How to Buy a Green Home

Green homes are finally hitting the mainstream, but make sure you know what you’re buying before you sign the contract.

Ten years ago, environmentally- and energy-conscious home buyers had a tough time finding ‘green’ homes. Even though models were out there, builders and real estate agents had no idea how to market them and sometimes didn’t even know their benefits versus those of conventionally-built residence. Things have changed rapidly in the past few years, with soaring energy prices, universal concerns about global warming and increasing awareness of the building industry’s contribution to the deterioration of the planet.

In many communities across the country, green homes have hit the mainstream and are even ousting the competition. According to John Stovall, vice president of EcoBroker, a firm that trains and certifies real estate professionals in the tenets of green design and energy efficient residential features, some neighborhoods with a high percentage of sustainably built homes on the market are actually seeing conventionally constructed homes drop dramatically in price in an effort to compete. That’s not to say, however, that a green home is going to cost substantially more than a conventional home. “Now is a good time to be shopping for a green home,” Stovall says. “Everyone has to be competitive to sell in this market.”

Buyer Beware
Of course, just because a home is marketed as ‘green’ doesn’t mean it is. And with so much ‘greenwashing’ out there and such a wide array of sustainable features, all with varying degrees of impact on one’s energy bills, it can be hard to navigate the green market. Stovall says the first thing home buyers should look for if they’re serious about buying a green home is third-party certification. Someone other than the builder, owner or real estate agent should have evaluated the home for its sustainability.

There are a number of third-party certification programs out there. Among them is the U.S. Green Building Council’s LEED for Homes program, though this is the toughest standard in the nation. Only about 2,000 homes in the U.S. have been certified to date. More likely, you’ll see certifications from ENERGY STAR® or regional or local programs like EarthCraft. Third-party certification indicates the home has been inspected and tested and shows substantial improvement in efficiency over a home of comparable size in the same area that has been conventionally constructed. ENERGY STAR® certification means that a home is at least 15 percent more efficient than homes built to the 2004 International Residential Code.

It’s also important to work with an agent who understands green design and features as well as their benefits or potential drawbacks. EcoBroker and the Green Resource Council of the National Association of REALTORS® (NAR) both offer certification programs for green agents. Together the two programs have certified nearly 5,000 brokers, and, chances are, there is one in the community where you’re looking to buy. “Not only can certified realtors help you understand a home’s features, they can also make you aware of resources and credits that may be to your advantage,” says Al Medina, Director of NAR’s Green Designation.

The American Recovery and Reinvestment Act of 2009 brought a host of new tax credits for green building and home improvements. You may be able to request green upgrades as part of your contract on a new home or roll green home improvements into your mortgage. The tax cap on deductibility was removed. Combined with state incentives, it is possible to get 45 percent of the qualifying products’ costs back in direct tax credits. The Federal Housing Administration’s 203(k) program offers energy efficient mortgage add-ons. Many lenders aren’t aware of it. “You may have to educate your mortgage broker,” says Stovall, another reason to employ a green real estate agent.

Make a Green Evaluation
Of course, if you don’t have an agent certified in green housing, you can still make some evaluations on your own. Even if you’re not buying a home that is being marketed as green, in the current economic and environmental climate, it might be in your best interest to request an energy audit. They generally cost anywhere from $300 to $500. The auditor, in addition to inspecting the home for its energy-efficient features, will also perform a blower-door test, which provides a pretty accurate picture of just how tight a home’s building envelope is.

Stovall considers the building envelope the most important home feature to consider. “How is it sealed?” he asks. “Insulation can be hard to measure, so we’re big fans of energy audits.” The most efficient HVAC system in the world won’t do you any good if your new home is riddled with air leaks and suffers from poor insulation.

Other often-overlooked features that can have a big impact on a home’s efficiency are landscaping and location. Will the residence’s lawn and plantings require a lot of irrigation and maintenance? And how close is the residence to public transportation and/or where you work and shop? “You may find a great green home in an outlying area,” Stovall points out, “but what are your transportation costs going to be?”

Most people buy green homes at least in part to save money. So even if you pay a little more on the front end, you might be saving big in the long run. “The cost of living in a home is something to consider,” Stovall says. “What will be the cost of utilities? Think about that as well as your mortgage, insurance, and taxes.”

Just because a home is green, however, doesn’t mean it will necessarily cost more than its equally-sized, conventionally-built neighbor across the street. “Price depends on the green features in the property,” Medina says. “I’ve seen plenty of green homes priced at market, too.” He says once builders gain experience with green building, they’re generally able to build sustainably for no more expense than usual.

And while there is little evidence as of yet that green home prices are taking the same plunge as the rest of the real estate market, Stovall says two things are certain: “Their time on the market is shorter, and they’re also slightly smaller than average, so they’re drawing more dollars per square foot.”

“Ask questions. Dig deeper,” Stovall advises. “Don’t take anyone’s word for it if they say a home is green. Ask for documentation.”

Top Tips for Buying Green
• Work with an agent who has been certified in selling green real estate
• Look for third-party certifications, such as LEED for Homes or ENERGY STAR®
• Request an energy audit along with a home inspection
• Evaluate cumulative long-term savings in energy usage vs. the home’s list price; often green homes sell higher because they’re cheaper to live in
• Educate yourself on local building codes-sometimes features marketed as ‘green’ are actually requirements of the local codes
• Ask your lender about special energy-efficient mortgages
• Request green upgrades to a conventionally-built home as part of the contract

Resources
EcoBroker International
800.706.4321 • www.ecobroker.com
Green designation trainer and certifier for real estate professionals

The Green Resource Council
800.498.9422 • www.greenresourcecouncil.org
National Association of REALTORS® program promoting Green Designation for real estate professionals

Listed Green® Homes
www.listedgreen.com
MLS for sustainable, energy efficient properties

Walk Score™
www.walkscore.com
An online calculator to determine just how ‘walkable’ your home’s address is

U.S. Green Building Council LEED for Homes
www.usgbc.org/leed/homes
Guidelines for green building that you can use to evaluate the ‘greenness’ of houses on the market

Database of State Incentives for Renewables & Efficiency
www.dsireusa.org
Look for your state’s and locality’s incentives for making energy efficiency improvements to your home

Federal Housing Administration 203(k) program
www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm
Information on obtaining mortgages that allow for energy efficiency improvement add-ons to home mortgages