The issue of whether or not a property is more environmentally friendly when compared to neighboring homes is not currently taken into great account during the appraisal process.
It's a practice that should end, according to a recent white paper from the Royal Institute of Chartered Surveyors.
RICS is suggesting that, in cases when homes contain sustainability features such as solar panels or tankless water heaters, it should favorably impact the appraisal.
"A property’s sustainable status can cover a range of social, environmental and economic matters that can potentially lead to changes in demand and therefore affect value," said Ben Elder, RICS global director of valuation.
While RICS is most recognized in the United Kingdom, the independent land valuation association maintains a network of 100,000 qualified members and more than 50,000 students and trainees in 140 countries, including the United States.
Sustainability features can also include a home’s energy efficiency rating and green materials used in construction, but RICS says the concept needs to go even further.
For example, if the home is close to public transportation, it lowers the carbon footprint of residents. This should also make the property more valuable, the white paper states.
"When calculating a property’s worth, the market doesn’t always take the issue of sustainability into account, but this could also have been said for central heating way back in the 1970s when people weren’t convinced it was going to have a market impact," said Elder, who is expecting some industry headwinds.
"With the increased emphasis on green living and energy efficiency, it is highly possible that the market will need to adapt," he added.
Homes built in the aftermath of the U.S. financial crisis should be more efficient in their use of space and energy to address a renewed emphasis on cost-consciousness among homebuyers, New York-based residential developer Mitchell Hochberg, principal at Madden Real Estate Ventures, told HousingWire in an interview appearing in the September issue.
Homebuyers are willing to pay more to get green features because they realize the operating costs of the home long term are far more important than the potential additional costs associated with buying a green home, he said.
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