch more rays and help heat the house passively, may not cost the builder a dime. But installing solar panels on the roof definitely will add a lot to the final price. Ironically, turning green probably does add considerable value -- or will, once green gets more established in individual locales and buyers get more familiar with it. In Seattle, a hotbed of green-building activity, new homes with green certification sell for 8.5% more per square foot than comparable non-green ones, according to a report from GreenWorks Realty. They also sell 22% quicker. "As more American homeowners green their homes, there will be more and more of a premium paid for green homes," said Ben Kaufman, GreenWork's founder. "I can imagine a miles-per-gallon type sticker on homes for sale and the marketplace will absolutely favor fuel-efficient homes."
G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
It costs more... It only costs more than it appraises for if uneducated appraisers use outdated methods like square footage and have no way to separate REO data. Their association leadership is apparently (finally becoming aware of this and providing training.) G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
Appraisers Feel Their Hands Are Tied Appraisers are actually mandated by recent legislation to value energy conservation. Many appraisers just haven’t been updated. We can help bring them up to date with the latest regulations. G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
How Much Will The Market Pay On Resale? To an Energy Wise Renovating Investor, selling his recently completed renovation, this is an irrelevant question because the buyer and seller have already answered it. This is part of the reason all of the GreenEarthEquities homes have appraised for the sales price or higher. G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
“Appraisers Have No Experience With Green Building” Green Building has been ramping up for at least a decade. It’s time the Appraisal Industry Leadership wakes up. Their Association says they are providing classes....We’ll see. It is also time for Green Builders and Renovators to reach out to the Appraisers with helpful information
G r e e n E a r t h E q u i t i e s . C o m
© 2010
Saving The Planet One House At A Time
Angle On The Lot vs PhotoVoltaic Panels Wrong on Point #1 and PV is point #27. All the rest of Home Performance that resides between these two extremes is skipped over in this type of comparison. This is the type of information we need to share with Appraisers. Education is the key on all levels: Consumers, Contractors, Appraisers, Realtors, Banks, & Politicians. G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
“MPG” type rating for Energy This is being worked on. A convoluted version of this is called HERS 2 and should arrive this summer. A much easier rating would be to publish the bills. A seller proud of his utility bills could list them in the MLS. A buyer could request them during due diligence. A seller’s failure to comply would say volumes. Too simple? G r e e n E a r t h E q u i t i e s . C o m
© 2010
Saving The Planet One House At A Time
GEE 4 Page Communique The GreenEarthEquities brochure is left on the granite counter and gives appraisers the data they need to justify reasonable Green Building Appraisals A sample follows: (All The Pages Work Together) G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
GreenEarthEquities.Com Energy Wise Renovation
About GreenEarthEquities & SmartEnergyHomes
At GreenEarthEquities we acquire distressed properties in prime neighborhoods and renovate them with 3 goals in mind: The Energy Factor , The Wow! Factor, and It’s All Done! Buyers enjoy lower utility bills and more comfort, every month in their Low Maintenance SmartEnergyHome.TM
3405 N Miami Fresno, CA 93727 4 Bedroom, 2 Bath 1188 sq ft. Total Transformation & Custom Kitchen Built 1971, Re Built 2010
The Right Neighborhood: Clovis Schools. Established neighborhood with tree lined streets. Close to Sierra Vista Mall, Old Town Clovis, Bus Lines,Shopping & Parks. 244 employers and over 10,000 jobs are within a 2.5 miles radius.
Dave Robinson Principal
Why Rent? Buyers can own this Clovis School District home for $853 per month* *$160,000 5,5% fixed rate, $10,000 down. Includes principal, interest only. Other down payments or terms will require different payments. Qualifications depend on lender guidelines. Not all people qualify. Estimated total payment with taxes and insurance should be less than $1,176 per month.
For more information:
Dave Robinson 559 994 9477
G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
GreenEarthEquities.Com
3405 N Miami
At GreenEarthEquities all we do is Energy Wise Renovation of homes. Each item that goes into our homes must address one of these three objectives: 1. Energy Efficiency 2. !Wow! Factor 3. !Done! Factor This is what we chose to do to meet those objectives on this home:
Energy Efficiency
Seller Will
1. !Dual pane windows throughout !! Pay 50% of 2. Motion Sensor & Photo Sensor Lighting Controls Utility Bills For 3. Energy Saving Lighting throughout First Year! 4. Dual Zoned High SEER Mini Split Heat Pump 5. New Engineered Duct System (ACCA Manual D) 6. !Shell Sealing of cracks and holes in the attic at the ceiling level. 7. !Attic insulation to R-50+ : far above Energy Star Standards for brand new homes. 8. Energy Star Appliances. 9. !Gas stove and gas option for the dryer. ! 10. !Dual pane and foam core front entry door 11. !Upgraded ceiling fans in every room
Wow! Factor 1. New Cabinets throughout in Kitchen and both baths. Real Wood throughout, 2. !Matching Granite Counters in Kitchen and both baths. 3. !New Hood Fan Microwave 4. !New Gas Stove and Oven Rent This 5. !New Dishwasher! 6. !New Disposal One Across 7. !New Deep Stainless Steel Sink with premium faucet and spray the Street 8. !Tile Floors in Kitchen and Baths with Custom Tile showers for $1,050 9. 9. !Designer 2 and three tone painted interior per month 10. !Crown molding and stepped door Trim 11. !Designer 3 tone paint exterior with New Dash over sculptured trim 12. !All ceilings have been replaced with new texture and paint. 13. New Stucco and Dash Coat for Brand New Look.
