Why do most lenders not recognize "Green" price adjustments on Energy Efficient / Green Homes by Appraisers ?

By
Real Estate Broker/Owner with Ed Nikles Custom Builder , Inc. / Nikles Realty , Inc. PA Broker-RM060117A

Some Lenders pretend to offer "Energy Efficient" Mortgages with expanded ratios for Energy Star & Green Homes ! However , these same lenders will not recognize the "Green" adjustments made by Appraisers vs. non-green & non-energy star homes ! It costs more to build Energy Star & Green ! The benefits are documented by HERS Raters & Green Verifiers and utility cost savings can be calculated by computer programs ! Yet another Green Paradox - we want you to build Green , but it just won't Appraise ! Wake up people ! There are very few Energy Star & Green comparables sold as Resales ! If we can't appraise the ones we build , then how are we supposed to build more ? Is Green only for the wealthy or high downpayment clients ? I hope not ! I'm looking for ideas - What do you think ? Keepin' it Green !

close

Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Isaac E. Chavez 03/01/2009 04:34 PM
Location:
Pennsylvania Pike County Milford
Groups:
PA Construction
Mortgages
Green housing panel
ECO-ALL-STARS & "BOOMERS"
All About Mortgages/Mortgage Networking
Tags:
green building
energy star
mortgages
new homes

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainer
951
terry shook
kilowatt realty company - Jacksonville, FL

I am a HERS Rater as well as a RE Broker.  I have not seen a legitimate energy efficient mortgage.  As you said, some pretend to offer an EE mortgage, but most are just a gimmick.

As for appraisers, I think that they don't understand it all.  Which is a poor excuse.  

Fannie Mae Desktop Underwriter (I have been a licensed mortgage broker in the past) tells the lender on the Energy Report page to increase the value of the home an amount equal to 23 x the annual energy savings, as reported on the HERS rating.  Fannie Mae is doing their part - it is up to the appraisers and lenders to get on board. 

Terry Shook

Mar 01, 2009 04:11 PM #1
Rainer
214,791
Edward D. Nikles
Ed Nikles Custom Builder , Inc. / Nikles Realty , Inc. - Milford, PA

Terry , thanks for the info. on Fannie Mae ! We both wear many hats - I'm a Builder , RE Broker & licensed Broker / Appraiser (I don't do Appraisals now though) ! I received a HERS Rating of 48 on my last Energy Star home with conventional Fiberglass (formaldehyde-free of course) insulation ! I also received Gold Level Rating from NAHB Green Building Program for the same home ! We recently sold another lot / house package and Appraiser added in $19,000.00 adjustment for Green / Energy Star for the subject house which the lender wouldn't accept ! We've talked with a few other lenders about this construction loan package , but no luck with appraisal part ! We're frustrated ! Keepin' it Green !

Mar 01, 2009 06:18 PM #2
Rainer
46,331
Michelle Viggiano
Four Winds Healthy Home Carpet & Air Duct Cleaning - Scottsdale, AZ
healthyhomeaz

Ed, there has been the same smokescreen since the the late 1970's when "green building" first came upon the scene. From my understanding, these values can not be correctly and universally recognized and appropriated without the support of a national underwriting standard, so to speak. There is no organized, identifable concensus to put a value on green building components and consequent upgrades. Yes, there are so called tax credits, but beyond that, nothing has been standardized or formularized by the powers that be. At least as of yet,  please correct me if I am wrong. I have been an interior designer for 25 years and for remodels, green upgrades are rarely discussed in the appraisal arena.  Long story short, it will be the commerical  building arena that will standardize this.  With my other company, the green cleaning, LEEDs and the Green Council will only certify commerical cleaners, or companies that are primarily commerical and not primarily residential.  The residential component business owners always seem to have to wait in line for the commerical giants to muddle through first.

 

Mar 01, 2009 09:43 PM #3
Rainer
46,331
Michelle Viggiano
Four Winds Healthy Home Carpet & Air Duct Cleaning - Scottsdale, AZ
healthyhomeaz

Ed, I would like to clarify, I don't  mean the building's energy output, I am mainly talking about sustainable products and other green components of buildings, exterior and interior.

Mar 01, 2009 09:54 PM #4
Rainer
214,791
Edward D. Nikles
Ed Nikles Custom Builder , Inc. / Nikles Realty , Inc. - Milford, PA

Michelle , thanks for the input ! It is extremely frustrating that the public wants to build Green & the Obama Administration talks about Green , but no one is doing anything about Green when it comes to Lending & Appraising ! Keepin' it Green !

Mar 02, 2009 08:58 AM #5
Rainer
46,331
Michelle Viggiano
Four Winds Healthy Home Carpet & Air Duct Cleaning - Scottsdale, AZ
healthyhomeaz

Yes Ed, it's frustrating, quarried products always appraise higher regardless of their initial cost and level of quality. Reclaimed materials, even if they are in a luxury category, like encaustics seem to always appraise in most circles like ceramic, still below quarried, etc. and the list goes on and on.  

Mar 02, 2009 09:28 AM #6
Rainmaker
204,044
R.E. Renée Hoover, Salesperson
Century 21 Geba Realty, Milford, PA - Milford, PA
Poconos, Pike, Wayne, Monroe Counties, PA

Ed, good post.  Wish some of the members on AR in the mortgage industry would add their insights regarding this.  Perhaps email a few, and invite them in for some of their expertise?

Mar 04, 2009 11:45 AM #7
Rainmaker
204,044
R.E. Renée Hoover, Salesperson
Century 21 Geba Realty, Milford, PA - Milford, PA
Poconos, Pike, Wayne, Monroe Counties, PA

Seems like "keepin it green" is catching on - had a contact today.  There has to be a way to be proactive on this issue!

Mar 08, 2009 10:42 PM #8
Post a Comment
Spam prevention
Show All Comments
Rainer
214,791

Edward D. Nikles

Ask me a question
*
*
*
Spam prevention