Developers would like to see green property projects rise rapidly.
Unfortunately appraisals are slowing down the rapid advancement of the
environmentally friendly property projects. Imagine you are going to
build a standard $500,000 home. You decide that you want the real
estate to be more environmentally friendly, therefore you ask your
architect to design the new house so it makes use of the sunshine and
you put in high quality insulations and solar panels. Due to these
green choices, this will add another $100,000 to the cost of the
property.
The appraiser from your bank or mortgage business doesn't look at it the same way. David Snook is an appraiser and associate of the real property committee on education for the American Society of Appraisers and he does doesn't think it's about the cost of the house but more about resale value.
Shall we continue with our example? Although the property cost $600,000 to build the bank or mortgage company will only accept the appraisal at $550,000. This escalates your payment by $50,000 working on a 20% down payment. For those of you that can't afford the 20% down payment and wish to take out a high-ratio mortgage, (5% down payment) then your payment will be $77,500. That is a very large amount of cash to save for upfront. This might force you to look at the cheapest green alternative, using older and cheaper technologies, or maybe you will abandon the whole green idea of the project altogether.
Still, as a green MLS expert I realize even though there is a rise in cost going green does make a big difference According to Green Work Realty statement, green homes are priced 8.5% greater on the resale market, and also sell 22% faster. This information doesn't help you though if you are dealing with bank or mortgage business appraisers who don't have much if any experience with the green home technology.
The appraiser from your bank or mortgage business doesn't look at it the same way. David Snook is an appraiser and associate of the real property committee on education for the American Society of Appraisers and he does doesn't think it's about the cost of the house but more about resale value.
Shall we continue with our example? Although the property cost $600,000 to build the bank or mortgage company will only accept the appraisal at $550,000. This escalates your payment by $50,000 working on a 20% down payment. For those of you that can't afford the 20% down payment and wish to take out a high-ratio mortgage, (5% down payment) then your payment will be $77,500. That is a very large amount of cash to save for upfront. This might force you to look at the cheapest green alternative, using older and cheaper technologies, or maybe you will abandon the whole green idea of the project altogether.
Still, as a green MLS expert I realize even though there is a rise in cost going green does make a big difference According to Green Work Realty statement, green homes are priced 8.5% greater on the resale market, and also sell 22% faster. This information doesn't help you though if you are dealing with bank or mortgage business appraisers who don't have much if any experience with the green home technology.
While you can give the appraiser the costing, until they have the experience then there is not a lot you can do about it. Support could be on the way for appraisers and future home owners if strong initiatives are put in place that will standardize environmental and energy efficiency. Green real estate is not only about the environment, it's also about money. When looking at purchasing a car, one of the first things you look at is its fuel consumption, how many miles to the gallon does it do. Understanding property energy consumption is the normal next step.
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