Valuing Green: Will A Green Home Mean A Better Appraisal?

May 23, 2024 | Published by Leave your thoughts

The true financial value of a green home has been a debate within the appraisal community for quite some time. Why would a seemingly positive home enhancement become a topic with such opposing view points? The answer is simple, while green home improvements may mean that the home owner is content, they don’t always translate to a higher value in the appraisal process. There are, however, people working tirelessly to change that.

We’ve covered this topic before when a client came to us asking about property enchantments with a green twist. Now, a study has found that homes with green labels provide a market premium of 9 percent compared to similar homes without the labels, according to an Appraisal Institute article.

The study, “The Value of Green Labels in the California Housing Market,” examined homes in California and the impact green labeling has on their sales pricing.

When appraising any home, appraisers look at the pros and cons of the home versus other homes in the neighborhood. The green value of the home is no different. Appraisers must check out how green the other homes in the area may be. Is this a neighborhood trend, or do the homeowners just happen to be ahead of the curve?

The study also produced some other interesting results, such as the fact that the heightened premium of green homes tends to rise in a neighborhood with similar eco-mindsets. For example, the number of hybrid vehicles are registered in the area.

Ultimately, this is interesting because a single green home in an area where the other homeowners do not value the same green labeling will probably not get the same heightened price points.

Appraisers have become increasingly aware of the rise of green labeling for homeowners and green valuation in their field. The findings of this study and advancements in green technology have certainly been felt by appraisers across the board.

Tell us, how has valuing green been in your experiences?

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This post was written by Joseph Castaneda

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