This post is a follow-up piece to yesterday’s Yardi contribution on the subject of green homes by The Balance Sheet writer Erica Racson. Now that you know profitable green home sales are here to stay, discover 6 eco-friendly tips that will help you (and your clients) see the best returns. To read our contribution to The Balance Sheet, click here.
Green homes sell faster—as in, 22% faster—than traditional houses. Green properties can also sell for nearly 10% more. But don’t jump on the emerald bandwagon just yet. It’s important to determine if a green renovation is right for a specific property, and if so, which alterations are the most valuable.
Learning what gives green properties a competitive edge in today’s real estate market can help you hone in on the most lucrative listings. Being able to identify what makes houses competitive in today’s market poses benefits for sellers, agents, and buyers.
Green Home, Green Neighborhood? Green Light!
Green homes make up less than 20 percent of properties on the market. If a home’s neighborhood does not have comparable green properties nearby, giving a house a green makeover may make it more difficult to appraise. If the appraisal fails to reflect the home’s intrinsic value, the seller most likely won’t fetch the price that he or she seeks. If, however, other area homes have successfully undergone green renovations, go right ahead. It’s officially trending in your ‘hood!
As all agents know, the neighborhood (again) influences the property’s price ceiling. A green home with $1.5 million worth of eco-friendly features (and a matching asking price) simply won’t receive many takers in a neighborhood of $200,000 homes. Such a property will prove to be a tough sell. Make eco-friendly adjustments that are in financial keeping with the rest of the houses in your area.
Minor Upgrades = Big Return
For sellers, GreenandSave’s Master ROI Table is a good starting point for general upgrade information, though more detailed analyses can be found at Cost vs Value Report issued by Remodeling Magazine. The latter breaks projects down by region and city. Popular additions that increase value and salability across the board include efficient heating and cooling upgrades, energy efficient appliances, and water-efficient fixtures.
The Contractor Counts
For agents, the contractor responsible for the renovations could be a selling point. While many contractors are capable of completing the work, homes whose green enhancements are completed by a Green Certified Professional likely yield the most promising results. A Green Certified Professional is a contractor with specialized training in green renovations, remodels, and builds. When presenting a home to a potential buyer, noting that Green Certified Professionals are responsible for the additions will increase buyers’ confidence.
Get a Third Party Involved
Green homes will also sell best if they receive a label from an accredited source. This could be achieved through a large scale program such as LEED or simply through an energy audit that will give buyers an idea of how efficient the home has become relative to non-green homes in the area. Without a third party seal of approval on the property, agents and sellers won’t have solid evidence of the home’s increased value.
While a home can have a slew of sustainable features, the home will never reach the ideal buyers without a proper write up that conveys its best assets. Eco-conscious buyers want to know what green features the home has and how much money they can expect to save. Sellers and brokers would be wise to obtain a home energy audit. The results of the professionals’ findings will highlight the home’s strongest features. Using such information while creating the home’s listing description, virtual tour and other marketing materials will catch the eye of buyers and increase interest.
Sellers should also check for tax credits, grants and loans available before beginning their green renovations. Such resources improve their return on investment by offsetting costs. Incentives under The American Recovery and Reinvestment Act (ARRA) of 2009 terminated last year yet there are still incentives available under EnergyStar.gov. Homeowners may also find state incentives via the Database of State Incentives for Renewables and Efficiency (DSIRE), which lists appliance tax credits, loans and grants for green home improvements.
Have you noticed a shift towards green properties in your local market? If so, what features draw the attention of most potential buyers?