Selling Green

REALTOR® Eileen Oldroyd works in image-conscious Mission Viejo, Calif. The broker/ owner of Oldroyd Lending and Realty, she drives a decades-old Mercedes converted to run on waste vegetable oil. Clients can often hear the car, dubbed The Veggie Mobile, before they see Oldroyd.

“Selling green is a challenge in Orange County because it’s just not sexy,” she said, clearly disappointed that unlike other areas on the West Coast like San Francisco, Portland or Seattle, southern Orange County California isn’t as progressive, in her opinion, on the green front.

“We don’t have a culture of conservation or sustainability,” said Oldroyd, who is known as “Green Eileen.”

Oldroyd, a recipient of the NAR® EverGreen Award in 2013, has been a REALTOR® for 10 years and has been a certified NATIONAL ASSOCIATION OF REALTORS® Green Designee for the last five.

Upon reflection, Oldroyd said she thought most home buyers by 2014 would be demanding high-performance buildings. And new home builders, she thought, would all be adhering to the better building standards touted by third parties such as U.S. Green Building Council.

“I thought everyone was like my husband and myself … wanted to be energy efficient … wanted to have a healthy home,” she said. “I had rose-colored glasses on.”

So just how well does green sell?

Carson Matthews, an associate broker with Atlanta Fine Homes Sotheby’s International Realty, has tracked the sale of newly constructed, third-party certified green homes to traditional new construction in the four counties that make up the core of the greater Atlanta area — Cobb, DeKalb, Fulton and Gwinnett.

Matthew’s figures show that for 2013 the median sales price of a green home was $450,500 and that the median sales prices of a conventional home was $403,014, or about 12 percent less. Matthew also compared the homes by average sales price. That comparison showed that an average price of a green home in 2013 was $509,761 compared to a non-green home of $492,909, or just about a 10 percent difference. For both comparisons there were 104 green homes that sold compared to 1,233 conventional homes.

Matthews has a similar study of sales for 2012 also comparing 122 green homes to 900 conventional ones. Again, the analysis shows the median and average sales prices of new homes in the four-county area. In 2012, the median sale of a green home was 2 percent higher than a conventional home and the average sales price of a green home was 3.6 percent more than a conventional home.

While the sales figures are higher for 2013, the percentage of green homes that sold was just 8.4 percent. Typically, for the years that Matthew has been tracking the sales data information, the percent of green homes has lingered more in the 13 percent range.

Matthews attributed the dip in the percent of green homes selling in urban Atlanta to pent up demand for new construction after homebuyers “blazed through the existing home inventory” over the last several years. “Now builders are coming back and building fast,” said Matthews, adding that homebuilders are able to sell the homes without having to advertise them as third-party green certified.

He also noted that the move to have third parties certify homes as green or high performance dovetailed with the crash of the financial markets and a soft real estate market. It became a “big marketing piece for homebuilders,” Matthews said of third-party green certification, “because no one was buying homes.”

Matthews also notes, though, that the area he tracks includes no new subdivisions, because the core of Atlanta is built out.

Cindy Wasser, manager of Green Building Programs at Home Innovation Research Labs, said interest in certifying homes to the National Green Building Standard (NGBS) continues to increase. Home Innovation Research Labs is an accredited third-party certification agency dedicated to the home-building industry. Wasser said, nationally, there are nearly 33,000 certified homes and apartments (both new construction and remodels) that are completed and certified and another 72,000-plus units — including land developments — in the pipeline.

Specifically, Home Innovation Research Labs has seen a real uptick in interest in NGBS Green Certification for multifamily buildings. Wasser attributes the activity to a variety of reasons including lower operating costs, an appealing feature for the developers, who usually are involved in long-term management. The sustainability moniker also attracts today’s young, urbane renters, she said.

There were 24,409 apartments in 976 NGBS Green Certified buildings as of April and another 47,900-plus apartments in 915 NGBS Green Certified buildings being developed.

And just how pleased are those with NGBS Green Certified homes? Conducted by GuildQuality and commissioned by the National Association of Home Builders, a February 2014 poll showed that 94 percent of homeowners who purchased a green home within the last five years would recommend a green home and 92 percent would buy another green home.

A whopping 87 percent of those polled listed “none” when asked what green feature they are most dissatisfied with.

The poll was sent to 1,350 people whose homes were built between 2010 and 2013. The findings, published March 2014, are based on the answers of 187 original homeowners.

When asked what features were important when they built or bought a home, 65 percent strongly agreed that energy efficiency was a driving factor and 37 percent strongly agreed that water usage played a role in the decision. Of those who reported that energy efficiency was important, 68 percent of those are satisfied with the results.

Fifty-two percent of those who said water was an important decision are satisfied with the performance.

The poll also showed that many buyers were not aware whether their home cost more than a comparable non-green home or thought their home cost a “bit more” than a non-green home. Indeed, capturing the value of green homes in the real estate market has been a priority for real estate professionals. The NAR® GREEN REsource Council has published a blueprint for MLSs and their vendors to capture high-performance features that can be replicated elsewhere, if desired. (See sidebar on page 42.)

Additionally, The Appraisal Institute created a Residential Green and Energy Efficiency Addendum to be used with the Fannie Mae Uniform Residential Appraisal Report (also known as Form 1004) to capture energy-efficient features. And in March, the Residential Energy Services Network — or RESNET — agreed to auto populate the appraisers’ addendum.

Even if the homes cost more initially, 55 percent of those polled for the NGBS evaluation believed the benefit outweighed the increased cost.

Meanwhile, similar to Home Innovation Lab, the U.S. Green Building Council also reports that an interest in high-performance building is increasing for multi-residential buildings, said Kelsey Mullen, director of residential business development. Mullen called it an “incredible surge” and said upward of 13 percent of all multifamily market units built last year were certified LEED midrise.

Not only are LEED buildings better built, Mullen said that there has been some “feedback” from developers and leasing offices that renters see the value of a LEED certification. He said there is no definitive market-wide study and for now it’s “just feed back here and there.”

However, on the single-family side, the percentage of those seeking LEED certifications is dipping.

Mullen said that a lot of builders, who understand high-performance, continue to build energy-efficient buildings, but may not be seeking third-party certification.

“We see a lot of single-family production builders doing the right thing but not necessarily certifying under a third-party program,” he said, adding, “I see the builders getting closer and closer to making green their everyday practice because a green home is not additive, it’s taking your everyday practice and making it better.”

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