Category Archives: Appraising Energy Efficient Improvements

Lower Energy Bills with an Energy Efficient Mortgage – Connecticut

Lower Your Energy Bills when you Refinance or Buy a Home in CA or AZ. Call me Today for More Information Lisanne Jordan 480-231-3719 Meet Jane and John. They’re approved for an FHA mortgage with a purchase price of 200,000. They start shopping for a home with their real estate agent Sally. After what seems like forever…..they find the perfect home and it was love at first sight. They have just enough money saved for their down payment and closing costs, and their monthly mortgage payments will be about the same amount that they’re paying now each month for rent. So they both think at the same time “this’ll be no problem”. They make an offer of 200k on their dream home and their offer’s accepted Everything’s moving along just fine until their home inspector tells them that the homes heating and air conditioning system is as old as the house and it only works when it wants to. And the repair person tells them that it can’t be fixed. The seller won’t make the repairs….John and Jane don’t have the money to do the work themselves, And worst of all, they find out that they can’t close on the home in the condition it’s in. Their dream home’s slipping away! What should they do? The Energy Efficient Mortgage With an Energy Efficient Mortgage, John and Jane can roll the cost MANY energy efficient improvements, into their mortgage, and make one monthly payment at the same low interest rate. And best of all, the home won’t have to appraise for any more than the purchase price and they won’t have to qualify for the additional amount that they finance. This is a relief because they’ve already been told that they won’t qualify for a higher loan amount. There’s one catch though, the improvements have to be “Cost Effective”. They say to themselves, “How do I know if the improvements are cost effective?” Their very helpful lender (that’s me) tells them that an energy audit will give them the information that they need. An energy audit is like a miles per gallon rating for a car. It’ll tell them how energy efficient their home is right now, how efficient their home will be after they make the upgrades, and how much they’ll save each month after the improvements have been done. John and Jane decide to spring for the cost of an energy audit. They have an energy auditor come to the house, and the report he gives them says that replacing the HVAC unit will be “cost effective”. But wait there’s more….he also tells them that insulating the attic will save them even more money, and that they can finance the cost of new energy efficient appliances too! If John and Jane make all of these improvements they’ll save more money each month, than their mortgage payment will increase, so the whole package of improvements will be considered “cost effective”. Because they can finance up to 5% of the property’s value, or 10,000 in their case, they’ll also have enough money to make all of the upgrades. Even better….John and Jane’ll still be able to close on time because the repairs can be done after closing, so they won’t have to cancel their moving vans. Now John and Jane can go to closing knowing that their home will be MUCH more comfortable and that they’ll save money every month on their utility bills. It’s a Win Win for everyone. They’re able to buy their dream home and the seller’s able to sell his home NOW without any additional costs. Anyone who’s approved for an FHA loan can use this program to make energy saving improvements. And best of all they can use this program just because they want to, not because they have to. – Complete – HBS Kit, Real Estate Appraisals, Home Inspections, Energy Saving Home – Connecticut

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How to Help Appraisers Fairly Value Home Energy Efficiency Improvements – Elevate Energy

How to Help Appraisers Fairly Value Home Energy Efficiency Improvements March 6, 2014 11:46 am In 2013, we published a blueprint with the National Home Performance Council that outlines a seven-step process to make energy efficiency visible and properly valued in the real estate market. Appraisals are a key part of the process because the appraiser serves as a neutral third party who assesses a high performance home and indicates whether energy efficiency improvements contribute to the value.

We’ve witnessed real progress in the appraisal process, including enhancements to the appraiser’s toolkit to better address high performance home valuations. And in locations that have pioneered the green building and remodeling movement, we’re even seeing a growing demand for qualified “green” appraisers. However, we still have a way to go. Consistently Document Energy Efficiency Features Nothing works in the appraisal process unless high performance homes are consistently documented (see Step 1 of the blueprint).

Right now, the majority of home appraisers use Fannie Mae’s Uniform Residential Appraisal Report (also referred to as Form 1004) to provide opinions on the market value of a given property. But, this form lacks an adequate section in which to document energy efficiency features. In response to this, the Appraisal Institute created the Residential Green and Energy Efficiency Addendum to collect the additional information an appraiser needs when forming an Opinion of Value on a high performance home. The addendum has been well received, including a recent announcement that the Residential Energy Services Network will auto-populate the addendum, enabling direct transfer of a home’s potential energy performance data from builder or home owner to the appraiser.

While all appraisers have access to the addendum online, the problem is, less than 15 percent of appraisers are members of the Appraisal Institute. We’d love to see the Residential Green and Energy Efficiency Addendum used as the model for a standard, approved approach to record the details needed to value high performance homes. The approach could be defined in the approved underwriting guidelines used by larger federal or lending organizations, or government sponsored entities like Fannie Mae or Freddie Mac.

While limited in reach, we’ve seen firsthand that the industry has embraced the template and the related process. Clarifications from the government sponsored entities would formalize this model. We’d also like to see more multiple listing services follow the lead of Midwest Real Estate Data Corporation and make energy costs accessible on listings. This provides appraisers with important data to help establish a credible value opinion. Appraisers are also better equipped to do sales comparison and income approach methods when this data is available. Assign the Right Appraisers to the Right Properties Next, and logically, the right appraisers need to be assigned to the right properties.

