Factoring Energy Efficiency into Your Home’s Value
February 6th, 2012
A question I hear people often ask is, “will energy efficiency improve my home’s value?” If you are considering implementing energy efficient features in your home, but don’t know how much longer you may live there, then you may be asking this question as well. The answer breaks down into two parts; improved home value & selling features.
Improved Home Value:
With the option of selling your home is on the table, the first thing to do is determine the approximate timeframe of when the house will go on the market. Figuring out whether you will keep your house for the next 5, 10, 15, or 30 years will help you analyze the potential benefits you will realize from specific energy efficient improvements. Based on your timeframe, look at each energy feature and begin estimating the approximate amount that it will increase your home’s value and what the annual savings will be. Once you have determined this for each improvement, subtract the amount it will improve your home’s value from the total cost of the product and divide adjusted cost by the annual savings to get an estimated return on investment. Once you have done this you will be able to pick out the improvements that will pay themselves back so that you can realize a financial benefit by the time you sell your home. If you chose improvements that pay themselves back in two years and you plan on living in the home five more years, at the point of sale you will have received a 150% return on your investment… and that is a lot better than most investments these days.
Selling Features:
The other aspect that must be considered is how much it will increase the appeal of your home to a potential home buyer. In order for someone to buy your home, they must see benefits that are more attractive than the house down the street. If you can feature new windows, a clean sealed crawlspace, or a warm, draft-free home, these benefits can set your home apart and make it sell. I just received an email from a builder we worked with to install a sealed crawlspace system in one of his new homes. He informed me that it was under contract and included this quote from the buyer. “My husband was very impressed with your home and especially with the crawl space-as was the inspector.” So clearly, energy efficient features can make your home more attractive to buyers. The key is making your realtor aware of the improvements and marketing the benefits.
Working with Appraisers:
If you get your home appraised before selling it, work with the appraiser to inform him of the improvements you have done so that he can account for them in the home’s value. Some appraisers are more aware about energy efficiency, but many don’t even consider it when looking at a home. Let them know the cost of the improvements and the approximate energy savings from them. If they are equipped with this information and can see the benefits, then they are much more likely to accurately account for your investments.















