In the fall, I gleefully reported that the Appraisal Institute had created a green addendum to accompany the standard appraisal forms so that appraisers had an official way to evaluate and compare green features in homes. I am not going to spend time in this article discussing what is included in the addendum but here is my original article for some highlights. Needless to say, I had a lot of questions in my mind as to how information was to be gathered, who should be involved in this, and how things were going to be calculated.
Last week, through the Green Resources Council, I was lucky enough to listen in on a presentation from The Appraisal Institute on some specific ways Realtors can use this new Addendum and AI’s expectations of their own. Here are my key takeaways from the presentation:
- Realtors and/or builders can and should be filling out this form, attaching documentation and making it available to potential buyers for new construction projects during the sales process.
- Buyers or their agents should provide this to their lender but also take it a step further and make sure it is provided to the appraiser.
- While Realtors cannot request a specific appraiser, it is completely appropriate to require the Appraiser have green education and be familiar with the new addendum. (AI says in their experience, the third parties assigning the appraisers will honor this). This was a huge concern of mine in the fall.
- If your MLS allows for you to upload documents such as disclosures with a listing, please include this form. The reasons are two fold, it makes it easier for the appraiser to get a hold of it and it can be used in future appraisals as a comparable.
- When it comes to energy efficiency in he new addendum, there are established metrics for appraisers to make adjustments. Because usage can vary from homeowner to homeowner, it is perfectly acceptable to include how many people (i.e. 2 adults and 3 children) live in a home either on the form or in the comments field of the listing.
- Any appraiser can use the form, AI does not require that only appraisers with green credentials use them. Some appraisers have said this and AI has suggested that if you get this objection, refer this appraiser on to AI for clarification.
- A home does not have to have a third party green certification in order to qualify to use this addendum. There is credit in there for items such as energy efficient retrofits, participation in programs through your local utility, walkscore, access to public transportation, and water saving features to name a few. AI is again stressing a homeowner will need documentation or a way for an appraiser to verify their claims. I’m still not sure how appraisers can assign a monetary value to this but perhaps if they are looking at this in terms of comps.
- According to AI roughly 1.9% of Realtors have some sort of green designation and roughly 2.9% of Appraisers have some sort of green classification. According the GreenMLSToolkit at least 20% of the new construction stock was built to some green builder certification in 2009 but I think based on our market here in Nashville, it’s trending around the 30% mark now.
For more information and a link to the new form visit Analyze the Value of Going Green of AI’s website, it’s a tremendous resource. I am pretty pleased with the form because it’s very thorough, and it’s clear AI is trying to include all parties to the transaction in the evaluation process. I am hoping this will become a game changer in regards to green homes getting stacked up against other green homes instead of by the standard size, finishes, and geography.