Developers would like to see green property projects jump quickly. Regrettably appraisals are slowing down the rapid advancement of the environmentally friendly real estate projects. Imagine you are going to build a standard $500,000 property. On top of the cost for the standard build you have your architect design the property to utilize the full potential of the sun and you install solar panels as well as good quality insulation. Now going green doesn’t come cheap therefore these green choices are going to increase the build costing to $600,000.
Unfortunately this is not how your bank or mortgage company appraiser looks at it. David Snook says “It doesn’t do a lot of good to simply add value based on cost, but the question is, How much will the market pay on resale?’ , he should be able to tell us, as David is an appraiser and representative of the real property committee on education for the American Society of Appraisers.
Shall we carry on with our example? Although the real estate cost $600,000 to build the bank or mortgage company will only recognize the value at $550,000. This swells your fees by $50,000 found on a 20% down payment. With a high-ratio mortgage 5% down payment, you will have to find $77,500 rather than $27,500. That is a large difference in particular if you are on a budget and every bit of savings matters. This might force you to look at the cheapest green option, using older and cheaper technologies, or maybe you will abandon the whole green idea of the project altogether.
Nevertheless, as a green GTA MLS agent I see deciding to go for a green property does make a difference. Look at it this way, green real estate sell over 20% faster with an 8.5% increase on sale price, according to Green Work Realty report. Regrettably, when you deal with an appraiser having little or no experience with green property technologies (and that’s quite probable, especially if you are among the green pioneers in your area), your home’s value will most probably be underestimated.
There is little that can be done about it at the moment . Whilst there is no standardization for environmental and energy performance at this time, I think that they will soon be on their way. Green housing is not only about the environment, it’s also about cost. Not many of us are willing to buy a car without at least a basic knowledge about its petrol consumption. So when purchasing your new home, it stands to reason the logical thing to do is find out how energy efficient the home is.
