How to Make Sure the “Green” Features of Your Home Help It Get Appraised for as Much Green as Possible

Some people “go green” and get energy efficient projects done on their home in order to do their part for the environment. Some do it mostly for the savings on energy consumption and bills. But no matter what your reasons, you probably hope it’ll also add value to your home when you sell it.

As with almost any home improvement you do, the return on investment and how much it’ll actually add to the sales price of your home can vary from one project to the next. So if you’re wondering if doing a “green” project is worth the cost — and will in fact increase the value of your home — ask your local real estate agent which ones will likely get the most bang for your buck, and which ones won’t, in the eyes of buyers in your area.

Some buyers will notice and appreciate green features in a home, while others may not. Think about it this way: Adding some energy efficient features to your home is like putting a higher performing engine on a Honda Accord. Someone who’s really into cars may notice and appreciate the upgrade, but someone who’s not that knowledgeable about cars probably just sees a Honda Accord and wouldn’t even realize the car will perform better than any other one they see on the road.

But even if your buyer ends up loving every eco-friendly improvement you’ve done — and is willing to pay a premium for it — there’s someone else you have to worry about overlooking the value of them…

When you sell your house, most likely your buyer’s mortgage company will require an appraisal to be done on your house to make sure it’s worth what the buyer has agreed to pay you for it. And, according to this recent article, the National Association of Realtors warns that some real estate appraisers aren’t taking the green improvements made to a home into account when they’re determining the value of a house.

So, not only do you have to worry about average homebuyers seeing the value in your improvements and paying you a premium for them, you also have to be concerned about real estate experts not recognizing the value you’ve added, and essentially not allowing the buyer to pay you as much as they were willing to.

That’s not to say that all appraisers would make that mistake, or even that the ones who do are entirely negligent. Green homes are still relatively new to the real estate scene. Appraisers certainly try to take the unique features of a house into account, but they’re also typically looking at the bigger picture of a house, like the square footage, condition of the house, location, etc. They might not be as tuned into how much better your heating and air conditioning system is than other houses in your area and price range.

Make Your Green Improvements Obvious to Everyone

You and your real estate agent will typically not have a say in who the appraiser is; it’s luck of the draw. The one assigned to you might be super in tune with green features, or not. Besides, no matter how good and thorough they are, appraisers can’t know what they don’t see. So the more info you can provide, the better.

Here are 3 things you can do to make sure nobody overlooks the green features of your home when you decide to sell it:

Document any work you’ve had done, and keep a file with any permits and certifications that will prove the improvement has made the house more efficient.
Keep track of and document any change in energy usage or savings you realized from a green project done on your house. This will help potential buyers truly appreciate the savings and added value of your home. For instance, if you saved $3,000 a year, that’s $30,000 over ten years of living there. Plus they don’t have to spend the money on making the improvements to another home in order to get to the point of saving money on a monthly basis; they can just buy yours and start reaping the rewards without the upfront expense.
Make sure your listing agent knows about everything you’ve done. While it’d be great if the agent you hire to list your property walks in and notices every single green feature in your home, don’t expect them to do so. Point out all of the features so he or she can make sure buyers, the buyers’ agents, and appraisers are all made aware of them as well by:
- Making sure to point them out in the remarks section of your listing in the multiple listing system.
- Touting them in their marketing materials for your house.
- Using them to justify value during negotiations.
- Making sure the appraiser took them into account on the appraisal, if their number comes in too low.

One final caveat: Keep in mind that the green projects you’ve done to your house may not add as much value as you might have paid for them or feel they should. For example, just adding new energy efficient windows might cut down your heating and cooling bill a bit, but it probably won’t be something buyers or appraisers see as much value in as a new high-efficiency heating and cooling system.

The Takeaway:

Whether you’ve done “green” projects to your home because you’re environmentally conscious, or just to save money, you want to make sure those improvements earn you as much money as possible when you sell your house. Unfortunately, not only do buyers sometimes fail to see the value of those types of features, but appraisers can overlook them as well.

Make sure you document the work you’ve done, and any savings they have generated for you, so your agent can make sure that potential buyers and appraisers don’t undervalue any of the green features your home has to offer.