[Part 2] Should Green be in your future, when it comes to homes?

Each homebuyer comes equipped with a unique set of needs and expectations. Some buyers in the market for a green-certified home may be drawn to the notion of reducing their carbon footprint. Others are more interested in the idea of saving money through their selected green features, while some simply like knowing the home has been constructed or upgraded with a specific set of standards in mind. According to Heather Witt, a green-certified real estate professional in Beverly Hills, “It lets them know that they’re getting a quality home.” While these are valid reasons for wanting a home that is green certified, experts agree that the variety and levels of green certification rating systems can cause buyer confusion and make it difficult to quantify the value of the green features for owners, buyers, and sellers alike.

In addition to standards outlined on the state and federal levels for green certifications, there are additional certifications available that offer further prestige and confusion. If a home generates enough power to run independent of outside sources, it is given the Zero Energy Building Certification. Much rarer, if a home generates a net-positive energy return, it is given the distinction of a Living Building Certification. These upgrades, especially in luxury properties can have a significant impact on resale price and utility costs.

Current studies focus primarily on the luxury market and the impact green homes have on the resale price and utility costs. These studies sought to determine whether or not buyers are willing to dig deeper into their wallets now (adding a .5%-2% premium to an already costly expenditure) to save money later. What became apparent, was that many luxury buyers who spend the extra money on these features do so for reasons that others might not.

According to Asa Foss, the Director of Residential Solutions at the nonprofit U.S. Green Building Council in Washington, D.C., “While saving 30% on their energy and water bill may not impact these buyers much, they do want to play their part in the bigger picture, and are concerned with the quality of their home and their health.” For high-net-worth individuals, spending a bit more on advanced water filtration and air purification systems, solar panels, and low-VOC products may be a higher priority than for first-time home buyers worrying about paying their mortgage on time.

To date, because green certifications, standards and features vary so widely, there is no standard way to determine how much premium buyers will spend on them, but change may be on the way. Right now, the real estate industry in the U.S. uses the Home Energy Rating System, also known as the HERS Index Score. Using this system, homes are rated 0 to 140, with 0 being a home that generates as much energy as it uses, and 140 being the least energy efficient.

While the HERS Index Score system seems pretty straightforward, one major issue is that not all homes are rated. Mr. Foss and other industry experts believe a standardized MLS field designed to auto-populating with the information and options related to green features and certifications. In addition, Mr. Foss suggests the development of a standardized energy use figure, similar to the MPG we find on vehicles to help offer a sense of annual energy costs. If homes in the US were required to use this system, complete with a standardized energy use figure, all parties would have a better understanding of the value of these green upgrades.

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