There is a mismatch between the current appraisal system and assessing the true value of high-performance, resilient, healthy, sustainable homes. But change is afoot.
Appraisals were never meant to be inspirational. They exist to ground housing transactions in evidence—to strip away emotion, hype, and speculation so buyers, lenders, and communities aren’t building wealth on wishful thinking.
But today, we’re asking a 2026 housing market to be evaluated using a system that still behaves as if square footage, finishes, and yesterday’s comparables tell the full story. That mismatch isn’t a failure of intent or professionalism. It’s a structural failure across the real estate ecosystem, one that routinely buries the very attributes consumers increasingly care about: operating cost, resilience, health, and energy independence.
When sustainability, resilience, wellness, and performance don’t show up clearly in the appraisal, they don’t show up anywhere else either—not in underwriting, not in financing products, not in insurance logic, and not in the buyer’s understanding of long-term cost.
The result is predictable: homes are undervalued, builders are disincentivized, and homeowners are left absorbing inefficiency and risk for decades.
The First Breakdown
Most people assume the appraisal fails at the math. In reality, it fails at the handoff. A buyer goes to a lender. A lender places an order through an appraisal management company. An appraisal management company assigns the job. An appraiser arrives at the property.
Sounds clean, that is, until you realize the key detail often never makes it into the chain: a green home isn’t “typical.”
Sandy Adomatis, former President of the Appraisal Institute and one of the most influential voices in the country on residential green appraisals, has been beating the drum for nearly two decades. “When a lender isn’t clearly told that a home is sustainable or high-performance, the system defaults to business as usual,” she says. “A standard appraisal order goes out. A standard appraiser gets assigned. And the appraiser may arrive with no education, no context, and no idea what questions to ask about a green home in order to ensure it is being properly valued.”
At that point, the home gets treated like code-built housing, and the value that actually matters—performance, resiliency, sustainability, and energy independence—stays invisible.
Structural Under-Valuation
The second breakdown is operational. “Many appraisal management companies run assignments like a bid process,” Adomatis relays. “They’re looking for the lowest fees and fastest turnaround.”
That may be efficient for processing volume, but it’s disastrous for precision. A properly analyzed high-performance home takes more time to appraise. It demands more research. It requires competency in features that most appraisers were never trained to interpret.
“A true green appraiser should charge more because the assignment is harder, more technical, and more exposed to risk if done lazily,” Adomatis insists. But the system is not designed to reward rigor. It’s designed to reward speed, and that’s why so many high-performance homes get appraised inaccurately.
Education Shouldn’t Be Optional
Here’s the part that should make the industry squirm: out of roughly 43,000 residential licensed appraisers in the U.S., fewer than 5% have meaningful education in sustainable or energy- efficient features, according to Adomatis. “So, even if someone says, ‘Our AMC has a database of 20,000 appraisers,’ the real question is: how many of them can competently value a HERS- rated home, a solar + storage system, electrification upgrades, filtered ventilation, or resilience features? The odds are not in a builder or homebuyer’s favor,” she laments.
The Hidden Tragedy
Even when an appraiser wants to do the right thing, they often can’t find the information. Adomatis offers a painfully vivid example: recently, she pulled 30 recent comparable sales in the local MLS and looked for a “green” or “energy efficient” identifiers. What did she find? None. Not because the homes aren’t efficient, but because the data wasn’t entered.
Adomatis goes above and beyond what most appraisers do. She takes the time, and the effort, to go to the RESNET database, search for HERS-rated homes, export information into spreadsheets, merge datasets, and reverse-engineer which “normal” sales are actually high- performance homes.
“The current system structurally suppresses value,” she maintains. “If the market can’t see it, it can’t price it. If appraisers can’t find it, they can’t adjust for it. If lenders can’t verify it, they can’t underwrite it confidently. If buyers can’t compare it, they can’t demand it.”
Sandy once used the phrase “invisible value,” and someone told her not to use that word. But she was right. This value is invisible—not because it isn’t real, but because the system refuses to make it legible.
