Only about eight years ago, when the housing bubble was about to burst and cause one of the country’s biggest recessions in recorded history, it was understandably difficult to sell energy saving houses as the majority of buyers could not focus on saving energy, but, instead, saving money.
In 2015, however, with the U.S. economy recovering rapidly and unemployment rates at a seven-year low, the housing market is in a different place, too. While a strengthening economy is one factor, more and more EPA regulations as well as increased social media awareness for the environment among Millennials who are looking to invest into their first homes make for another, crucial factor.
In other words, properties that offer “green” solutions are quickly gaining in value.
In a recent study conducted by economists at the University of California, Berkeley and the University of California, Los Angeles – covering a sample of 1.6 million homes sold in California between 2007 and early 2012 – found that homes with a green certification sold for 9 percent more than comparable, non-labeled homes. Based on a $400,000 average, the study concluded that certified green homes were able to add $34,800 in selling value.
According to the Washington Post, the 9 percent result of the California study aligns with findings in the European housing market, where properties labeled as energy-efficient (and rated “A” under the European Union’s system) sell for an average of 10 percent more than conventional homes.
Where to Sell
Not surprisingly, the California study also found that potential buyers in areas where environmental awareness is generally higher, are more open to paying premiums for green homes than in other locations. They call this the “Prius effect, because the zip codes that marked the highest percentages of hybrid car registrations happened to overlap with green-home friendliness.
Other areas that turned out to favor energy-efficient homes were warmer parts of the country, such as the Central Valley of California.
Securing Certification to Increase Value
One of the key factors in selling energy saving homes is the certification. The most common and respected ones are:
- “Energy Star” – a voluntary program operated by the U.S. Environmental Protection Agency and the Department of Energy to protect our climate by rewarding homes that reduce heating and cooling costs, water use, and that improve indoor air quality.
- “LEED” (Leadership in Energy & Environmental Design) – a certification created by the private nonprofit U.S. Green Building Council, which certifies buildings that save money and resources and have a positive impact on the health of occupants, while promoting renewable, clean energy. Single-family homes can apply for LEED, even though the certificate is more common among commercial buildings.
- “GreenPoint Rated” – the most trusted independent green home certification program in California, according to nonprofit group Build It Green (its administrator), providing proof that a home is healthy, comfortable, durable, and resource efficient.
List the Home’s Green Assets
The simplest way to show potential buyers the value they gain by purchasing an energy saving home is to specifically list all of the property’s green assets accompanied by their individual value. This can include things like insulation (including its “R Factor”), heating equipment, cooling systems, and water-conserving barrels.
Compare the added value to the reduced price the home would be worth if it did not have all the extra equipment to clearly point how much buyers are winning.
To create an overview of where you put your home improvement dollars, you can conduct an energy audit, such as the “Home Energy Rating System Index,” which is mandatory in some states before selling a home. You could also use Homeselfe’s mobile app, which creates a digital mock-up of your home and guides you through the key areas that contribute to monthly energy bills.
Provide Energy Savings Overview
Finally, one of the most powerful tools in convincing prospective buyers to invest into an energy-efficient house is to compare conventional energy costs with the significantly reduced utility bills of a green home. To help them visualize how much they could save, provide cost projections for a year’s worth of utility bills as well as the entire time period (e.g. 30 years) of the mortgage.
It might also help to point out that, according to the Residential Energy Services Network (RESNET), the market value of a home increases by $20 for every $1 decrease in annual energy costs.
A large part of selling energy saving homes is educating the buyer. You might come across environmentally conscious clients, but chances are that even they don’t know about all of the benefits and values this new generation of homes brings with them. Finally, do not underestimate the value of what you are selling, because energy-efficient homes could be a huge asset as the housing market evolves.