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Green Appraisals and Mortgage Solve Problems

Posted by Christina B. Farnsworth

Apr 29, 2014 2:41:00 PM



The ongoing problem with evaluating green homes has been the lack of tools that appraisers can use to determine value (or perhaps that so far only a few appraisers have made use of the existing evaluation tools) and the dearth of mortgages that take into account utility cost savings. And there has been plenty of finger pointing.

Both problems may be close to being solved.

Just published is the Appraisal Institute's “Residential Green Valuation Tools.”

Sustainable building is in the news and the market for green, or high-performance, homes is clearly growing. Appraisers who want to appraise these homes competently need to get up to speed on the latest green and energy-efficient home features and learn to determine exactly how green a particular property is,” the Appraisal Institute says.

Residential Green Valuation Tools explores what the institute describes as “the six features that make a home green—proper siting, water and energy efficiency, indoor air quality, materials, and operations and maintenance—and provides:

  • A comprehensive overview of the valuation of high-performance homes

  • Case studies illustrating common scenarios and valuation problems

  • Detailed instructions on how to complete the AI Residential Green and Energy Efficient Addendum form

  • Tips for appraising Energy Star homes, passive solar houses, solar photovoltaic systems, and net-zero energy homes

Appraisers who value green homes are breaking new ground and face unique challenges. Residential Green Valuation Tools provides the methods and resources you need to meet these challenges and become a green-friendly appraiser.

The author is an expert in her own right. Sandra K. Adomatis, SRA, LEED Green Associate, is a practicing real property appraiser and consultant at Adomatis Appraisal Service in Punta Gorda, Fla. She is a state-certified general appraiser and earned her LEED Green Associate credential from the Green Building Certification Institute in 2013. Adomatis is a current member of the Appraisal Institute’s Admissions and Designation Qualifications Committee and past vice chair of the national Education Committee. Adomatis has edited and contributed to Appraisal Institute books, courses, and seminars, including the Valuation of Sustainable Buildings professional development program. The Appraisal Institute considers Adomatis their voice of “green.”

The 191-page Residential Green Valuation Tools (ISBN: 978-1-935328-52-0) is $60 ($50 for Institute members).

And once a home has been properly appraised, there is at least one lender stepping up to offer green mortgages, according colleague and syndicated columnist Lew Sichelman who writes the Housing Scene column.

Sichelman’s column, posted March 26th, reported on  new energy-efficient mortgages. Sichelman rightly points to the failures of previous efforts to launch such mortgage types and how “cumbersome” they are “to originate.”

Sichelman writes that consumers, “In short, they’ve been punished rather than rewarded for wanting to go green.” So true.

Salt Lake City-based lender SecurityNational Mortgage Company (SNMC) describes itself as the nation’s premiere green lender with 77 branches nationwide. Sichelman writes that, “In partnership with Green Energy Money (GEM) of Austin, Texas, SecurityNational is set to launch a massive high-performance pilot program with a goal of funding 10,000 energy-efficient homes by the end of next year. The partners are currently seeking builders in California, Illinois, Arizona, Colorado and Maryland to participate in the effort.”

The pilot program, according to the lender’s Web site, uses its own proprietary GEM appraisal tool to value how green homes are. And in a move that gives even more credence to HERS becoming a national standard, uses a homes’ HERS Index as part of the loan qualification process.

According to the SNMC Web site, “SNMC has partnered with Green Energy Money (GEM) to offer a High-Performance Building and Green Mortgage Pilot Program.

GEM has developed a proprietary green appraisal rating system that standardizes and quantifies the connection between the HERS Index and 18 energy rating systems and building codes. As a result, GEM captures the monetized value that consumers (and lenders) require to build new high-performance homes or convert existing buildings to high-performance homes.

SNMC and GEM offer financing and quantified green appraisals that can include the following measures on all projects:

  • Solar

  • Geothermal

  • Rainwater Harvesting (only source of water)

  • Solar Hot Water

  • Electric vehicle infrastructure

  • High-performance building materials, SIP panels, etc.

  • All energy-efficiency building envelope and equipment upgrades."

So, Green Up, Green On and get properly appraised and financed. Yes.

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