The other day I received an email VIA Active Rain regarding Green Building. The person was sharing their thoughts on the issue as to what they thought the down side was of Building Green. This was not a hostile e-mail, he was simply sharing his views.
I appreciate that. This is one way how I know what topics need to be discussed. One of the statements I was quick to disregard at first:
"So, I guess one might ask the question: Why should a house appraise for more because its constructed to the codes? Its required by law!"
The more I thought about this, I realized that many consumers would not understand why I disregarded this statement. There are a couple of misconceptions here. One big one and that is what I am going to talk about. I am going to refrain from saying this is true about ALL High Performance or Green Homes because as I mentioned in another post, these terms are sometimes used loosely and I can't speak for all builders around the globe. Just the many that build true to terms.
Why should a house appraise for more because its constructed to the codes?
This is a great question and the answer is simple. The Majority are NOT built to code. They are for the most part built ABOVE codes. Again, we run into some confusion regarding Green Homes and High Performance Homes...for the sake of conversation I will use the High Performance Home as an example as I believe that is what the consumer was referring to. Again, this is just one example.
I contacted a builder that is part of the Green and LEED community in Houston today to get his opinion on the statement above. I am going to do my best to quote..I was driving when I had the conversation.
"You can build a home to Codes at $100,000 or you can build it at $10 Million-homes can be built to code but it does not guarantee performance. Codes have to do more with Safety than they do Performance"
This is why the term is used. If it were simply a little more energy efficient, Energy Star would be a better term. By 'High Performing' it will be a step above. I will use just a few Houston Building Codes for an example:
- Exterior Walls- Building code asks for an insulation factor of R-13. You are more likely to see a Minimum of R-15 or higher.
- Attic Insulation- Building code asks for an R-30. You are more likely to see an R-38 or higher.
- A/C Seer Rating- The new minimum is 13 Seer that is manufactured. You are more likely to see a 15 Seer or higher. Buyers with the money will choose 20 Seer or higher. (The higher the Seer, the higher performing)
There are many, many other aspects of building Green or High Performance Homes. I felt as though these 3 topics would be a great, easy way to explain. These homes do not cost/appraise more because they are built to code. They cost/appraise more because they exceed.
Now, the cost. How much more are we talking about? Well, that's for another post. Let's just say that it's another slight misconception that needs to be put to rest.
Stephanie,
Some of the high efficiency items cost more but can still save money on the total cost of the house. A lot of people don't understand how that can happen but if the high efficiency heat pump costs and extra $15 on your mortgage payment and saves you $35 on your energy bill it saves you money. Hopefully more people will grow to accept things like geothermal heat and solar panels to help bring the cost down.
Exactly,
Good point. Also, Did you know that FHA has a loan program that will lend above appraised value (to a limited amount), to be spent on (only) energy upgrades?
I just finished with a buyer that went with this program. FHA knows that the value IS there in energy efficient upgrades and are backing it up with loans to match! Good Stuff.
Listed Green
Hi Rita, EXACTLY! Thank you. Taking a step toward green definitely helps the consumer.
Everyone, Welcome David! He is new to AR and is with listedgreen.com
David, Thanks for stopping by. I am familiar with the EEM products. It is also offered by VA and there are conventional loan products as well. Mary Bigelow is our EEM expert. Thanks for bringing it up!
Also,
You have to pay attention to spending the extra $ on higher SEER ratings, because the payback can take a long time versus the original cost (ROI - return on investment).
You should spend money on making sure the existing systems are working at or close to 100%. So many systems are poorly installed, making for a wasteful system, even with a high SEER rating. (i.e. ductwork, insulation,etc.)
As with "greenwashing", some builders are doing "borderline" energy upgrades and marketing themselves "green", because they know it's the new "buzzword" in the media.
The public needs to educates themselves and Realtors that get certified as EcoBrokers can help that happen. Feel free to go here and scroll down to bottom of the homepage to find out how.
Everyone needs to understand that there are MANY different certification programs, some vary state to state and some such as LEED H are national. Educate yourselves.
Thanks for the WelCOME.
Listed Green has come across quite a bit of "greenwashing" in the real estate marketplace. We turn down listings all the time, from "slick" people using "key" words in their listing(s). In this saturated marketplace, they feel they need to add a "boost" to any stagnate listing that isn't getting the attention.
Even some builders are jumping on the "bandwagon". Just be aware of the actual components in the home, as well as what the building is being built out of. There are many choices of sustainable products to build from now; some better than others, regarding true carbon footprint of how those products affect our environment before they are even installed in the home. Think about the process of manufacturing all products. Find out. Judge for yourself.