The “Done” Factor ! 1. !New front and back lawn 2. !Automatic sprinklers front and back 3. !Finished Garage, Drywall and painted 4. !Sewer line recently serviced and encroaching tree roots removed. 5. Brand new 30 year roof with warrantee 6. Garage Door with new automatic opener 7. !Brand New water heater 8. New carpet 2 grades up from FHA standard, normal in renovation, with 6 lb pad. (4 lb is normal) 9. !New receptacles, new switches and covers 10. !New six panel doors and new hardware. 11. !New light fixtures 12. New Fencing with room for RV or Trailer storage. 13. New Covered & Tiled patio for Outdoor Living.
Everything Is Old
It#s Your Choice:
Or Own This One For About $100 more
Everything is New
We value your opinion. How do you think we did toward meeting our objectives? What would be one or two things that you would change to make this home more desirable? Thank You
Dave Robinson, Principal"
"
Rogelio Covarrubius, Supervisor"
"
Jennifer Martin Real Estate Advisor
G r e e n E a r t h E q u i t i e s . C o m
© 2010
Saving The Planet One House At A Time
GreenEarthEquities.Com
Address
Details
#1 5741 E Bernadine
1574 sf 3-2 LR & Fam 1959 Corner Lot, RV access, Wow! Done! And Energy Packages
#2 3328 N Purdue
1164 sf 4-2 50 year roof, covered patio, Wow! Done! And Energy Packages
#3 5664 E Bernadine
1404 sf 3-2 LR & Fam 1962 pool Drive Thru Garage, Wow! Done! And Energy Packages
#4 3332 N Ezie
1362 4-2 LR & Dining 1960 Possible RV parking Wow! Done! And Energy Packages
#5 4404 N Eddy
1348 sf 4-2 Great Room, RV Access, Huge Corner Lot, Wow! Done & Energy Packages
#6 5967 E Fedora
1188 sf 3-2 1971 Great Room, Custom Kitchen, Wow!, Done! & Energy Packages Possible RV
#7 145 Gettysburg
1171 sf 3-2 1971 Great Room, Custom Kitchen, Wow! Done! And Energy Packages, Clovis Schools
#8 3915 E Townsend #9 3405 N Miami #10 5868 E Andrews
Projects Done & In the Pipeline Completion Target
$185,000
Jan 15, 2009
SOLD! $143,500
Feb 10, 2009
SOLD! $185,000
Feb 20, 2009
SOLD! $165,000
July 1, 2009
$169,500
Aug 4, 2009
$160,000
Nov 1, 2009
Pending SOLD! SOLD! $170,000
Sept 15, 2009
$135,000
Feb, 2010
$160,000
Feb 14
SOLD!
Apx 1670 sf 4-2 1948 LR & Formal Dining, New Master Suite, Detached Garage Quiet Neighborhood. 1157 sf. 4-2 1971 Custom Kitchen, Wow!, Done, & Energy Packages Clovis Schools. New Roof, & AC
List Price
SOLD! Available Now!
1171 sf 3-2 1959 Great Room, Custom Kitchen, Wow! Done! And Energy Packages, Clovis Schools
$160,000
Mar 15, 2009
REALTORS: We plan that many homes will be sold before they reach MLS. All homes will be offered to the group of Preferred Realtors for 7-14 days before listing in MLS. For details and to be alerted of new projects as they become available contact Jennifer Martin 259 8153
Note: Owner Will Consider Lease Option Or Owner Carry On This Property We are alsoG have r aeprogram e n toEgive a preference r t h Eto Veterans. q u i t
i e s . C o m
Š 2010
Saving The Planet One House At A Time
Compared To the single sheet used by most Realtors for Open Houses, this format is a lot more helpful to buyers and Appraisers.
GreenEarthEquities.Com
Projects Done & In the Pipeline
7 5
Tarpey North Cluster
2
1
6 Tarpey South Cluster
9
3
4
10 G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
Also Leave CMA Reports with annotations. The last 2 “Solds” are GEE properties #1 & 2 on the map. These sales make the next properties easier to value similarly G r e e n E a r t h E q u i t i e s . C o m
© 2010
Saving The Planet One House At A Time
Collaboration Is The Key California Building Performance Contractors Association (CBPCA) Build It Green, (BIG) Building Performance Institute (BPI) Green Earth Equities (GEE) And others have existing classes and will work with Appraisal groups to customize training for appraisers on evaluating Green and Energy Saving Renovations. Working together we can achieve our 2030 and 2050 Energy Goals. G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time