Even though the housing market has recovered over the last few years, buyers are still more shy to invest than they used to be prior to the U.S. financial crisis in 2008.
Sellers now have to come up with increasingly new and creative ways to make their properties more attractive and valuable to future home owners. It has particularly become popular to use lower electric bills as a selling point for homes. Here is why.
According to an extensive study – covering a sample of 1.6 million homes sold in California between 2007 and early 2012 – conducted by economists at the University of California, Berkeley and the University of California, Los Angeles, homes with some kind of green certification sell for approximately 9 percent more than comparable homes that are not energy-efficient (or labeled as such).
The study noted that on a $400,000 per home average, these “green” properties were able to increase their sales value by $34,800.
Another important number to consider was pointed out by the Residential Energy Services Network (RESNET), who states that the market value of a home increases by $20 for every $1 decrease in annual energy costs.
As noted above, in order to take advantage of this added value, the home you are selling should come with a green label or certification, such as one of the following three:
- “LEED” (Leadership in Energy & Environmental Design), which certifies buildings that save money on energy bills and have a positive impact on the health of occupants while promoting renewable energy,
- “GreenPoint Rated,” which, according to nonprofit group Build It Green, is the most trusted independent green home certification program in California with a focus on health, durability, comfort, and resource efficiency of the home,
- or “Energy Star,” which is probably the most famous U.S. wide certification provided by the Environmental Protection Agency and the Department of Energy rewarding products and homes that protect our climate by reducing heating and cooling costs, water usage, and improving indoor air quality.
While the added property value is an important factor, some buyers might be more interested in learning about the amount of money they will be saving in the long run due to lower electric bills.
To visualize this huge upside, first present them with an extensive list of equipment (and its individual value) as well as all the features your home provides that contribute to lowering their energy bills. To create this overview, you can use Homeselfe’s mobile app, which creates a digital mock-up of the home and then provides a report pointing out key areas that contribute to the monthly energy bill.
Then, prepare a convincing financial forecast that shows what the electric bill would usually amount to compared to the much lower bill resulting from the energy-efficient home you are selling. You could, for example, provide them with financial projections for a year’s worth of electric bills as well as the entire time period (e.g. 25-30 years) of the mortgage to point out the drastic difference.
As part of your sales strategy in putting a home with lower electric bills on the market, think about who your ideal target audience might be.
As an example, the same study as mentioned above found that there is something called the “Prius effect.” It basically means that your chances of selling an energy-efficient home are much higher in areas where environmental awareness is a priority and where many buyers are willing to pay premiums for “green” products.
It’s called the “Prius effect,” because these green-home-friendly locations clearly overlapped with the zip codes associated with a high percentage in hybrid car registrations.
Additionally, consider that an increasing part of the educated and affluent demographic is interested, for both emotional and financial reasons, in putting their money on homes that have lower energy bills and, thus, increased long-term value.
Future Market Value
Speaking of long-term value … after the historic climate deal between the U.S. and China at the end of 2014, there is no doubt that energy-efficiency is becoming one of most important topics of the 21st century.
As a result, the Environmental Protection Agency and the U.S. Department of Energy will most likely introduce stricter rules in terms of energy use for both commercial and private buildings and indirectly drive up the value for homes that are already adequate.
In fact, the U.S. Green Building Council already stated that “LEED (certified) homes can qualify for discounted insurance, tax breaks and other incentives,” which, in addition to the lower electric bill savings, is probably one of the most convincing selling points for buyers to invest into energy-efficient homes.