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The Key Elements of ‘Green’ Home Improvements

What is the biggest difference between a truly green home and a property with eco-friendly features? The answer lies in the value of the home. According to the Appraisal Institute [1] homeowners looking to increase the value of their home must look at making six key elements of their property truly energy-efficient. They include site; water efficiency; energy efficiency; indoor air quality; materials; and operations and maintenance.

“The latest research shows that green and energy-efficient home improvements have the potential to pay dividends for buyers and sellers,” said James L. Murrett, MAI, SRA, President of the Appraisal Institute. “However, it depends on the improvements made. Some green renovations, such as adding Energy Star appliances and extra insulation, are likely to pay the homeowner back in lowered utility bills relatively quickly.”

Homeowners looking to save on taxes can also look at installing renewable energy systems in their homes to become eligible for federal tax credits, according to Murrett, who cited the guidelines by the Environment Protection Agency that has extended tax credits for all residential renewable energy products through December 31, 2021 and features a gradual step down in the credit value.

To get a true appraisal value for their homes, Murrett advised that homeowners should keep all new construction documents that outline the energy-efficient home improvements for appraisers and potential buyers. For homebuyers, looking for energy efficient homes he advised to choose a lender who " has knowledge of high-performance homes and will make the right choice for an appraiser."

“Builders and homeowners should collect and share with appraisers data about cost and benefits of green building materials and energy-efficient features to establish historical data regarding return on investment of green construction,” Murrett said.

In its guide to the Residential Green and Energy Efficient Addendum released earlier this year, the Appraisal Institute aimed to explain how each high performance or energy-efficient feature of a home applied to the valuation and marketing of a property.

To read the Institute's book on Residential Green Valuation Tools, click here [2].