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How do I Ensure that the High-Performance Features of my Home are Included in an Appraisal?

07/01/2019 2:16 PM | Maureen Connolly (Administrator)

Developed by the Appraisal Institute and Building Codes Assistance Project (and since endorsed by the NAHB), Appraised Value & Energy Efficiency: Getting It Right explains to real estate professionals and lenders why the appraisal of high-performance homes is a complex appraisal assignment and, for Architects, builders, home performance contractors, and sellers how to proactively prepare customers/buyers for loan applications and appraisals.

Use the procedure described and modify and use the buyer and lender template letters contained in Appraised Value & Energy Efficiency: Getting It Right. Modifications to these template letters should be made to describe the salient features and benefits of a home (e.g., home is a net zero energy home with a HERS Index Score of 0, home is 30% more energy efficient than a home built to minimum required RBES specifications, home has been renovated to meet current RBES energy specifications, etc.).

Provision of the lender cover letter along with the Appraisal Institute’s Residential Green and Energy Efficient Addendum and supporting attachments puts the lender on notice that this is a complex appraisal assignment and that the lender needs to ensure they hire a competent appraiser.

It is important to share this information with prospective lenders at the earliest opportunity and for the loan applicant to be clear with the lender that they will be asking any appraiser contacting them or their builder to schedule an appraisal that they will be asking questions to ensure that the appraiser has appropriate knowledge and experience to perform a complex appraisal of this specialized property type.

Ask questions about the appraiser’s qualifications before the appraisal begins:

  • How many hours of energy efficiency and green building education has the appraiser completed?

Sandra Adomatis states that 14 hours is appropriate based on the Appraisal Institute's “green” courses.

  •  What is their actual experience appraising green homes?
  • Is the appraiser familiar with the Residential Green and Energy Efficient Addendum? PV Value?
  • How will the appraiser assign value to the Residential Green and Energy Efficient defined green categories: “(1) site, (2) water, (3) energy, (4) materials, (5) indoor air quality, and (6) maintenance and operation?”
  • Ask if the appraiser uses net present value to calculate the energy savings revenue stream, what are the assumptions, methodology and duration for the savings?
  • Does the appraiser subscribe to the local Multiple Listing Service (MLS)?

If no, this causes concerns about competency above and beyond energy efficiency and green building. Where are they getting their data? The MLS serving all of Vermont is the New England Real Estate Network (NEREN). NEREN has recently updated their 3rd party verified green fields and can document the ratings, scores, Profiles, and other 3rd party verified building certifications available in Vermont. NEREN also maintains database provided by Efficiency Vermont that lists the address of all homes participating in Efficiency Vermont’s Residential New Construction Service (since the fall of 2010) where a Home Energy Rating (HERS) Index Score is provided, the Index Score, any 3rd-party verified building certifications earned, and the date of completion in the Efficiency Vermont service.

If the buyer or builder doesn’t get satisfactory responses from an appraiser they should not schedule the appraisal and should immediately contact the lender to discuss their concern about the appraiser’s lack of knowledge and experience with high-performance homes.

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