Sales Agents, Appraisers Underestimate Value of Green
Professionals with expertise in green building sales and marketing attending the National Green Building Conference in Dallas on May 8-10 reported that they are seeing steady progress in educating real estate appraisers and sales agents to recognize the added value of homes that can save energy, promote comfort and indoor air quality and go easy on the environment.
However, at a time when builders in general are encountering difficult appraisal problems because of slow sales and surging forecloses, finding appraisers who know how to make suitable property comparisons to provide accurate valuations of green homes is particularly challenging, they said.
The large majority of those who play a role in the residential appraisal and sales process don’t have enough expertise in green homes to value them correctly or to promote their unique features to prospective buyers. Because of that, consumers aren’t always aware of the improvements that their builders or remodelers make, whether their information comes from these professionals or from the tools that they use — like the local MLS system.
Putting Green in the MLS
Al Medina, director of the Green Designation program of the National Association of Realtors®, said that only about 1% of the nation’s independently owned and operated MLS’s have a green feature. His organization is working to change that deficiency by educating its sales agents about the value of green and the importance of establishing its benefits in the listings and in the minds of consumers.
Toward the end of last year, roughly 1,500 Realtors® had completed the educational requirements to receive the green designation, Medina said. “Agents are a great conduit to consumers and the public,” he said. “There is clearly pent-up demand for green education.”
As part of its mission, the association's Green REsource Council is working to include entry fields in MLS’s to identify green features and certifications that will help agents search for sustainable homes and properties and allow builders and sellers to market their green homes.
As a prototype, Medina recommended MLS inputs initiated by Realtors® in Traverse City, Mich. and its green disclosure statement, which is the most comprehensive greening of a MLS that the council has received. “This is one great example,” he said, “and it wouldn’t have gotten done without the collaboration of the local Home Builders Association of the Grand Traverse Area.”
On the appraisal side, we are behind any movement or education that gets the appraisal world on board with this stuff,” Medina said.
Don Briggs, whose company Briggs Associates Inc. specializes in green appraisals, said that a builder or Realtors® should expect the appraiser who comes to view their green property to be competent, but if he isn’t knowledgeable about green building he may fall short in determining the most probable price a property will bring in the open market. “He can leave things out, and he is responsible for that,” Briggs said.
While green may not yet have received the full market recognition it deserves, Briggs added, “90% of people looking for a home have at least some awareness of green.”
In the meantime, “you’re going to have to educate appraisers,” he said, and go out and look for those who are competent in assessing green homes.
For appraisers who are in the business of making market comparisons in order to assess home values, “data from the Multiple Listing Service is the right place to look,” said John Stovall, vice president of EcoBroker. “But most MLS’s don’t identify green properties.”
Stovall said that NAHB members can help promote the higher value and customer benefits of green homes by working with knowledgeable agents to include appropriate data in the MLS.
His own company, which was honored during the NAHB Green Conference as the “Green Advocate of the Year,” now has some 5,000 members spreading the word in all 50 states about the advantages of green housing.
As an example of emerging companies that are dedicated to selling green housing, Stovall cited Seattle-based GreenWorks Realty, which bills itself as the first real estate brokerage in the country to specialize in green properties.
The company’s agents drive their business by volunteering with various local organizations in the area, including Built Green of King and Snohomish Counties, the Northwest Eco-Building Guild and the Seattle Chamber of Commerce.
Shoving Buyers Out the Door
Blazing some new territory of her own, Beth Johnson, of Advocates Realty in Dallas, has earned all of the national green credentials available and was the first certified EcoBroker in Texas.
“When a buyer comes to me, they tend to be green leaning,” Johnson said. “What makes them comfortable is the resale value. They understand the concept that you don’t want a white elephant home that’s not even Energy Star five or 10 years from now.”
About 37% of the homes built in Texas are Energy Star certified, she said, and Texas ranks as the leading state for that program.
Conceding that there are some extra up-front costs in making homes more energy efficient — which is a growing priority for municipalities across the state — Johnson said that they tend not to be significant amounts of money and they can be mitigated by savings on utility bills and energy tax credits.
Johnson warned green builders that listing agents who aren’t knowledgeable about their homes could be doing more harm than good. She said she has encountered agents who can’t tell prospective buyers the program under which a home has been certified, which is “very confusing” to them. “Sometimes your own sales staff is shoving them out the door,” she said.
With plenty of trained Realtors® coming into the market, “you might as well choose someone who can articulate your product accurately and enthusiastically,” she said.
For more information on green resources from NAHB, e-mail Calli Schmidt or call her at 800-368-5242 x8132.