bcap - appraisal institute · appraised value and energy efficiency: getting it right while...
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Appraised Value and Energy Efficiency: Getting it Right
While location, design, and price are a home buyer’s main considerations, surveys show that buyers rank energy efficiency as one of the most desirable features, and importantly, when there is sufficient energy savings - one they’re willing to pay more for. However, energy efficiency can be overlooked in the appraisal process for a variety of reasons, including a lack of access to quality data, underwriting impediments, and appraiser qualifications. Many appraisers may not be aware of the unique features of an energy efficient home. However, there are many specially-trained appraisers who are qualified to assess the value of these features that are often hidden behind the drywall. One way to know that a home is built energy efficiently is to know which energy code it was built to.
According to the U.S. Department of Energy, homes built to the 2012 or 2015 International Energy Conservation Code (IECC) are 15-16% more efficient than those built to the 2009 IECC or earlier. They will be more comfortable to live in and have lower monthly energy bills.
Fannie Mae, Freddie Mac and FHA guidelines require appraisers to consider the energy efficient features of the home, and if the market supports an adjustment in the appraised value, one must be made, but an average appraiser won’t take this into account if they aren’t aware of it.
A ready-made solution exists.Fannie Mae, Freddie Mac and FHA guidelines require lenders to choose competent appraisers who have the requisite knowledge required to perform a professional quality appraisal for the specific geographic location and particular property type.
Appraisers who are specially trained on energy efficient / high-performing homes will analyze market trends relating to special energy-efficiency features. You can access a list of qualified appraisers at the Valuation of Sustainable Buildings Professional Development Program Registry.
What can builders do?Builders can help the buyer assure a competent appraiser is selected by doing these things:1. Complete and provide buyers with the Residential Green and Energy Efficient Addendum form.2. Provide a copy of a complete Home Energy Rating System (HERS) report (if available).3. Prepare the buyer to notify the lender that they require a competent appraiser for this special type of
construction; add your logo and provide a copy of the directions on the next page.4. Add your logo, the property address, and contact info to the attached letter. Direct your buyer to give the
letter (along with 1 and 2 above) to their lender.
Building Codes Assistance ProjectBCAP
FOR
BU
YER
S:A
SSU
RIN
G A
CO
MPE
TEN
T A
PPR
AIS
ER F
OR
YO
UR
NEW
HO
ME
Cong
ratu
latio
ns o
n ch
oosin
g an
ene
rgy
effici
ent,
high
-per
form
ing
hom
e!
Your
new
hom
e w
as b
uilt
to h
ighe
r ene
rgy
effici
ency
stan
dard
s tha
t will
im
prov
e yo
ur q
ualit
y of
life
. You
r hom
e w
ill b
e m
ore
com
fort
able
to li
ve in
an
d ha
ve lo
wer
mon
thly
ene
rgy
bills
than
oth
er n
ewer
hom
es o
n th
e m
arke
t. Ac
cord
ing
to th
e U.
S. D
epar
tmen
t of E
nerg
y, ho
mes
bui
lt to
the
2012
or 2
015
Inte
rnati
onal
Ene
rgy
Cons
erva
tion
Code
(IEC
C) a
re 1
5-16
% m
ore
effici
ent
than
thos
e bu
ilt to
the
2009
IECC
or e
arlie
r. So
me
of y
our h
ome
feat
ures
may
in
clud
e:⌂
⌂M
ore
wal
l and
cei
ling
insu
latio
n to
kee
p co
nditi
oned
air
insid
e yo
ur h
ome
⌂⌂
Win
dow
s tha
t kee
p th
e he
at o
ut in
the
sum
mer
mon
ths t
o im
prov
e co
mfo
rt⌂
⌂Fe
wer
dra
fts a
nd a
ir le
aks,
whi
ch im
prov
es in
door
com
fort
Wha
t You
Nee
d To
Kno
w R
egar
ding
the
Loan
/App
rais
al P
roce
ssAs
par
t of t
he ty
pica
l loa
n pr
oces
s, le
nder
s ran
dom
ly a
ssig
n an
app
raise
r to
dete
rmin
e th
e ap
prai
sed
valu
e of
a n
ew h
ome.
How
ever
, you
rs is
not
a
typi
cal n
ew h
ome
– it
is a
high
-per
form
ing
build
ing
with
uni
que
feat
ures
. Fa
nnie
Mae
, Fre
ddie
Mac
and
FHA
gui
delin
es re
quire
app
raise
rs to
be
com
pete
nt in
the
prop
erty
type
they
are
app
raisi
ng. I
f you
do
not c
lear
ly
iden
tify
the
prop
erty
as a
spec
ial p
rope
rty
type
requ
iring
a c
ompe
tent
ap
prai
ser t
rain
ed in
ene
rgy-
effic
ient
, hig
h-pe
rfor
man
ce h
omes
, a ty
pica
l ap
prai
ser w
ill b
e as
signe
d, a
nd th
ese
feat
ures
may
not
be
take
n in
to a
ccou
nt,
whi
ch w
ill p
ut y
our a
ppra
isal a
t risk
of n
ot b
eing
com
pete
ntly
app
raise
d.
