Like many people out there, with mortgage rates as low as they are right now, we are looking into refinancing. So I wanted to bring up something that Earth Advantage is doing: In the process of refinancing, buying, or getting a construction loan, banks need to know that what they are lending for is a sound investment so they send out an appraiser to determine what this property or proposed property might be worth. Unfortunately appraisers tend to only look at a handful of standardized metrics for determining the value of a home (size, number of bathrooms, garage, etc… ), and green measures are rarely if ever looked at or given value. Some of this is because of basic lack of education on the appraiser’s side, and some of it is lack of ability to give evidence of value for green measures (for reasons like a lack of comperables). This is where Earth Advantage comes in. They have training courses for appraisers, as well as an addendum that anyone can give to an appraiser to explain what the installed cost of green measures you incorporated are
Why its important to me, the home owner:
Getting funding for a nonstandard house is tricky. The lending process is geared towards valuing McMansion style developments (which have shown in recent years to be lousy investments), and it can be quite frustrating when your value system collides with this. In our case this extends to things that have shown to have financial value: For instance, our high efficiency envelope saves us a considerable amount of money each year, but our triple pane windows and better than code insulation have brought us no additional value to earlier appraisals.
Why it is important to our cities:
The bigger issue is what this means for the built environment. The vast majority of people or companies building or buying are able to do so only with the help of a loan… And if features that make for better buildings and better neighborhoods don’t get recognized as having value, there is no way to get them built unless the builders are able and willing to put themselves out and invest in something that they believe in or know will have a good payback time. The net effect of this is that our built environment is slow to take up technologies or ethos that are known to improve our quality of life, and save us money.
Katherine and I have often commented that if anyone wants to do something important for green building and the environment, they should become appraisers. Not the most glamorous part of the process, but the appraiser is the filter through which everything passes and that single individual has the power to say what can and cannot be built or bought. This is, I suppose, a bit of a call to action… I’m glad there are organizations out there that are addressing this issue that I hope can make a difference, and I would be super excited if more individuals who are interested in sustainability got involved in the appraisal process.
Jetson Green has a post plus discussion on this topic that you can find here.