Countertops or Cost Savings? Banking on Green Real Estate to Improve Existing Home Values
By: Luke Bujarski
Today’s competitive real estate market is making it extremely difficult for owners to sell their existing properties. One way property owners can set themselves apart in this tough market is through green certification. As the green building movement continues to gain momentum, ever-scrupulous buyers will be drawn toward properties that have their green credentials, while shying away from those that do not. Therefore, instead of investing in new kitchen countertops or ceramic tiles for the bathroom, home improvement budgets might be better allocated toward improving the overall energy efficiency of your home.
A report released by Harvard University’s Joint Center for Housing Studies states that the median price for existing single-family homes dropped by 28.5 percent from 2005 to 2009. Tighter credit markets and high national unemployment have also shrunk the pool of potential buyers. For those looking to break even on their existing homes in this tough market, extra care and deliberation should be taken when deciding how to spend limited home improvement dollars.
Today’s market savvy building professional might suggest that “greening” one’s home is money well spent, compared to other piecemeal improvements focused on esthetics. Taking the necessary steps to improve and certify the energy efficiency of your home will instill much needed confidence with potential buyers. Furthermore, today’s buyers are looking for customizability, with the option to choose the look and feel of their bathrooms and kitchens. Putting in the initial investment to guarantee an energy efficient core can work as a selling point across all buyers, regardless of their preference in color and building materials.
One way of quantifying your home energy performance is by getting it Energy Star certified. The Energy Star certification is commonly associated with electronics and other durable goods, but the EPA in partnership with the Department of Energy also offers certification for homes through Energy Star. The cost of certification will depend on your home’s current energy usage, and how it compares to the US Department of Energy benchmark standard, often referred to as the Energy Smart Home Scale or e-Scale.
The process of getting your home Energy Star certified usually follows three steps: 1) energy rating to establish a benchmark of efficiency 2) energy audit to see which improvements can yield the biggest gains in energy efficiency 3) performing the energy retrofit. Step three usually involves added insulation, sealing air leaks, replacing old appliances with newer more energy efficient models, and replacing old windows and doors.
Once Energy Star certified, sellers can use this verifiable designation as a way to attract buyers. Likewise, online property listings through major realtors like ReMax and Realtor.com are poised to feature properties based on their energy efficiency certifications and scores. This will allow buyers to “weed out” properties based on their energy efficiency credentials. In other words, not having green credentials could actually eliminate your property from a larger pool of potential buyers. As the green real estate market infrastructure evolves, prioritizing energy efficiency could be a market maker or deal breaker.