A Tale of Two Appraisals:

Financing Leveraged with the Residential Green and Energy Efficient Appraisal Addendum

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The Moyers weren’t interested in energy efficiency or green building. They just wanted to expand their home for their growing family in the traditional neighborhood that they loved in a way that reflected their desire for a modern interpretation of the best parts of the design vocabulary their home already had. We designed the addition, hopeful that the cost was not higher than financing in this area of Roanoke, Virginia could support.

Whether the Client requests it or not, we always include energy efficient and green features. It’s not ‘extra’ it’s just good design in our firm. So when it came time to get some financing appraisals, we provided and Energy Performance Score Energy Model, documentation of insulation, heating and cooling systems, and more; with a summary of how this home compared to its neighbors.

The first bank did not use a qualified green appraiser. The appraisal came in at $465,000 – too low for the client’s financing needs. So we recommended that a second bank use a qualified green appraiser. Based on the same documentation provided to the first appraiser, the second appraisal came in at $585,000. The project was financed.

What explains a 25% higher appraisal value using the Green Addendum?

We asked. It’s all about the “comps”. The first appraiser had a nearby ‘radius’ of comparable home sales (none with energy efficient or green features noted). The qualified appraiser used an expanded radius to include homes with bona-fide energy efficient and green features:  these homes sold for more – a lot more.

New Appraisal Institute guide lines Require a building scientist (us) to fill out the Green Addendum before the appraisal takes place. This triggers the requirement that the financing institution use a qualified appraiser. As more high performance homes are built, the Green Addendum will be a market differentiator for homeowners and builders. Based on our experience, those that use it could see up to 25% higher appraised values. That’s on top of monthly utility savings (and borrowing power – and better Loan-to-Value Ratio (LTV)).

More comfort. Higher value. Healthier environments. Better Buildings.

Homes are where families grow. Our roles as the designer is to make places that shape without confining – that protect without limiting – and that whisper ‘today’ without forgetting the stories of this house, this family, this “now”.

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