The MLS Bottleneck
One of the most important and misunderstood obstacles comes from the lending side: if information is not in the MLS, appraisers can’t query it. And if appraisers can’t query it, it effectively doesn’t exist as a market signal.
This is why the conversation about Value Per Square Foot cannot be theoretical. It has to be infrastructural. Because value doesn’t scale through good intentions. It scales through fields, forms, standards, and databases. If HERS scores, certification types, solar PV, battery storage, envelope performance, and resilience measures aren’t consistently listed and searchable, we are guaranteeing under- valuation at scale.
The Secret Sauce Myth
“There is no secret sauce. There is only data,” Adomatis contends. “Anyone selling a magical method to appraise above contract price without support is selling risk disguised as hope.” It can get builders burned. It can get appraisers sanctioned. And can undermine credibility of all stakeholders involved.
The goal is not inflated value. The goal is fair market value based on real, defensible market evidence. If demand exists, the appraisal should reflect it.
Big Shift Coming
Despite the recognition of a broken system, Adomatis expresses some optimism: Fannie Mae and Freddie Mac’s updated appraisal format (the “3.6” URAR) includes a full page dedicated to green and energy-efficient features.
That matters because forms shape behavior. When appraisers are required to disclose these features, and when those disclosures open additional fields that force comparables to be analyzed for the same attributes, the system starts to move from optional to inevitable.
For years, the forms made it easy to ignore performance. Now they’re beginning to make that harder.
But forms alone won’t solve the education gap. The underwriters reviewing reports also need fluency, because if they don’t understand what should be documented, they won’t know what to challenge.
From Appraisal to Cultural Literacy
There’s a deeper issue underneath the mechanics: people buy what they understand. Adomatis made the point bluntly. “Builders can’t assume the market will pay more for what it can’t see. If listings don’t mention the features, if sales teams can’t explain what a HERS score means, if buyers don’t understand the monthly operating cost difference, then the market will treat a high- performance home like a typical home.” And appraisers who are bound to reflect what the market pays will follow the market’s cues.
This is why education isn’t a “nice to have.” It’s the demand engine. Appraisals don’t create demand, but they absolutely can amplify it when the market is informed and the data is visible.
The Fix
Solving the appraisal challenge isn’t a single—or simple—solution. “We can start by attaching the Green and Energy Efficient Addendum to contracts so the lender sees it from day one,” Adomatis advises. “Builders should train sales teams to ask appraisers directly whether they have education and experience with high-performance homes. They should also build lender and AMC databases of qualified appraisers instead of pretending a general list is good enough, and force MLS visibility so features become searchable, comparable, and priceable. Educate underwriters so they can quality-control the appraisal itself.”
At the end of the day, everyone involved—builders, homebuyers, lenders, and even appraisers themselves, have to stop hoping the system will figure it out on its own, and start designing the system to tell the truth.
Because until appraisals can see value, the market can’t reward it. And if the market can’t reward it, the housing sector stays trapped, building to minimum code, normalizing high operating costs, and pretending affordability is about the sticker price instead of the full cost of ownership.
Appraisals aren’t just paperwork. They are one of the most powerful levers shaping what gets built, what gets financed, what gets insured, and, ultimately, what families are forced to live with long after closing.
Want to hear more on this topic? Join us a riveting in person discussion during Design and Construction Week. Click here for more information.
As cofounder and CEO of Green Builder Media, Sara is a visionary thought leader and passionate advocate for sustainability. A former venture capitalist, she has participated in the life cycle (from funding to exit) of over 20 companies, with an emphasis on combining sustainability and profitability. She lives in Lake City, Colo., with her husband, where she is an avid long-distance runner, snowboarder, and Crossfit trainer. She is also on the Board of Directors at Dvele, runs the Rural Segment for Energize Colorado, and is a former County Commissioner.
The Problem With Appraisals
There is a mismatch between the current appraisal system and assessing the true value of high-performance, resilient, healthy, sustainable homes. But change is afoot.
