Appraisal and Market Value, the MLS

Elizabeth Million – Bank of America

Residential Energy Efficiency Working Group (REEWG)Appraisal Committee – MLS Improvement Recommendations

Who is the REEWG – Appraisal Committee Group?

Residential Energy Efficiency Working Group (REEWG) Appraisal Committee – MLS Improvement Recommendations

• The Appraisal Committee: a volunteer group, determining how to integrate new searchable fields into Colorado’s Multiple Listing Service’s (MLS); creating uniformity in “greening” our regional MLS’s.

• Comprised of Real Estate Agents, Appraisers, Lenders, members of the Construction and Energy Efficiency Industries, and both IRES and Metrolist

What we are currently doing at REEWG – Appraisal Committee Group.

• The new searchable MLS fields:

• New MLS searchable fields are split into two categories, “Certifications” and “Features.”

• It will provide the industry with needed energy and “green” data points

• Quantify market value, and identify comparison data for the appraisal and lending industries.

• Addendums lend more information on the green features of the home, as well as, help decipher between energy-efficient and regular homes.

How do we integrate “green” home features into the MLS and to what end?

1. Identify the “green” attributes of a home to be added as searchable fields in the MLS.

2. Distinguish between “green” features of a home and actual certifications.

3. Appraisers will determine if any of these features or certifications add value to the homes.

4. Lenders/underwriters will need to be convinced that there is added value. Even if appraisers find added value the lenders/underwriters who ordered the appraisal must also come to believe there is additional value.

Outreach Strategy to the Real Estate Community

MLS bodies/providersHomebuilders Partners (ESNH, USGBC, Xcel, EcoBroker) Real estate professionals Appraisers

• The Appraisal Committee, with the aid of the local HBAs, will obtain the email information of the associations Homebuilders to inform them of training opportunities (such as ENERGY STAR for New Homes trainings) and industry events will be utilized to promote MLS improvements.

• Encourage homebuilders, through various websites, (such as Recharge Colorado, ENERGY STAR New Homes, Xcel Energy) to contact their real estate professional and list a new home using the improved MLS.

• Real estate professionals will have training opportunities which include the Colorado Association of Realtors (CAR) convention, Ecobrokers, and ESNH. In addition, local Realtor boards will convey the green changes on the MLS.

• Appraisers will be notified of training opportunities via local Realtor Boards, Appraisal Institute, and other local Appraisal organizations.

Getting the Information Out andTraining the Real Estate Community

The webinar trainings will be offered to both real estate professionals and appraisers.

1. Understanding energy / green field improvements to MLS a) definitions of fields b) how to properly gather and enter datac) how to utilize the energy / green features addendum

2. Searching the new MLS for real estate professionals and appraisers

Trainings focus on tools for real estate professionals equipping them with valuable information on opportunities for their clients to make improvements to the home they are buying or selling.

Ecobroker, the National Association of State Energy Officials (NASEO) and the Governor’s Energy Office (GEO), are currently partnering on developing trainings

.

Training, Education, and Knowledge

• SAMPLE TRAINING OUTLINE:

• I. Why do we need this in our MLS?

– A. Consumer service

– B. Valuation data

– C. Full and accurate representation (liability reduction)

• II. What is a “green” house, anyway?

– A. Definitions

– B. Characteristics

– C. Examples

• III. How can the seller or buyer or agent know?

– A. Third party certifications

– B. Hire an expert

• IV. The best‐known certifications in Colorado

– A. HERS Rating

– B. Energy Star® Qualified new home

– C. LEED for Homes

– D. NAHB/NGBS‐ICC 700

– E. Other certifications

• V. Features in fields and Features to highlight in text

• VI. Resources

The “Green/Sustainable/Energy Efficient Chicken…….or the Golden Egg??

This is the million dollar question…?

“Retrofit“Green/Sustainable/Energy Efficient Chicken

The age old question of what comes first………?

Demand for Green/Sustainable/Energy Efficient Homes

OR

“Green Value Chain” and Value Challenges with Green, Sustainable, Energy Efficient

HomesSeller – need to document all green, sustainable, energy efficient features of the home

Real Estate Agent – need to list green, sustainable, energy efficient features or certifications in the MLS

Buyer – “purchase power” decision and willingness to pay for green, sustainable, energy efficient features of a home

Appraiser - most important link in the value chain. Must have the market data to determine if there is value add to green, sustainable, energy efficient homes.

Lender/Underwriter – decision maker for accepting appraised value and information provided by appraiser. Very important to provide quantifiable green data within the appraisal.

AND NOW FOR THE REST OF THE GREEN VALUE STORY……………..

Retrofit /New Construction home ready for sale!!

Knowledgeable Green Real Estate Agent list on MLS . The MLS must have Green Data Points!

Knowledgeable Green Buyer Broker Real Estate agent finds a buyer who says “I want to buy a green house” –now the green home is under contract

Buyer makes application with lender for a green loan. Appraisal is ordered for the green home.

What’s a

green loan??

“GREEN HOME”

This is the story of a very green home………

Appraiser inspects the green home for green features & certifications – uses MLS to compare to other homes that may or may not have green features.

Lender/underwriter reviews appraisal

Lender/underwriter approves the loan!! Green Home is Sold!!

You gave how much

value to the PV panels?

And they lived sustainably ever after…..

Green/sustainable/energy efficient fairy