Finding a competent appraiser who has experience in valuing energy efficiency features can be difficult. Various training initiatives are happening with some success, but lenders and appraisal management companies continue to struggle in finding qualified appraisers – or even knowing they need to assign them in the first place. An important first step would be to ensure that the existing requirements for assigning appraisers based on competency are enforced for high performance home assignments. Definitions of this competency are starting to be drafted by the Appraisal Foundation. But we see progress here, too. The Appraisal Institute is in the process of opening its Appraiser Registry to include all students who successfully complete the required sustainability courses (and consent to have their name listed on the registry), allowing for greater exposure and marketability of their qualifications and services. Before this change, the directory only listed Appraisal Institute members who had first graduated a designation course and then went on to complete sustainability courses and exams.

Education provides a great opportunity to better connect these qualified appraisers to appraisal management companies and lenders. Appraiser Sandra Adomatis suggests that appraisers, lenders, underwriters, and builders take courses together. “When all the different players in the high performance home transaction come together for training and discussion, they better understand how they can work well together toward overlapping processes and common goals,” Adomatis said. Up next, we’re honored to attend a Green Mortgage Appraisal Roundtable on March 11 in Washington D.C. Members of our team will join appraisers, lenders, Realtors, federal agencies, and other stakeholders to discuss the challenges of assigning a value to energy savings. We will continue to work toward progress on these issues through our Value for High Performance Homes campaign.

Source: How to Help Appraisers Fairly Value Home Energy Efficiency Improvements – Elevate Energy

Appraisers get guidelines for setting the value of energy-saving home improvements – The Washington Post

Real Estate Appraisers get guidelines for setting the value of energy-saving home improvements Resize Text Print Article Comments 0 By Kenneth R. Harney October 7, 2011 Here’s some good news for homeowners who have gone green and installed energy-saving features but haven’t been sure whether appraisers will credit them with higher valuations: Thanks to a new industry-issued appraisal addendum, the odds have improved that they’ll get the market value they’re due. The Appraisal Institute, the country’s largest and most influential association in its field, published the long-awaited addendum Sept. 29. It’s designed to be attached to any standard appraisal report covering a property with significant green features. Owners, sellers, buyers, refinancers and real estate agents don’t have to wait for an appraiser to use it. They can download it at no cost and ask that it be made part of the appraisal submitted to the lender. The addendum won’t guarantee that the appraiser will raise your property value by the tens of thousands of dollars you spent on your solar panel array, high-efficiency windows or geothermal system. But it should guarantee at a minimum that he or she will take notice of those energy improvements and seek a value adjustment consistent with your local market conditions. ADVERTISING   The three-page form is a response to growing concerns that although the Obama administration and many state governments and utilities are pushing homeowners to invest in energy-conserving components, standard appraisal forms — including those used by financing giants Fannie Mae and Freddie Mac — are not set up to give adequate recognition to those often costly improvements. The inevitable result: Owners are frustrated at what they consider low-ball valuations. Refinancers can’t get the loan amounts they seek because the appraisal report doesn’t factor in the monthly utility savings they’re getting from their solar panels. Appraisers, for their part, say that local real estate listing documents often don’t detail all the energy-efficiency improvements or they get the facts wrong. For example, appraisers complain that some real estate listings claim that the house is an “Energy Star Home” when there’s nothing more than a few Energy Star appliances installed in the kitchen. The Energy Star Home designation is a much higher standard: It requires qualifying under a comprehensive set of criteria for the building envelope, lighting, windows, water heating and high-efficiency appliances, among others. The institute’s addendum covers a gamut of improvements and ratings and goes well beyond energy efficiency. Though it has basic sections covering insulation, windows, lighting, heating, air conditioning and solar, it also covers sustainability features such as the presence of water-saving or reclamation systems, landscaping that lowers water use or energy use, and the presence — or lack — of public transportation nearby that might help lower fuel use. Of special significance to owners who have had their houses audited or rated for green features and energy efficiency, the addendum asks for detailed information on the rating or auditing entity, the dates of the rating, average utility costs in the area and the entity’s estimate of the monthly savings that can be tied to the improvements. Any certifications such as LEED (Leadership in Energy and Environmental Design) must be attached to the report, along with information on any changes made to the property since the certification. If the house has solar installations, the addendum asks for such details as the age of the panels, the energy production in kilowatt-hours for each array, plus other information relating to the actual energy savings attributable to the solar features. Appraisers using the new addendum should now be better equipped to identify accurate, recent comparable sales in the area — a key step in coming up with a valuation, according to Joseph C. Magdziarz, president of the institute. In other words, if you have a highly efficient, audited house with extensive energy-saving features as demonstrated by the addendum, an appraiser should consider the prices of houses that sold recently with and without such features for indications of your house’s true market value. Appraisers who have training in green valuations can also convert the documented monthly savings on utility bills into a specific value adjustment appropriate for the local market. Sandra K. Adomatis, an appraiser in Punta Gorda, Fla., who teaches green appraisal courses and is a nationally recognized expert, said the higher the utility charges in a jurisdiction, generally the higher the value gain from solar panels and other energy-saving installations. For instance, in a relatively high-utility-cost state such as California, she said, the value increment from a given set of improvements might be double that of the same improvements in a relatively low-cost state such as Florida.

Source: Appraisers get guidelines for setting the value of energy-saving home improvements – The Washington Post