Appraisers evaluating energy-efficient, green homes now have a couple of tools to use—the Appraisal Institute’s (AI) “Residential Green and Energy Efficient Addendum” or Earth Advantage’s (EA) “High Performance Home Evaluation Addendum,” which helps document a home’s green features (see Access). The AI form is basically a checklist of features, while the EA form allows a quantification of the value of green features.
While this is a step in the right direction, neither form provides a method to calculate ongoing savings due to the use of less energy, water, and other resources, which can be capitalized to estimate the market value increase of a home.
The easiest features to quantify are energy and water savings, since they can be calculated and then compared to energy and water costs of the same home without energy-efficiency features. More difficult to quantify are things like good indoor air quality or reduced heating loads from passive solar gain. The most difficult to quantify are the use of sustainably produced or recycled materials, since their benefits accrue mostly to society rather than the individual homeowner. While there is some market value increment for green home demand, such information is only revealed when a robust market exists, and this increment is recognized in the sales-comparison approach.