The first Better Buildings: Better Business conference is coming to Illinois in February! The B4IL event runs January 31st to February 2nd in Schaumburg.
I’m pleased to be joining many friends, colleagues and mentors as a speaker at this great event.
Join Realtor colleague Sarah Coulter and me as we present Finding Value in Green: The Secrets of Green MLS on February 2nd.
This year on Groundhog’s Day I’m promising hot info – and no blizzard!
Last month I was named to the National Association of Realtor’s Real Property Valuation Committee. I will be serving as one of 15 at-large Realtor members. The balance of the committee is made up of licensed appraisers and representatives from other key NAR committees.
The purpose of the Real Property Valuation Committee was published in NAR’s Committee Structure Book:
1. To evaluate, monitor, and analyze trends as they relate to real property valuation.
2. To make policy recommendations as they relate to real property valuation models.
3. To provide recommendations on valuation-related issues.
4. To monitor and respond to new government regulations such as Dodd-Frank and to actions by The Appraisal Foundation, Appraisal Standards Board, Appraisal Qualifications Board, and Appraisal Practices Board and other organizations and entities that might have jurisdiction over or impact on valuation-related issues.
Important changes were approved to restructure this committee during NAR’s 2011 annual meeting. The improvements extend the focus of the group beyond appraisals to other models such as Broker Price Opinions, Automated Valuation Models, etc.
Valuing homes is challenging given the current market environment, and there a lot of moving parts including evolving models and changing legislation. Working with my fellow committee members to provide industry leadership on these topics is certainly my top priority.
I will also keep a close eye on opportunities to highlight the specific valuation challenges for green and efficient homes. Limited Green MLS access makes getting comparable data challenging. Progress such as Frank-Dodd appraisal independence actually limits green/efficient home owners because it has reduced the ability to assign competent appraisers to these home assignments.
Not all green homes will command a premium, and valuation of these homes has to evolve both with inventory and consumer demand. But the process particularly for these homes could use improvement.
I look forward to a year where I can learn more about valuation obstacles and opportunities in general, contribute towards a better system in 2012, and educate my peers as appropriate on the issues specifically related to green and efficient homes. More details through 2012!
The takeaways that will stick with me most from this year relate to home performance measurements, data quality and the role of the MLS and appraisal in the real estate transaction. Some of my big revelations from this year is that each of these is more complicated than it would seem, and that the dynamics of each tend to work against each other unintentionally in the quest for Green Value for Homes. You can understand the issues by understanding the current environment for MLS and appraisers.
MLS - I threw out everything I thought I knew this year about MLS and started over.
Key Revelations:
Implications for Green Value – Greenwashing and green errors are a huge and real concern for MLS. The Home Performance world needs to make it as simple as possible for agents, appraisers and MLS to quickly identify error-proof efficiency data. Green Value will come when there is a standard way to understand different ratings, scores and certifications apples-to-apples. The real estate market is constrained until the efficiency world determines a consistent way to reflect simple metrics for energy performance that can be easily verified.
Appraisers
Key Revelations:
Implications for Green Value - The process to assign a qualified appraiser to a green/efficient home assignment simply does not work today. Consumers have to proactively manage this process to get the right appraiser assigned, and the vast majority don’t even know this process starts with them. And if the right appraiser is assigned, most MLS, even with green fields, are not designed in a way that makes it easy to find and compare other green homes in the market.
What do we need most in 2012 and beyond?
I’m thrilled to be joining Efficiency Vermont as the keynote speaker for the 2012 Better Buildings by Design 2012 annual conference!
My keynote is called Seeking the Holy Grail (aka a Resale Premium) in a Turbulent Market. I’ll be weaving together some of my favorite stories and case studies from my blog to share what’s working – and not working – to make energy efficiency a part of the real estate transaction.
Be sure to follow Efficiency Vermont on Twitter (@EfficiencyVT)to learn more as the conference approaches! And I’ll be posting some key observations in the days leading up to the keynote.
Here’s a clip to get started: Does it ever feel like we’ve been here before?…building a castle only to see it sink into the swamp…(first 56 seconds of clip)
2012 is an opportunity for efficiency and real estate to work together more effectively and create results that make change!
My 2011 “Best Of” list of course has to start with product news. I cannot market an efficient home unless of course there is one to sell! In 2011 Home Performance exploded 
across the country, with as many Americans having access to a remodeling program for efficiency upgrades as to a 4G network!
Next on the list was the news of new resources rolling out to help home owners communicate what makes their homes more efficient, and valuable! This includes DOE’s pilot of Home Energy Score, an easy and affordable tool to score the efficiency of your home and the Appraisal Institute’s Green and Energy Efficiency Addendum.
This is good because consumer interest in energy efficiency made a few headlines. NAR’s
annual profile of home buyers and sellers showed that energy efficiency has remained a consistent priority for home buyers. And AVID Ratings this summer found that energy efficiency climbed into the top spot for home trends this year. Affordable is starting to surpass “bling” like stainless steel as the most desirable home features.
Then this summer several case studies were released showing that demand is developing, and a green premium is beginning to emerge (keep in mind that the science behind some of studies is still emerging too…). For example:
Other good news included two great examples from the commercial real estate world that set the bar a bit higher for residential energy efficiency too. First the DOE and the Appraisal Foundation (a governmental standards-setting organization, not to be confused with the Appraisal Institute mentioned above) jointly announced a standard for valuing efficiency features when appraising commercial buildings. LEED revised its Existing Building standard, requiring commercial buildings to re-certify and demonstrate that these buildings are delivering the energy performance they are designed for!
