Green Appraisals & Energy Efficient Mortgages
Selling an EarthCraft home
EarthCraft homes and buildings cater to market needs and expectations in a way that traditionally built homes cannot, providing a high-quality product that saves money while enhancing the quality of life for their residents. What’s more, projects that achieve EarthCraft certification are typically discounted less, and remain on the market for a shorter period of time than their conventionally built counterparts.
Knowing that consumer awareness and interest is on the rise, how do realtors, builders and homeowners alike ensure their home energy improvements are fairly reflected in the marketplace? Meet the “Residential Green and Energy Efficient Addendum,” which despite being released by the Appraisal Institute in 2011, is still a fairly underutilized tool in the Virginia appraisal market.
The Residential Green and Energy Efficient Addendum, developed by appraisers to support their efforts in analyzing residential “green” features and properties, supplements the standard home appraisal form used to verify the value of a home. Since high performance homes have additional value that is not always evident to appraisers, the completed addendum becomes a useful tool that allows realtors, builders, and homeowners to more effectively communicate green or energy efficient features such as third party certifications, insulation type, window specs, appliances, mechanicals, building tightness and more. Sellers have the right to request an accredited green appraiser who is educated in identifying these features and accurately valuing properties.
Energy Efficient Mortgages
An Energy Efficient Mortgage (EEM) is a mortgage that credits a home’s energy efficiency in the home loan. For an energy efficient home, for example, an EEM could mean giving the home buyer/borrow the ability to buy a higher quality home because of the lower monthly costs of heating and cooling the home.
To be eligible for an EEM, a borrower typically has to have a home energy rater conduct a home energy rating, included in EarthCraft certification, to verify for the lender that the home is energy-efficient so that financing can be approved
EEMs are generally applied on the purchase a newly-built, energy efficient home with third-party certification such as EarthCraft, ENERGY STAR, LEED for Homes, etc.
Energy Improvement Mortgages (EIMs) are similar to EEMs, only they can be applied to the purchase of an exisitng home that will have energy efficient improvements made to it. EIMs allow borrowers to include the cost of energy-efficiency improvements to an existing home in the mortgage without increasing the down payment. This concept allows the money saved in monthly utility bills to finance energy improvements.