A new study by home appraisers has shown that energy-efficient properties can command thousands more dollars than their less green counterparts when it comes time to sell.
The recently released study examined the sales of 27 homes in Virginia and Maryland that had been accredited by the Vienna-based firm Pearl Certification. Those sales were then compared with sales of 35 similar homes in the area that were not Pearl-certified.
“The study found that the average price premium for a Pearl-certified home was more than 5 percent when the certification had adequate market exposure,” said author Sandra Adomatis. “Our findings are consistent with the results of other studies from across the U.S., which have almost all shown a premium on the sale of homes with green and energy efficiency certifications.”
Specifically, certified homes in the Central Virginia market had an average price premium of 5 percent, compared with premiums in the Northern Virginia market that ranged from 2.2 percent to 4.2 percent.
The idea to examine potential value increases for energy-efficient homes came a year into Pearl’s launch into the Central Virginia market, according to CEO Cynthia Adams. The company looked to Adomatis, a nationally recognized expert at valuing properties with solar installations and energy-efficient features, to conduct the appraisal.
“She had complete editorial authority over the study, and she also enlisted some local appraisers from the Central Virginia and Northern Virginia markets to do research on the particular properties and to speak with some of the agents who represented those properties,” Adams said.
The goal of the study was to “validate [Pearl’s] supposition” that homes with third-party certifications and more available information on energy usage are more valuable in the real estate market. While the increase in perceived value was expected, Adams noted that premiums only occurred when the home was properly marketed as “high-performing.”
“If the agent didn’t say anything about the certification, or didn’t include any information about in the Multiple Listing Service, then there wasn’t much increase at all,” Adams said. “This may seem obvious, but I think for us it bears repeating, that people will pay more for things that they understand and that they value.”
Adams said it was incumbent on agents to help potential buyers understand the perks of a home being Pearl-certified, including energy cost reductions and enhanced air quality.
“That is what you’re getting from a house that’s certified,” Adams said. “You’re gaining the knowledge that it will be a more affordable property to own and operate because it is a more efficient property.”
Greg Slater of Nest Realty has been selling homes in Central Virginia for two decades, and has long worked with builders in the market to turn toward greener building sciences. A significant portion of his annual sales come from new construction, and nearly every new home in the area is equipped with energy-efficient features of some kind.
“We can look through the Pearl certification and see what makes that home less costly to operate than the average home — maybe in the way it’s insulated, maybe in the higher efficiency of the HVAC, it could be a tankless water heater or appliances,” Slater said. “In general, these homes are just built tighter and have better insulation. We talk about how their power bills will be lower, but also about how the home will be more comfortable.”
The lower power bills tend to be heavy hitters, Slater said, as the majority of prospective buyers ask to see power bills for a new home. But in general, buyers tend to gravitate toward greener homes due to their increasing prevalence.
“What Pearl helps my sellers do is put us on a more level playing field with the competition, particularly if it’s new construction,” Slater said. “If it’s not new construction and there’s no mention of green features or energy efficiency features, it makes the buyers think, ‘Why isn’t that home doing it?’ It just positions your home and puts all of the features that people are thinking about right up front.”
Recently, Slater was able to get the former home of Art Petrini, with Pearl certification, sold within just two weeks. Petrini said his home already had a strong score on the Home Energy Rating System index, and that he was able to tout an average electrical bill of $75 per month — a good deal for a house of more than 3,000 square feet.
Petrini said the house typically retains temperature well, meaning the HVAC system did not have to continuously cut on as outdoor temperatures changed. That and the low energy bills were always evident to Petrini, but it wasn’t until he was ready to sell that Slater suggested getting Pearl certification. Petrini does not know how much the certification affected his house’s sales price, but it certainly helped it sell quickly.
“I would surmise that someone who wants to buy a house, if they saw these positive characteristics relating to energy efficiency, that has to have a bearing for one house compared to another,” Petrini said.