Green MLS is the platform that brings consumer demand together to make energy information – and a premium – transparent to the home-buying market. While Green MLS is the critical technology piece, Green Value for Homes is a much bigger system, with multiple stakeholder industries working closely together to make it effective. 2011 saw a lot of significant developments with collaboration for Green Value for Homes.
First, the MLS that serves Boulder, Colorado, rolled out what I consider to be the leading-edge example of Green MLS design. This was part of a state-wide effort coordinated by the Governor’s Energy Office and included representatives from all the related industries. Even the state USGBC chapter was involved and created an excellent GreenMLS overview highlighting how different professionals from builders to Realtors to appraisers work together to support an effective green home transaction.
In April, NAR incorporated that same multi-disciplinary focus into the Green MLS Toolkit. 
The Toolkit now includes a framework with its own anchor graphic to encourage more Green MLS designs like in Boulder. In September more progress was made when CNT Energy hosted the Green MLS/Better Buildings Roundtable. Nearly 50 professionals from GreenMLS-related fields came to Chicago for an event I was privileged to manage. The attendees represented national trade organizations or were local Realtors, appraisers, MLS staff or Better Buildings program staff from seven participating communities. The Roundtable identified a strong need for more collaboration across industries, a standard means to reflect the value of improved energy performance, and more education 
opportunities. The resulting report tees up opportunity for follow-up projects in 2012. A continuum for Green Value for Homes evolution also emerged from the Roundtable, creating a path to track future progress.
2011 truly was a monumental year for homes in need of energy efficiency upgrades. So the question as we look ahead to 2012 is…What the heck are you waiting for???!
This month’s annual Cost vs Value report showed that replacement projects win over remodeling projects year after year. It also showed that 21 of the 35 projects create easy opportunities to add a bit of energy efficiency while you improve your home.
That got me thinking, how easy is it for the average American to connect with a one-stop shop for efficiency done right? One-stop shop means the full package:
The Top 10 projects stack up a bit differently than nationally, but are in line with the East North Central Region. In Chicago only one project, Fiber Cement siding replacement breaks the 70% cost-recouped threshold at 76.1%. The rest of the Top 10 Chicago projects recouped 66% of cost or less. Nationally the cost-to-value ratio for the Top 10 is 69% and 78%, with an average of 71.6%
But, a whopping eight of out Chicago’s Top 10 projects include energy efficiency opportunities too (in bold). These projects are great opportunities to beautify your home and add value, while improving comfort, air quality and monthly utility costs.
The 2011 Cost vs. Value report by Remodeling and Realtor magazines looks at 35 remodeling projects to compare costs vs. resale value in today’s market. As I mentioned in my previous blog post, 21 out of the 35 projects offer a slam-dunk opportunity to improve home energy performance while improving the home as well.
Top 10 Projects and the related energy-savings opportunity:
The online comparison tool is a handy way to zero in on these projects and bake in some energy savings. Remodeling time is the best time to add energy efficiency. Adding insulation and sealing air leaks is far cheaper and less disruptive when walls are already open, than as stand-alone projects. Steps like this commonly save 10-30% in energy use!
Don’t miss an opportunity to beautify or expand your home and enjoy money savings long afterward!
Remodeling and Realtor magazines are out with their 2011 Cost vs. Value report. The annual report looks at 35 remodeling projects and identifies cost trends in different regions and cities across the country, as well as how much value they would add today at resale.
An interesting trend is that year over year replacement projects out-value remodeling projects with doors and siding leading the way. Both are prime opportunities to seal air leaks for a more efficient home.
Year-over-year the most interesting thing to me is that 21 of the 35 projects include an easy opportunity to upgrade energy efficiency, although this is not specified in the scope. These projects add an element of monthly savings in addition to value recouped.
Why wouldn’t you go for that extra bang for your buck in insulation when the walls are already opened up? And with the expansion of the Home Performance with Energy Star and Better Buildings Neighborhood Programs this year, you just don’t have an excuse to say it’s too complicated and ignore it any more! Plus, there are generous incentives in most markets. Between the two programs more Americans have access to an established local program linked to these two national efforts than they have access to an NFL football team!
If you want real value from your home improvement, don’t forget to improve home performance too!
Each year the local real estate coverage includes a great piece about real estate trends for the coming year. This year’s top ten like last year has some trends that support affordable, more efficient living.
4.) Location Tops the ‘Must Have’ List
They want transportation, retail conveniences and good schools or the home is off their list,” said Jeff Benach, co-principal of Lexington Homes.
Luckily there are great tools available to consumers today to better understand location options. Abogo (“abode” + “go”) by the Center for Neighborhood Technology helps home buyers understand the transportation costs linked to a specific address. Walkscore offers a similar tool for those going by foot!
The size of American homes is trending down. This makes it less pricey to buy, and leads to lower operational costs (fixing things and paying utility bills) when there is less space.
Never has it been easier to make smart renovations in the Chicago area! Energy Impact Illinois launched in November, bringing together a plan to make energy efficiency improvements easy to do, access to great contractors and links to financing and incentives that makes the work affordable. Target projects save 15% on their energy use!
Of the 35 projects listed in Remodeling Magazine/Realtor Magazine Cost vs. Value report, 24 include an opportunity to upgrade energy efficiency at the same time. The cost to add efficiency during an existing project (walls open, etc.) than to do it later stand-alone. So whether your heater goes out this year, or you are remodeling the attic into a bedroom, Energy Impact Illinois or similar resources are your best friend to get the most bang from your buck and comfort from your home!
