Saturday, May 1, 2010

"Green" Value Increase Formulas

From Dave Towne:

For your reading pleasure, you may want to read this blog about how to calculate the ‘increase in value’ for a “green” property:

I present this only as information... ...this is the first time I’ve seen ‘numbers’ applied to the green revolution.

There are assumptions made in this blog presentation, and direct comparison to ‘non-green’ comparable homes is barely made … only the perceived increase in value based on the installation costs, or on the utility cost savings.

...The danger of applying this kind of methodology is the energy costs or savings and green revolution energy-efficient installations within the comparable properties is not generally known to the appraiser. Without specific information, the appraiser must report a giant extraordinary assumption that the comparable properties do or do not have similar green revolution features if suggested formulas are used to give a value increase (via adjustments) to the subject property.

From Stan Sidor:

Dave, yes, this is a concern that I have: that the “green revolution” advocates are developing or creating these “formulas” for “cost savings” (such as on utilities), and suggesting that these cost savings should (not “could”) be capitalized to reflect an increase in “value” based on this factor; however, the key issue is whether or not BUYERS are actually electing to pay MORE for these properties based on this factor ….or any other energy-related factor.

It is not enough that energy efficient features will help the homeowner save money, but rather if they transform that perceived (or known) cost savings into a higher sale price.

From Michael Imes:

Follow the money!

Look at who is presenting this info also. They are not appraisers, and they have an obviously biased interest.


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