Fight Low Green-Home Appraisals

While there's little doubt that the green home-building movement is here to stay, numerous barriers stand in the way of widespread adoption of sustainable, high-performance practices. Chief among them is getting the lending and appraisal communities to recognize the real added value of implementing green strategies. For example, if a home builder includes, as standard, $5,000 in energy-efficiency enhancements, shouldn't the appraised dollar value of its homes be higher?

In many cases it isn't, says Jim Deitch, COO of Southern Crafted Homes, a Tampa, Fla.-area builder that specializes in energy-efficient homes. “There's definitely a knowledge gap on the appraisal side,” Deitch says.

Deitch and his team at Southern Crafted have worked to educate local appraisers on the value of green, and it's starting to pay off. He offers the following 10 rules for ensuring a good green-home appraisal:

1. Educate your staff on the changes to appraisal rules.

2. Make sure appraisers come from an appraisal pool.

3. Make sure the appraiser signs the ethics statement on their report. The statement, among other things, certifies that they have seen the inside of the home.

4. Keep your completed homes locked so that the appraiser must contact sales or the main office to gain access.

5. Ask the appraiser questions like: Are you from the area? Do you know the product? How many appraisals have you done recently in the area? Have you appraised one of our homes?

6. Assuming that you're satisfied with their answers, provide them with contract information and specifications on green features that add value (e.g., a high-efficiency HVAC unit).

7. If you're unsatisfied with their answers, don't let them perform the appraisal. Instead, contact the lender and tell them to send the next appraiser in the pool.

8. If the appraiser submits the report anyway without seeing the inside of the house, file a complaint with the state under the ethics code and challenge the appraisal.

9. Keep in mind that once an appraisal is completed, a new report can't be requested — it can only be modified.

10. Educate your buyers about the changes in the appraisal environment so they're not startled by some of these steps as they occur and try to renegotiate their sale price.