Appraisals were never meant to be inspirational. They exist to ground housing transactions in evidence—to strip away emotion, hype, and speculation so buyers, lenders, and communities aren’t building wealth on wishful thinking.
But today, we’re asking a 2026 housing market to be evaluated using a system that still behaves as if square footage, finishes, and yesterday’s comparables tell the full story. That mismatch isn’t a failure of intent or professionalism. It’s a structural failure across the real estate ecosystem, one that routinely buries the very attributes consumers increasingly care about: operating cost, resilience, health, and energy independence.
When sustainability, resilience, wellness, and performance don’t show up clearly in the appraisal, they don’t show up anywhere else either—not in underwriting, not in financing products, not in insurance logic, and not in the buyer’s understanding of long-term cost.
The result is predictable: homes are undervalued, builders are disincentivized, and homeowners are left absorbing inefficiency and risk for decades.
The First Breakdown
Most people assume the appraisal fails at the math. In reality, it fails at the handoff. A buyer goes to a lender. A lender places an order through an appraisal management company. An appraisal management company assigns the job. An appraiser arrives at the property.
Sounds clean, that is, until you realize the key detail often never makes it into the chain: a green home isn’t “typical.”
Sandy Adomatis, former President of the Appraisal Institute and one of the most influential voices in the country on residential green appraisals, has been beating the drum for nearly two decades. “When a lender isn’t clearly told that a home is sustainable or high-performance, the system defaults to business as usual,” she says. “A standard appraisal order goes out. A standard appraiser gets assigned. And the appraiser may arrive with no education, no context, and no idea what questions to ask about a green home in order to ensure it is being properly valued.”
At that point, the home gets treated like code-built housing, and the value that actually matters—performance, resiliency, sustainability, and energy independence—stays invisible.
Structural Under-Valuation
The second breakdown is operational. “Many appraisal management companies run assignments like a bid process,” Adomatis relays. “They’re looking for the lowest fees and fastest turnaround.”
That may be efficient for processing volume, but it’s disastrous for precision. A properly analyzed high-performance home takes more time to appraise. It demands more research. It requires competency in features that most appraisers were never trained to interpret.
“A true green appraiser should charge more because the assignment is harder, more technical, and more exposed to risk if done lazily,” Adomatis insists. But the system is not designed to reward rigor. It’s designed to reward speed, and that’s why so many high-performance homes get appraised inaccurately.
Education Shouldn’t Be Optional
Here’s the part that should make the industry squirm: out of roughly 43,000 residential licensed appraisers in the U.S., fewer than 5% have meaningful education in sustainable or energy- efficient features, according to Adomatis. “So, even if someone says, ‘Our AMC has a database of 20,000 appraisers,’ the real question is: how many of them can competently value a HERS- rated home, a solar + storage system, electrification upgrades, filtered ventilation, or resilience features? The odds are not in a builder or homebuyer’s favor,” she laments.
The Hidden Tragedy
Even when an appraiser wants to do the right thing, they often can’t find the information. Adomatis offers a painfully vivid example: recently, she pulled 30 recent comparable sales in the local MLS and looked for a “green” or “energy efficient” identifiers. What did she find? None. Not because the homes aren’t efficient, but because the data wasn’t entered.
Adomatis goes above and beyond what most appraisers do. She takes the time, and the effort, to go to the RESNET database, search for HERS-rated homes, export information into spreadsheets, merge datasets, and reverse-engineer which “normal” sales are actually high- performance homes.
“The current system structurally suppresses value,” she maintains. “If the market can’t see it, it can’t price it. If appraisers can’t find it, they can’t adjust for it. If lenders can’t verify it, they can’t underwrite it confidently. If buyers can’t compare it, they can’t demand it.”
Sandy once used the phrase “invisible value,” and someone told her not to use that word. But she was right. This value is invisible—not because it isn’t real, but because the system refuses to make it legible.
