Tag Archives: Real Estate

Green Sells: Energy Upgrades Raise Home Value

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Row of purple Monopoloy houses with a green house in the middle.The housing market, like the U.S. economy, is a mess. GDP growth dropped from 3.7% to 2.4% in the second quarter. In the housing market shrinking incomes and greater lender restrictions mean fewer qualified buyers are looking, which is driving down prices.

Here is the bottom line: if you want to sell your home without losing your shirt, you need an edge.

To find an edge, just look to the part of the economy that’s still growing – the green sector. In Massachusetts, major utility companies have stepped up energy efficiency investments this year with the goal of tripling enrollment in their programs. A recent report funded in part by the state department states that renewable energy use is at “a clear tipping point” for growth. Never before has it been more affordable to green your home.

Green home improvements enhance comfort, make homes more durable, save on monthly utility costs, and reduce pollution. One benefit that people don’t often think about is higher resale value. While your real estate agent may have asked you to add a fresh coat of paint, refinish your basement, or plant some flowers to spice things up, she probably hasn’t asked you to upgrade your insulation or qualify your home for ENERGY STAR.

A recent study published in The Appraisal Journal indicates that the market value of a home increases by $10 – $25 for every $1 decrease in annual fuel bills. An ENERGY STAR qualified 3,000 square foot new house can save around $800 per year (around $70/month) on utility bills compared to the standard new home. According to the report, this level of investment in improvements would add $8,000 to $25,000 to the market value. Energy savings and sale value benefits to existing homes are typically even higher because of the greater opportunity to upgrade energy performance. And unlike a new paint job, these investments will actually pay for themselves.

The financial benefits of energy improvements don’t stop at utility savings and higher market value. The New Homes with ENERGY STAR program provides an incentive of $750 to $8000 to homeowners, builders, realtors, or architects who meet standards that are 15-60% more energy efficient than a standard home, depending on the level you want to shoot for. Whoever applies to the program can earn the incentive.

Additions of at least 500 square feet can qualify for ENERGY STAR as well. To qualify, you need a third-party Home Energy Rating System (HERS) Rater to verify that the home is truly energy efficient. Total Green Energy Solution will do a HERS Rating for new homes or additions in Massachusetts at a price that is typically fully recouped with program incentives.

So, as you get ready to unload the biggest financial investment of your life, take the time to sell it right: go green first.

The real estate industry vs climate change?

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Brian Brady

Mortgage Broker and Climate Change Guru?

Following on from an article published on Warm Home Cool Planet a couple of weeks ago on mandatory Energy Audits in Austin, TX, we have noticed a growing movement amongst the real estate industry targeting the ‘Cap and Trade’ bill and any local ordinances that might obligate homeowners into performing an energy audit on their home or making energy improvements in their home before they sell.

Here’s one from Brian Brady ‘America’s No. 1 mortgage broker’:  “Sadly, the theory of carbon dioxide emissions’ effect on climate change is accepted as fact by our politicians without rigorous examination of its merits. It’s easy to turn a blind eye on faulty legislation when it attacks “big business”.  Cap and Trade, however, is much more restrictive than its supporters would have you believe.  Your neighbor’s penchant for bay windows and your desire for key-lime green bathroom walls might just be at stake. ”

As in all cases where people attempt to sow doubt on the accepted fact of climate change, it’s important to consider the source of these opinions.  It’s also worth mentioning that the scientific community, not politicians, are responsible for deciding what is scientific fact.

Mortgage brokers make their money from arranging mortgages for people who aren’t considered good risks by banks. (Which describes at least 50% of Americans at the moment.) The mortgage broker assumes the risk of the loan for a premium on the prevailing interest rates (usually in the form of ‘points’). Mortgage companies then package up these loans and sell them to banks so they can be traded as financial instruments like CDO’s (Collateralized Dept Obligations) which in large part were responsible for the near collapse of our financial system last fall.

Mr. Brady’s business suffers if anything gets in the way of him writing another mortgage and stuffing more dodgy paper into our already teetering financial system. To prevent that from happening,  Mr. Brady has hauled the “man’s home is his castle’ trope out of the cupboard and dusted it off. According to Mr. Brady soon ‘the socialists will be invading your home and telling you how many light switches you can have’.

As a recent home seller (and potential home buyer) I can assure readers that the marketplace is already factoring energy efficiency into the price of homes. Anyone seriously considering buying our Central Square home asked our broker for recent energy bills so they could figure out what their total house expenses would be each month. A gas boiler tune-up performed the previous winter, and an Energy Star-rated air conditioning system resulted in our home energy bills comparing favorably to other homes with a similar square footage. As a result our home was sold.

Given his connection to the real-estate industry, Mr. Brady should know that potential home buyers are already performing something close to an energy ‘audit’ on every home they are considering for purchase. Local municipalities are simply reacting to current market trends and ensuring that everyone gets the information needed before they make a home buying decision.