If you’re in the market to buy an eco-friendly dwelling, researchers say you should expect to pay more for a so-called green home. How much more depends on a number of factors, but in a recent study looking at data from 1.6 million California home sales from 2007 to 2012, University of California researchers found that green-certified single-family homes sold for $34,800 more — or 9 percent more — than comparable homes that weren’t certified green.
Green is in vogue. Amber Turner, a broker with Living Room Realtors in Portland, Ore., estimates that about three-quarters of her buyers begin their search with a strong interest in green, even if what they mean by green is vague.
“Most buyers start from the standpoint of wanting an energy-efficient home,” she says. “But for about half of my buyers, going green ultimately becomes a deciding factor in the home they choose to purchase.”
While the growing interest in green has Turner excited, she worries that some buyers are falling victim to green washing, the practice of marketing a product as eco-friendly when it really isn’t.
“If you want to buy a green home, you definitely have to do some extra homework,” says Turner.
How do you Define a ‘Green Home’?
If want to buy a green home, the first thing you should do is ask yourself why, says David Bergman, who teaches green architecture at Parsons The New School for Design in New York and wrote the book “Sustainable Design: A Critical Guide.”
“It’s an important question because people tend to buy a green home for one of three reasons, and while each of those reasons overlap somewhat, they do determine what the buyer really means by green.”
According to Bergman, green can be as simple as saving on energy costs, which means buyers will want to focus on energy-efficient appliances, weatherproof windows and good insulation.
Alternatively, some buyers define green in personal health terms, so they want a home that uses nontoxic materials. For these buyers, even seemingly innocuous carpeting is a big deal, because carpets can be a nightmare for people with allergies.
Last, some buyers define green as contributing to a sustainable future. For those buyers, Bergman says, it’s often important to look for building materials that are locally sourced and sustainable.
Work with the Right Agent
If you’re serious about looking at green homes, you should work with an agent who sells green, Turner says. “There are a lot of little things you’ll see in a green home that are different,” Turner says. “So it’s helpful to have an agent who’s worked in that part of the market.”
Referrals are one of the best ways to find an agent who specializes in green. But it’s not the only way, according to Turner, who advises buyers to look for green real estate tours in their area.
“I got up to speed on green by spending several years in a group that toured local green homes,” Turner says. “The group was free and open to Realtors as well as the general public.”
It’s also possible to find a broker or real estate agent with green certification. Earth Advantage is one popular certification authority. But it’s important to remember that there isn’t a standardized national certification. Plenty of brokers know green, even if they don’t have the credentials. Likewise, it’s important to research the certifying authority, because the mere presence of a certificate doesn’t necessarily mean the real estate agent is an expert.
Look for the Signs of a Green Home
Are you looking at a truly green home? Finding the answer could be more complex than you might think. According to Bergman, buyers can usually tell quite a bit about a home just by looking at the appliances (Energy Star is a big plus), the windows (double pane), and the heating and air-conditioning system. But to learn about the insulation — which can make a big difference on the utility bill — buyers will often have to ask or rely on an energy audit, which could run about $500.
“Asking to see past utility bills is an option,” Bergman says, “but the bill won’t tell you everything you need to know about energy efficiency because human behavior is such a big factor.” Likewise, it’s a good idea for buyers to ask about documentation on green features. But they shouldn’t be surprised or dissuaded if the seller can’t provide paperwork.
“The certification process for a lot of green features may not be standardized yet, but if it’s there, it’s a good idea to use it,” Turner says.
Discern the Home’s Relation to the Land
One often-overlooked aspect of buying a green home is the property, says Cassy Aoyagi, owner of FormLA Landscaping in Los Angeles. “A green home isn’t just a green structure, it’s a home that makes the best use of the land,” Aoyagi says. “Asking simple questions like which direction the home is oriented toward can tell you a lot about the home’s green credentials.”
The house’s orientation determines how much sun exposure it gets, which affects heating and air-conditioning use. Likewise, it’s important to understand the prevailing winds, because they affect the temperature inside the home. Outside, Aoyagi says buyers should also pay attention to the landscaping. If it’s dominated by non-native plants, that should raise alarms for green buyers. “In some parts of the country, water is a serious issue, so non-native plants are going to raise your costs and make it harder to be green,” Aoyagi says. “But no matter where you are, there’s always the issue of maintenance, which costs money and uses energy. Sustainable landscaping is about understanding how to pick plants and trees that don’t need the same maintenance as a lawn.”
Does the Seller Care About Green?
Buyers who buy green inevitably do so from sellers who care about green. Consequently, Turner says buyers can learn a lot just by engaging the seller or agent in a conversation about the home’s green features. “The more questions you ask about green, the more likely you are to figure out if they’re selling you a truly green home or a green wash,” she says.
To get an edge on a would-be green washer, do a little Internet research. “The Internet is full of these quick little lists that tell you how to make a home green without much effort,” Turner says. “If you find that the seller has done the bare minimum of updates that coincide with the top two or three on those lists, there’s a good chance you’re talking to someone who isn’t as serious about green as you.”
On the other hand, Turner points out, sellers who are passionate about green tend to have deep knowledge of the topic.
What’s the Break-Even Period?
While some buyers will pay a premium for green no matter what, most buyers want to know if they will get a return on their investment, according to Bergman. For example, they want to know how long it will take to break even after paying for energy-efficient features.
Each home is different, but Bergman says buyers who plan stay for a decade or more stand a good chance of saving money by going green, even if they pay an upfront premium. On the other hand, buyers who are in it for the short run, or who want to flip the house, should understand that a lot of the savings comes from lower energy bills, which means owning a green home for five years or less probably won’t pay off.
What about the Mortgage?
Some buyers report difficulty in getting lenders and appraisers to recognize the value of a green home. “Unfortunately, the lending industry just isn’t as up to speed on green as we’d like it to be,” Turner says. She adds that it’s sometimes hard for appraisers to find comparable houses nearby, because green homes are relatively new.
While green buyers may have a hard time convincing lenders their utility costs will be substantially lower than in a standard home, they’re not entirely without resources. Last year, the Appraisal Institute, a trade group for real estate appraisers, introduced a new, optional form that helps appraisers better take into account energy-efficient and green features when valuing homes.
Making the financial case for a green home may not be as cut-and-dried as for standard homes, Turner says, but the marketing is changing fast when it comes to green.