The MLS Bottleneck
One of the most important and misunderstood obstacles comes from the lending side: if information is not in the MLS, appraisers can’t query it. And if appraisers can’t query it, it effectively doesn’t exist as a market signal.
This is why the conversation about Value Per Square Foot cannot be theoretical. It has to be infrastructural. Because value doesn’t scale through good intentions. It scales through fields, forms, standards, and databases. If HERS scores, certification types, solar PV, battery storage, envelope performance, and resilience measures aren’t consistently listed and searchable, we are guaranteeing under- valuation at scale.
The Secret Sauce Myth
“There is no secret sauce. There is only data,” Adomatis contends. “Anyone selling a magical method to appraise above contract price without support is selling risk disguised as hope.” It can get builders burned. It can get appraisers sanctioned. And can undermine credibility of all stakeholders involved.
The goal is not inflated value. The goal is fair market value based on real, defensible market evidence. If demand exists, the appraisal should reflect it.
Big Shift Coming
Despite the recognition of a broken system, Adomatis expresses some optimism: Fannie Mae and Freddie Mac’s updated appraisal format (the “3.6” URAR) includes a full page dedicated to green and energy-efficient features.
That matters because forms shape behavior. When appraisers are required to disclose these features, and when those disclosures open additional fields that force comparables to be analyzed for the same attributes, the system starts to move from optional to inevitable.
For years, the forms made it easy to ignore performance. Now they’re beginning to make that harder.
But forms alone won’t solve the education gap. The underwriters reviewing reports also need fluency, because if they don’t understand what should be documented, they won’t know what to challenge.
From Appraisal to Cultural Literacy
There’s a deeper issue underneath the mechanics: people buy what they understand. Adomatis made the point bluntly. “Builders can’t assume the market will pay more for what it can’t see. If listings don’t mention the features, if sales teams can’t explain what a HERS score means, if buyers don’t understand the monthly operating cost difference, then the market will treat a high- performance home like a typical home.” And appraisers who are bound to reflect what the market pays will follow the market’s cues.
This is why education isn’t a “nice to have.” It’s the demand engine. Appraisals don’t create demand, but they absolutely can amplify it when the market is informed and the data is visible.
The Fix
Solving the appraisal challenge isn’t a single—or simple—solution. “We can start by attaching the Green and Energy Efficient Addendum to contracts so the lender sees it from day one,” Adomatis advises. “Builders should train sales teams to ask appraisers directly whether they have education and experience with high-performance homes. They should also build lender and AMC databases of qualified appraisers instead of pretending a general list is good enough, and force MLS visibility so features become searchable, comparable, and priceable. Educate underwriters so they can quality-control the appraisal itself.”
At the end of the day, everyone involved—builders, homebuyers, lenders, and even appraisers themselves, have to stop hoping the system will figure it out on its own, and start designing the system to tell the truth.
Because until appraisals can see value, the market can’t reward it. And if the market can’t reward it, the housing sector stays trapped, building to minimum code, normalizing high operating costs, and pretending affordability is about the sticker price instead of the full cost of ownership.
Appraisals aren’t just paperwork. They are one of the most powerful levers shaping what gets built, what gets financed, what gets insured, and, ultimately, what families are forced to live with long after closing.
Want to hear more on this topic? Join us a riveting in person discussion during Design and Construction Week. Click here for more information.
Publisher’s Note: This content is made possible by our Today’s Homeowner Campaign Sponsors: Whirlpool Corporation and ProVia. Learn more about building and buying homes that are more affordable and less resource intensive.
By Sara Gutterman
As cofounder and CEO of Green Builder Media, Sara is a visionary thought leader and passionate advocate for sustainability. A former venture capitalist, she has participated in the life cycle (from funding to exit) of over 20 companies, with an emphasis on combining sustainability and profitability. She lives in Lake City, Colo., with her husband, where she is an avid long-distance runner, snowboarder, and Crossfit trainer. She is also on the Board of Directors at Dvele, runs the Rural Segment for Energize Colorado, and is a former County Commissioner.Also Read