I’m predicting that 2011 is going to be the year green becomes hot. And, I’m talking green as in value, not building materials.
As I wrote last week, we’ve been anticipating market value for energy efficiency for some time. Today we have obstacles in the way of this value. GreenMLS 2.0 could make deep progress to clear those obstacles.
What is GreenMLS 2.0?
First you have to know what GreenMLS is – a collection of approximately 150+ independent Multiple Listing Services that offer one or more fields representing a “green” characteristic about a home. The trend started when REALTOR and EcoBroker Kria Lacher stepped up to green Portland’s MLS back in 2006. The design of the fields varies with each MLS. The GreenMLS Toolkit, a real estate industry collaborative, is a great place to learn more.
v2.0 takes the pioneering focus and the successes of the early GreenMLS rollouts to the next level. GreenMLS 2.0 must include:
- Fields for existing-home retrofits as well as new homes
- Focus on comps, instead of a focus on fields
- Integrated with local ordinances, such as point-of-sale energy disclosures, etc.
- Regular publication of credible sales trend reports (Only 3 GreenMLS reported tracking sales in a recent survey by NAR)
Green remodeling projects are not easy to describe in the check-box driven world of GreenMLS. Greenwashing is a real concern. But GreenMLS 2.0 needs to address that. Third-party standards make it easier to plan fields and document a newly-built green home. Existing-home programs are coming on strong like the DOE BetterBuildings grants, DOE Home Energy Score, and state-run Home Performance with ENERGY STAR. These programs are making it easier to validate work on existing homes.
Comps, short for comparable sales, are what real estate agents use to help clients shape and negotiate an offer, and what appraisers use to confirm value as part of the mortgage loan process. Comps help agents, buyers, sellers and appraisers look at what a similar home sold for to determine fair value for another home.
Retrofit Comps are a critical output of any GreenMLS 2.0 system:
- Retrofit comps validate value
- Retrofit value leads to self-sustaining demand for green remodeling
For the most part, current GreenMLS do not provide green data that appraisers can verify. So, appraisers today do not have Green Comps. This is where the value engine is broken. If appraisers do not have comps, they can’t evaluate value of efficiency improvements the same way they can factor in how new stainless steel appliances add value to a kitchen.
The difference between GreenMLS fields and GreenMLS comps is data validation. Data validation is not possible without local MLS board policy. For the most part, the early adopters of GreenMLS were small teams of engaged REALTORs committed to improving the MLS in their community. What they were missing was policy support for a systematic way to ensure that the claims that go into green fields can be backed up somewhere. Colorado is emerging as a leading GreenMLS 2.0 example with broad stakeholder involvement, and a design that intentionally supports a clear data verification policy.
Integration with local initiatives is key. Several communities have implemented or are considering energy labels (along the lines of an MPG for a home) or disclosures at time-of-sale. A discussion of the merits and risks of a program like this belongs in another post! But the bottom-line is that if a community choses to implement such a program, the most effective way to see benefits from it and encourage a more efficient housing stock is to integrate the disclosure into a local GreenMLS 2.0.
The inventory of existing homes made more efficient is going to be growing rapidly in the next few years. The learnings are there for a straightforward extension into GreenMLS 2.0. The time is now! Contact me to learn more.