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Energy efficiency doesn’t always add value

More comprehensive appraisals needed, advocates say
Energy efficiency experts say a lack of experience in appraising homes with energy-saving features is hampering homeowners’ ability to recoup their costs for costly systems such as photovoltaic systems. This home built by Kogan Builders has solar panels and other energy-efficient measures including an air-to-air heating/cooling system, triple-pane windows, and blown foam insulation in the ceiling, walls and foundation of the home.

Homeowners who install expensive solar systems and other energy-efficiency measures are not necessarily recouping their investments when they sell, a situation that energy-efficiency experts worry could discourage such investments in the first place.

Energy-efficiency advocates said some of the blame lies in the appraisal process. A lack of comparable improvements in the same neighborhood, and sometimes appraisers’ inexperience with energy-efficiency improvements, means green tech isn’t being taken into account in many home appraisals.

“The ability to value high-efficiency homes will increase the value of high-efficiency homes,” said Peter Rusin of the Colorado Energy Office, who gave a talk at First National Bank of Durango in October.

Some building and green-energy professionals said appraisers often don’t recognize the market value of high-efficiency homes.

“In my opinion, that is the weak link in the whole process, the appraisers,” said Mike Frisoni, owner of Annadel Building Solutions of Mancos. “You’re asking them to go out on a limb.”

Rusin conceded that there can be liability issues for appraisers who value features without strong comparable examples. “We understand that,” he said.

Gregg Dubit, executive director of the Four Corners Office for Energy Efficiency in Durango, known as 4CORE, said the problem will ease with time and experience.

“When we get more comps with higher performance that sell, then we’ll start to see that value,” he said.

Rusin advocated using the HERS index, an energy rating system. A standard new home has a 100 HERS rating. A lower number is more efficient.

“What this is is a miles per gallon for your home,” he said.

The HERS index takes into account a home’s furnace, walls, roof, ceilings, windows and overall dimensions. A duct blaster test is performed to make sure the system isn’t leaking air.

Rusin said windows have less energy-efficiency power than solar, but appraisers value windows more than solar panels.

He pointed to evidence that homes with solar panels do sell for more. A Colorado Coalition of Appraisers study of 30 homes with photovoltaic panels sold in northwest Denver found 21 homes sold for more than appraised, while only nine sold for less.

Rusin described the study as encouraging.

“This is a pretty big deal as far as the market,” he said. “We’ve never had this data.”


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