• There are varying definitions for green homes and features. The term "high-performance" is more exact and might better describe what a buyer wants in a new home.
  • To meet the definition of green or high-performance, a home must meet minimum requirements in six categories. Having green features does not make a home green.
  • Consumers can ask that their lender to provide an appraiser who has expertise in valuing green properties, and also request that the Residential Green and Energy-Efficient Addendum be used in the valuation process.

Whether they’re buying or selling, consumers are increasingly expressing an interest in green homes. However, this rapidly growing and changing field can cause confusion among homeowners — and real estate professionals, too — on what exactly green means and how to potentially get its maximum value during a purchase or sale.

Here are four green lessons real estate agents can share with clients:

1. Green has many meanings

The concept of green, particularly when it comes to housing, has many definitions. A more descriptive term and one that’s used by the U.S. Environmental Protection Agency is “high-performance.”

Calling a house high-performance sets it apart from conventionally built homes. Clients might say they want a green home, but they really want one that’s high-performance.

2. Energy-efficient doesn’t mean green

A homeowner wanting to list a property as green might not understand why it doesn’t meet the definition even though it has energy-saving appliances, for example.

Real estate agents can explain to clients that green features, such as LED lighting and solar panels, don’t necessarily make a house green or high-performance. To be a high-performance building, it needs to meet minimum requirements in these six categories:

  • Site
  • Water efficiency
  • Energy efficiency
  • Indoor air quality
  • Materials
  • Operations and maintenance

3. Clients can ask for an appraiser with green expertise

Real estate agents can recommend that clients request that their lenders use an appraiser who has a green valuation education.

Agents or borrowers can’t ask for an appraiser by name, but the Appraisal Institute, for example, has the registry Valuation of Sustainable Buildings: Residential with names of designated members who have green expertise.

4. Clients can request use of the Residential Green and Energy-Efficient Addendum

Clients also can ask lenders to provide appraisers with the Residential Green and Energy-Efficient Addendum. This addendum, created by the Appraisal Institute and available on its website, was the first form of its kind intended for appraisers’ use.

It’s an optional addendum to Fannie Mae Form 1004, the appraisal profession’s most widely used form for mortgage lending purposes, that allows appraisers to identify and describe a home’s green features, including solar panels and energy-saving appliances.

Green technology is an exciting segment of the residential marketplace. Real estate agents and appraisers should learn more about this rapidly evolving field to best serve the growing numbers of energy-conscious consumers.

Scott Robinson, MAI, SRA, AI-GRS, is the 2016 president of the Appraisal Institute, the nation’s largest professional association of real estate appraisers, with nearly 20,000 professionals in almost 60 countries throughout the world. 

Email Scott Robinson.

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