Wha
t You
Nee
d To
Do
Prov
ide
your
lend
er w
ith th
ree
thin
gs p
rovi
ded
to y
ou b
y yo
ur b
uild
er:
⌂
The
lend
er le
tter r
egar
ding
this
spec
ial p
rope
rty
type
and
the
need
for
a tr
aine
d, c
ompe
tent
app
raise
r for
ene
rgy-
effici
ent,
high
-per
form
ing
hom
es.
⌂
The
Appr
aisa
l Ins
titut
e’s R
esid
entia
l Gre
en a
nd E
nerg
y Effi
cien
cy
Adde
ndum
, com
plet
ed b
y yo
ur b
uild
er.
⌂
The
Hom
e En
ergy
Rati
ng S
yste
m (H
ERS)
Rep
ort (
if av
aila
ble)
.
FOR
LEN
DER
S
Dear
lend
er,
The
new
hom
e lo
cate
d at
: ___
____
____
____
____
____
____
____
____
____
__is
a sp
ecia
l pro
pert
y ty
pe. I
t is a
n en
ergy
effi
cien
t, hi
gh-p
erfo
rmin
g ho
me
that
mee
ts th
e st
ringe
nt e
nerg
y effi
cien
cy re
quire
men
ts o
f the
cod
e ch
ecke
d be
low
:
__ 2
012
Inte
rnati
onal
Ene
rgy
Cons
erva
tion
Code
(201
2 IE
CC)
__ 2
015
Inte
rnati
onal
Ene
rgy
Cons
erva
tion
Code
(201
5 IE
CC)
A co
py o
f the
Gre
en a
nd E
nerg
y Effi
cien
t Add
endu
m fo
rm, a
nd th
e HE
RS
repo
rt (i
f ava
ilabl
e) sh
ould
be
incl
uded
with
the
appr
aisa
l eng
agem
ent l
etter
.Fa
nnie
Mae
, Fre
ddie
Mac
and
FHA
gui
delin
es re
quire
lend
ers t
o ch
oose
co
mpe
tent
app
raise
rs w
ho h
ave
the
requ
isite
kno
wle
dge
requ
ired
to p
erfo
rm
a pr
ofes
siona
l qua
lity
appr
aisa
l for
the
spec
ific
geog
raph
ic lo
catio
n an
d pa
rticu
lar p
rope
rty
type
. As a
hig
h-pe
rfor
min
g, e
nerg
y effi
cien
t hom
e, it
re
quire
s an
appr
aise
r tha
t is c
ompe
tent
to a
sses
s the
val
ue o
f the
gre
en a
nd/
or e
nerg
y effi
cien
cy fe
atur
es in
the
loca
l rea
l est
ate
mar
ket.
You
can
acce
ss a
list
of q
ualifi
ed a
ppra
isers
at t
he V
alua
tion
of S
usta
inab
le
Build
ings
Pro
fess
iona
l Dev
elop
men
t Pro
gram
Reg
istry
, ava
ilabl
e at
htt
p://
ww
w.m
yapp
raisa
linsti
tute
.org
/find
appr
aise
r/gr
een_
sust
aina
bilit
y_re
siden
tial.
aspx
. The
se sp
ecia
lly tr
aine
d ap
prai
sers
hav
e co
mpl
eted
28
hour
s of
educ
ation
and
pas
sed
thre
e ex
ams.
If th
e ap
prai
sers
on
your
pan
el a
re n
ot
on th
is lis
t, th
ey c
an c
ompl
ete
14 e
duca
tion
hour
s onl
ine
to g
et st
arte
d:
http:
//w
ww
.mya
ppra
isalin
stitu
te.o
rg/e
duca
tion/
cour
se_d
escr
b/De
faul
t.as
px?p
rgrm
_nbr
=826
&ke
y_ty
pe=C
O
Appr
aise
rs o
n th
is lis
t are
not
requ
ired
to b
e Ap
prai
sal I
nstit
ute
mem
bers
but
m
ust t
ake
the
requ
ired
cour
ses a
nd p
ass t
he e
xam
s to
be li
sted
.
If yo
u ha
ve q
uesti
ons,
ple
ase
cont
act o
ur re
pres
enta
tive
at:
Nam
e:
Phon
e:
Emai
l Add
ress
: