3 minute read
Clients care about being green
Find out how energy efficiency is impacting home sales
At Centract Settlement Services, we recognize important trends in valuation services and keep you aware of the continual evolution happening in this industry. One such trend is energy efficiency ratings and their impact on home sales. To that end, in 2012, Centract Settlement Services launched its energy auditing and rating services, as these will increasingly become a part of how homes are bought and sold and impact a home’s appraised value.
First, it’s important to understand how the various initiatives across the country for determining energy efficiency ratings on properties have helped to demonstrate return on investment.
Commercial buildings, for instance, are certified energy efficient through programs such as Leadership in Energy and Environmental Design (LEED) Canada which is a rating system that evaluates the design, construction and operation of buildings. Such certified buildings deliver solid return on investment through lower operating costs, higher lease rates per square foot and lower vacancy rates.
In new home construction, many developers are motivated to use energy-efficient appliances, building techniques and materials that enable them to be rated by organizations such as R-2000 and Energy Star for New Homes®. The ratings can help the developers sell the properties more quickly and in many instances, at a higher price. For home-buyers, homes that meet these standards can result in 30 per cent lower energy bills than a comparable new home.
For resale homes, demonstrating return on investment and encouraging energy efficiency ratings have been more challenging. Probably the most successful program has been the ecoENERGY Retrofit Homes Program, which is run by the federal government and provides grants of up to $5,000 to help homeowners get their existing homes rated and make them more energy efficient.
Initiated on April 1, 2007, the four-year, $745-million ecoENERGY Retrofit Homes program provided federal grants to property owners and the 2011 budget allocated an additional one-year investment of $400 million to the program. Under this program, it is estimated that about six to seven per cent of households have had their homes EnerGuide rated. The program was not extended in the most recent federal budget. It is likely that within the next decade, energy efficiency ratings on homes will become the norm and green-energy attributes will play a larger part in the valuation of a home, just as they have in commercial real estate. Energy bill savings are one reason. Also, consumers, especially younger ones, are more environmentally aware and governments need to meet global emissions standards, which include homes.
Provincial governments have also initiated programs for rating existing homes. Ontario, for instance, incorporated language into its 2009 Green Energy Act, which required a seller to provide the energy efficiency rating of a home if asked by the buyer. The Ontario government has since taken a step back, making the disclosure voluntary. British Columbia tried a similar voluntary route, and encouraged it by making the ratings free, but interest has been limited.
The Toronto Real Estate Board, along with other real estate boards, has added an energy efficiency rating field to their MLS’ listings displays. But overall very few listings currently show the home energy rating, even on homes that have already been well rated. Other initiatives, such as “Know your energy score,” offered by Enbridge, promote awareness to consumers, real estate agents and home inspectors.
Centract Settlement Services is taking an active role in this market change. In 2011 we began providing appraisers with education on energy efficiency and assessment and in early 2012, we launched The Home Inspection Network to provide the Canadian market with high quality, professional and experienced energy auditors and home inspectors. We are working with industry partners to increase awareness and educate agents, lenders, home inspectors and consumers on the issue and the benefits of energy efficiency.
For more information or to place your order, visit www.homeinspectionnetwork.ca or call 1-855-232-9778.
These short videos will help answer important questions, while encouraging viewers to get in touch with their local Royal LePage REALTOR® before, during and after the sale.
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