Listed Green personally reviews all listings submitted before they go public on our site, helping eliminate the greenwashing problem out there. Plus, no confusing banner advertising. Too much out there. Folks are already getting tired of it.
Remember Paula,
You can list green, energy efficient homes and developments to a worldwide audience.
At
Listed Green
Stephanie - very informative and timely post once again! There is also great information in the comments!
"You can build a home to Codes at $100,000 or you can build it at $10 Million-homes can be built to code but it does not guarantee performance. Codes have to do more with Safety than they do Performance"
This is a very important point and your examples effectively show what you are referring to.
I especially agree with David's comments on proper installation of products. This is the very reason why it is so important to interview your home building team to be certain they have the knowledge and expertise to construct a High Performance Home. Equally important IS the manufacturing process. I know when Adam chooses a supplier/vendor part of his interview process regards their manufacturing process.
Keep up the great work Stephanie!
Thanks Mary, that is all very true. Installation and Manufacturing is important. I wish we could explain all of this in ONE post. :) I guess people will have to keep tuning in to find out more.
Hi Thesa, Thank you! I am glad that it helped.
Stephanie,
"You can build a home to Codes at $100,000 or you can build it at $10 Million-homes can be built to code but it does not guarantee performance. Codes have to do more with Safety than they do Performance"
Consumers believe that a home built to code, whether green, high performance or otherwise, is a good well built home. The fact is this couldn't be further from the truth. Codes are minimum standards. Most builders will build to code, not exceed it.
Energy performance on a code built house today is generally better than a home built 10 years ago. But the main thing that makes any home perform well is quality of workmanship. If components and systems are poorly installed, they will not operate at their highest efficiency.
I am a home inspector and have an infrared camera. I use this primarily for locating energy loss. This past winter most every home I was asked to come and look at was under five years old. It is amazing the lack of quality in these homes. Almost everyone of these homes were high end homes. Many were a million dollars or much more.
This is an IR image from the clients masterbedroom over the fireplace. The darker the color the colder the spot. The wifes side of the bed was next to this spot. She had been complaining for years that it was cold. She said to me everyone thinks I'm crazy. Well she wasn't as you can see. This house was about four years old.
The builder had tried to correct the problem. You can see his "fix" in the image. Notice the warmer areas (orange spots) among the coldest areas. That is where he stuffed insulation into the cavity from the attic.
Building to code is equally as important as building well. Exceeding the code should yield better performance, but quality workmanship is paramount.
James, that's amazing. It never ceases to amaze me the short cuts that are taken sometimes in construction. You are bringing some excellent insight to my conversations.
I think we need you in the Eco All Star Group.
Excellent comments James!
I agree with Stephanie! We could use your input!
This is great information. My husband is a Custom Home builder and he's been talking about this very same thing for a long time. We spent a little more to get higher performing materials in our home and we have much lower energy bills than our neighbors. In some cases our electricity bill is $75 less than a comparably sized home.
I had no idea there was such a thing as an ECOBroker. I"m going to check that out today.
Lisa Rourk
Stephanie--
Another great post! And some great comments that follow.
Not trusting built to code--my first experience came with my first remodel. As we tore into the walls of a 6 year old house, we found scary things. I said to the contractor that was overseeing the remodel--but it had to pass inspection to get finalled. He just laughed at my innocence. He mentioned that many times the building inspectors had no real construction experience, so they didn't know when things weren't really done properly and many times, they'd just drive by the house and sign off paperwork without even getting out of the car to inspect!
I love James IR image--I don't think any of our home inspectors are using that!
Tamara,
Your comments are precisely what I try to tell my clients all the time. Contractors do not always put a home together correctly and the building inspector often does not look at the home in detail or not all!
I have written a few blogs on some of my recent finds. Check out No Support, Plainville, CT This was just one of many defects that the building official should have caught.
One area where I find builders cheating all the time is insulation depth or amount. I had one instance where the client was confined to a wheel chair and could not check the attic of his new handicap accessible addition. He had the architects plans which called for R-38 insulation in the attic. I found R-30 along with a few other problems. I was there to check the construction because he became suspicious of the contractors when they stopped returning his calls to fix and finish the project.
Another piece I wrote and has actually been published is Connecticut New Construction Progress Inspections. It explains why people who are having a new home built should have an independent inspector watching over the project.