Green Building Appraisals / LEED Certified

[Nevermind 3]

I just got a potential order for a LEED certified SFR. I say potential because I am unsure if I want to do it. My question is to anyone who has had additional training/education and or experience in green property appraising and how you approached it, and what fee you charged, etc. I am trying to decide if I want to do it and what I should ask for as a fee.

FYI - this is a refinance transaction

Thanks in advance

 

[Scott R Marshall]

Kind of depends. Are you in a subdivision or not? Are there other green homes in the subdivision or market area or not? Does your MLS or other databases make a habit of disclosing the various level of LEED certification? Some neighborhoods I appraise in, that's all that's been built over the last couple of years and there are actually resales occuring by which does base true market reaction, not just 1 owners preference, so they're kind of easy. Other markets, they're 1 in 100+ of the comparable properties out there.

The complexity of your market would dictate the appropriate fee. All I can say is for some, especially when dealing with LEED certification, the fee would be pretty much the same as a normal appraisal as there's plenty of market data. Other markets, not so much and the fee would be somewhat higher. Also depends on the level of LEED certification. Certified and silver are much more common, gold a bit less so and I don't think I've come across a platinum yet.

 

[Nevermind 3]

Kind of depends. Are you in a subdivision or not? Are there other green homes in the subdivision or market area or not? Does your MLS or other databases make a habit of disclosing the various level of LEED certification? Some neighborhoods I appraise in, that's all that's been built over the last couple of years and there are actually resales occuring by which does base true market reaction, not just 1 owners preference, so they're kind of easy. Other markets, they're 1 in 100+ of the comparable properties out there.

The complexity of your market would dictate the appropriate fee. All I can say is for some, especially when dealing with LEED certification, the fee would be pretty much the same as a normal appraisal as there's plenty of market data. Other markets, not so much and the fee would be somewhat higher. Also depends on the level of LEED certification. Certified and silver are much more common, gold a bit less so and I don't think I've come across a platinum yet.

Hey Scott,

Well, per HO, this is the first and only LEED Platinum property in its' city. They are generating enough power to sell back to the power company. We do not have a prevalence of Platinum properties or even Gold certified properties in the area, that I know of, and especially ones that I can easily find without going through every single listing and reading the comments. I supposed there is some sort of listing of LEED certified properties somewhere, but I am not sure how complex this may end up being.

I mean, I may have to find some LEED certified properties which are anywhere in the area and do some paired-sales to determine a premium paid, if-any, on the green, energy efficiency of the houses, or I suppose, I could try and analyze it from the income approach and how much money is saved by the energy efficiency, etc. But, honestly, I'd have to charge a lot for either one of those and I am not sure the clients would pay that and if I am willing to put that kind of time and energy into it.

I could also put more emphasis on the cost approach, since it is a newly built home, but I don't think most people put a high priority and value on green building yet. I don't think the cost justifies the value for most people yet.

I don't mind these challenging assignments, but I need to get paid for them and keep my sanity while completing other reports and trying to grab a little sleep here and there.

Any other ideas of how to approach it?

 

[Scott R Marshall]

Not sure if your MLS allows you to search by "comments" only. Ours does and if I type in LEED I get about a dozen sales and about the same number of current listings in the greater Albuquerque metro area. Not much, and most are builder sales, but enough to start making market determinations.

If it has a PV system that is generating income, you can do a DCF but some will argue that this is erroneous as this approach manufactures the value of the PV system and that only market sales should be considerd when attempting to determine the contributory value of such things. The last one I did was more than a year ago and I had quite a bit of assistance from my peers in performing the DCF. Ultimately I would only want to utilize market sales and would rely on this method only as a last resort, and even then the rationale behind including this analysis as reasoning behind the contributory value of the PV system and the income/savings it generates is shaky at best, at least in my opinion.

 

[Greg Parker]

I have taken a couple of classes on these, and have a god idea of the cost to produce the homes. That said, there are developments in Philadelphia with the Platinum certification, including a development which was to be condo's, but ended up as rental apartments.

I have seen them in two major areas in my city. The first area is a higher priced neighborhood (Graduate Hospital for those familiar with Philly), and there is almost no differential between the resale price and "original sale price of similar GLA/functionality homes which are not certified. The market simply is not recognizing it yet.

Another local developer and his brother have done a couple of green developments in Fishtown. One of these was completed ~ 6 years ago, and is now beginning to see enough turnover to develop an opinion for comparison. Again, no real market reaction.

The final development I can think of is in a rougher section of town where ther eis a goodly amount of redevelopment. Here, it's possible to really compare apples to apples because you have standard new construction, and a smattering of plat cert homes. I got to to do the resale of one of the platinum certified homes last month. The property was reselling after 10 months due to a relo, and again... no reaction.

With the price of solar panels and the like dropping, limited gov't returns or sponsorship on the development, and natural gas being relatively cheap here, the Leed homes are coming across as a niche market based on my research which simply are not jsstified at a resale level at this point in our area. Looks great for marketing, does not add up to a hill of beans for sales purposes though.

 

[The Bob]

You may want to Google "net zero housing"

 

[energyprojects]

Might be too late for this suggestion but you may want to try googling/contacting Efficiency First (they have some chapters in CA, and I know of a particularly active member who deals with appraisal subjects, who is out of Nevada City, not sure which chapter is closest to that)

 

[Mr Rex]

Might be too late for this suggestion but you may want to try googling/contacting Efficiency First (they have some chapters in CA, and I know of a particularly active member who deals with appraisal subjects, who is out of Nevada City, not sure which chapter is closest to that)

LEED is energy efficient, but also has a heavy element of "sustainable" PC BS that makes the whole concept not cash returnable on investment. The market is the ultimate decider, and so far its a definite thumbs down, as the RE lions will buy up these over priced, over hyped properties at a substantial discount. Chapel Hill NC is one of the most liberal locales east of San Francisco, and recently had their bold foray into LEED go into foreclosure.http://www.builderscounsel.com/2011...heads-to-foreclosure-green-elements-to-blame/

 

[energyprojects]

thanks, I was thinking in terms of the AI green addendum, which seems to have a lot or mostly energy related line items, that the Efficiency First contact might have some info and examples on those components.