ome of the objectives of going green include better indoor air quality, reduced utility ex- penses and easier maintenance. Also, some owners probably expect their green homes
to appreciate more in value over time compared to
more conventional homes.
Evaluating the value of green home features and
improvements can be difficult, however, which can
sometimes make it tough for originators to get loans
approved on energy-efficient homes. Green appraisals
require close coordination between everyone involved
in the lending process, from originators and appraisers
to construction professionals.
The Appraisal Institute’s Residential Green and
Energy Efficient Addendum is a core document in the
valuation process of green homes. Before discussing the valuation process, however, let’s look at what
makes a home green and what criteria must be evaluated during an appraisal.
The green home
A green home can encompass everything from a
property with outstanding insulation and the latest
ENERGY STAR appliances to more expensive homes
with specially designed energy-efficiency features,
solar panels for electricity generation or geothermal
heating and cooling.
Green building is the practice of creating structures
and using processes that are environmentally responsible and resource-efficient throughout a building’s life
cycle, from siting to design, construction, operation,
maintenance, renovation and deconstruction. The
terms high-performance building and green building
are often used interchangeably. Green-home certifications have been developed to help assess these homes
and, likely, encourage their adoption by consumers.
One prominent green certification is the National
Green Building Standard, developed by the National
Association of Home Builders (NAHB) and the International Code Council (ICC) “to establish a nationally recognized standard definition of green building
for homes.” The standard features a comprehensive
“nuts and bolts” specifications guide for builders and
This standard, which also carries American National
Standards Institute (ANSI) approval, has four levels of
attainment, Bronze, Silver, Gold and Emerald. To earn
the Emerald performance level, a building’s energy use
must be reduced by 60 percent or more.
Most originators also should be familiar with the
LEED (Leadership in Energy and Environmental Design)
designation, which was developed by the U.S. Green
Building Council (USGBC) and is now in its 4th iteration.
A LEED building can earn Certified, Silver, Gold and
Platinum rating levels, and the program covers residential homes as well as commercial buildings, portfolios of buildings and campuses. As many as 150,000
housing units worldwide are now LEED-certified green
properties, according to USGBC estimates.
Green homes are generally evaluated or graded by
looking at six core areas. These are the property’s site,
water usage, energy consumption, material types,
indoor environmental quality, and the cost of maintenance and operation. Here are some examples of
n Site: Home placement and landscaping that shelters
the home from wind, sun and inclement weather help
to improve a home’s energy efficiency. Smaller lots
and being close to public transportation also help.
n Water: Water-conserving plumbing fixtures,
reclaimed-water systems and rain barrels or cisterns
used for irrigation help here.
n Energy: ENERGY STAR appliances; high-efficiency
heating, ventilation and air conditioning (HVAC)
systems; heat pumps; radiant floor heating; geothermal systems; solar-thermal water heating systems
and special insulation all help to improve energy
n Materials: Recycled metal as well as stone or wood
from rapidly renewable, responsibly managed forests matter here. Low chemical emission, nontoxic
materials and materials that take less energy to
harvest or manufacture also help.
n Indoor environmental quality: Natural ventilation
is a plus here, but energy- or heat-recovery ventilators, humidity-monitoring devices and radon
systems are great additions.
n Maintenance and operation: The key is to build
with sustainable products and components that cost
less to maintain and have better life expectancy.
Now that we have a better idea of how green homes
are certified and what components must be evaluated
on energy-efficient properties to determine their value
and efficacy, let’s take a look at some of the issues with
appraising green homes.
Appraisers are becoming more familiar with green
homes and the features and certifications mentioned
earlier, but this is still a specialty niche, and appraisers will need to rely on the expertise of originators,
Michael Dresden is president of Dart Appraisal, an independently owned,
nationwide appraisal-management company founded in 1993. As the chief
integrator for all branches of Dart Appraisal, Dresden works closely with the
company’s leadership team to create and fulfill a comprehensive strategic
plan that delivers consistent, reliable and customized service. Dart Appraisal
excels at creating custom solutions that serve the complex needs of any appraisal customer.
Visit dartappraisal.com. Reach Dresden at email@example.com.
Continued on Page 86 >>
<< Green continued from Page 83
“Green building is the practice of creating
structures and using
processes that are
resource-efficient . ”