Sales agents, appraisers underestimate value of green

From the NAHB-- Professionals with expertise in green building sales and marketing attending the National Green Building Conference in Dallas on May 8-10 reported that they are seeing steady progress in educating real estate appraisers and sales agents to recognize the added value of homes that can save energy, promote comfort and indoor air quality and go easy on the environment.

However, at a time when builders in general are encountering difficult appraisal problems because of slow sales and surging forecloses, finding appraisers who know how to make suitable property comparisons to provide accurate valuations of green homes is particularly challenging, they said.

The large majority of those who play a role in the residential appraisal and sales process don’t have enough expertise in green homes to value them correctly or to promote their unique features to prospective buyers. Because of that, consumers aren’t always aware of the improvements that their builders or remodelers make, whether their information comes from these professionals or from the tools that they use — like the local MLS system.

Putting Green in the MLS

Al Medina, director of the Green Designation program of the National Association of Realtors®, said that only about 1% of the nation’s independently owned and operated MLS’s have a green feature. His organization is working to change that deficiency by educating its sales agents about the value of green and the importance of establishing its benefits in the listings and in the minds of consumers.

Toward the end of last year, roughly 1,500 Realtors® had completed the educational requirements to receive the green designation, Medina said. “Agents are a great conduit to consumers and the public,” he said. “There is clearly pent-up demand for green education.”

As part of its mission, the association's Green REsource Council is working to include entry fields in MLS’s to identify green features and certifications that will help agents search for sustainable homes and properties and allow builders and sellers to market their green homes.

As a prototype, Medina recommended MLS inputs initiated by Realtors® in Traverse City, Mich. and its green disclosure statement, which is the most comprehensive greening of a MLS that the council has received. “This is one great example,” he said, “and it wouldn’t have gotten done without the collaboration of the local Home Builders Association of the Grand Traverse Area.”

Green Appraisals

On the appraisal side, we are behind any movement or education that gets the appraisal world on board with this stuff,” Medina said.

Don Briggs, whose company Briggs Associates Inc. specializes in green appraisals, said that a builder or Realtors® should expect the appraiser who comes to view their green property to be competent, but if he isn’t knowledgeable about green building he may fall short in determining the most probable price a property will bring in the open market. “He can leave things out, and he is responsible for that,” Briggs said.

In the meantime, “you’re going to have to educate appraisers,” he said, and go out and look for those who are competent in assessing green homes.

For appraisers who are in the business of making market comparisons in order to assess home values, “data from the Multiple Listing Service is the right place to look,” said John Stovall, vice president of EcoBroker. “But most MLS’s don’t identify green properties.”

Stovall said that NAHB members can help promote the higher value and customer benefits of green homes by working with knowledgeable agents to include appropriate data in the MLS.

His own company, which was honored during the NAHB Green Conference as the “Green Advocate of the Year,” now has some 5,000 members spreading the word in all 50 states about the advantages of green housing.