A New Appraisal- Lessons from the History of Efforts to Value Green and High-Performance Home Attributes in the United States [electronic resource].
- Washington, D.C. : United States. Dept. of Energy. Office of Energy Efficiency and Renewable Energy, 2015. and Oak Ridge, Tenn. : Distributed by the Office of Scientific and Technical Information, U.S. Dept. of Energy
- Physical Description:
- 62 pages : digital, PDF file
- Additional Creators:
- Lawrence Berkeley National Laboratory, United States. Department of Energy. Office of Energy Efficiency and Renewable Energy, and United States. Department of Energy. Office of Scientific and Technical Information
- Restrictions on Access:
- Free-to-read Unrestricted online access
- Rigorous consideration of green and high-performance (“green/HP”) features is rarely included in the property valuation process._ To help illuminate why this is the case, this report takes stock of the history of efforts to improve practices, and identifies barriers that have emerged and opportunities for overcoming them. Particular emphasis is placed on what energy and environmental policymakers and other stakeholders outside the appraisal community can contribute to the broader effort to advance professional practices. The history has unfolded in parallel with turbulent periods in the housing market for which appraisers and their customers are deemed to share responsibility, followed by cycles of regulations, siloing of appraisers in the name of professional integrity, and commoditization of the valuation process itself. This pattern has important ramifications for aspirations that appraisers engage more fully in identifying and valuing the green/HP characteristics of homes. On the one hand, it is legally and ethically incumbent on appraisers to do so, yet on the other hand it is perceived as a risky avenue to follow. Risks arise where findings can be challenged as either over- or under-stating value, together with a market environment in which the complexity of their assignments increases despite downward pressure on appraiser fees. While efforts to address green/HP considerations date back to the early 1980s, the vast majority of activity has taken place within the past five years. Many players have engaged in the efforts to promote improved valuation practices. These include the Appraisal Foundation, The Appraisal Institute, Colorado Energy Office, Earth Advantage, EcoBroker, Elevate Energy, Fannie Mae, Federal Housing Administration, Home Innovation Research Labs, The Institute for Market Transformation, Northwest Energy Efficiency Alliance, National Association of Homebuilders, National Association of State Energy Officials, National Association of Appraisers, RESNET, USEPA, USDOE and its National Laboratories, the U.S. Green Buildings Council, and the Vermont Green Homes Alliance. Many activities have resulted, ranging from trainings, to data-gathering instruments, and the emergence of a literature attempting to statistically isolate the effects of green/HP characteristics on home values. In some cases, the results of studies have been overgeneralized and oversold, and embodied flawed methods. Although the green/HP community has encouraged appraisers to focus on exemplary buildings (e.g., LEED or ENERGY STAR Certified), any level of green or energy performance can in fact influence value, including below-average performance (a.k.a. “brown discount”), irrespective of whether or not the building has been formally rated. This overly narrow focus represents a significant missed opportunity. Other surmountable challenges include limitations to non-appraisers’ understanding of the appraisal process (and practical constraints therein). A byproduct of this can be unrealistic expectations of what appraisers can and will do in the marketplace. These challenges notwithstanding, the environment for moving forward has improved. There is better data today (a critical need); expanded efforts to disclose energy use information (characteristics, consumption, bills); improved and more pervasive building energy codes, building rating and labeling initiatives; and a host of federal, state, and local policies that have collectively brought green/HP practices much more into the mainstream. Meanwhile, a renewed focus on professional standards of care and competency for assessing green/HP homes make it increasingly important for appraisers to consider these factors in their assignments. Despite the past four decades of studies, there is little if any discernible uptake of these practices by the appraisal practice at large. It would behoove interested parties to step back and consider what new strategies might be productive. A key element o...
- Published through SciTech Connect., 10/21/2015., "lbnl-1003835", "ir:1003835", and Evan Mills.
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