What Real Estate Pros Should Know About Green Certifications

Understanding green certifications can help you craft smarter listings, attract new clientele and work with properties known to save money and outpace local market appreciation.
Green Home Standing Out From The Crowd

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At one point, only a few buyers knew about the Energy Star stamp of approval. Now, more than 70% consider it essential or desirable, according to 2020 National Association of Home Builders data. And though Energy Star remains the most widely recognized rating, the data shows more and more buyers are becoming informed about additional green-friendly certifications like LEED, WaterSense and Forest Stewardship Council.

There are many reasons homeowners show growing interest in green features, such as energy cost savings, concern for the planet, focus on home value appreciation and alignment with personal values.

"Well-designed energy-efficient homes save money and are proven to appreciate in value beyond market norms," says architect developer Jason Boyer, whose firm recently developed Karma, a new smart, modern community in Phoenix. "Any real estate professional looking to differentiate themselves from the pack would be wise to understand the characteristics that elevate smartly designed homes."

Green Certifications 101

Real estate professionals can help close the info gap and position themselves as leaders in the field by understanding which green certifications make a difference. Green certifications can attract buyers seeking sustainable homes or any clients motivated to save on energy costs.

These are four of the most common whole-building green certifications, according to Yale University:

  1. LEED. Leadership in Energy and Environmental Design is a third-party green certification that focuses on the sustainability of a building's design, construction and ongoing operation, according to the U.S. Green Building Council. Regarding LEED, sustainability considers air quality, noise pollution, energy savings, materials used and other factors.
  2. WELL. This green certification focuses on health. A WELL-certified building is designed to improve residents' sleep patterns, emotional health and more.
  3. Living Building Challenge. This rigorous certification can only be applied to self-sufficient, regenerative buildings—structures that reuse water and create more energy than they consume.
  4. Energy Star. As a whole-building certification, properties must meet or surpass energy efficiency markers set by the U.S. Environmental Protection Agency.

Trends and the Future of Green Certifications

Though awareness of green certifications is growing, homeowners and buyers have not settled into a standardized prioritization. It might take a few years to predict which labels and programs will matter most to buyers and sellers in your area.

"[Certifications] actually seem to be less important to owners than just knowing that their personal priorities are being met," says Tanya Shively, LEED-accredited interior designer at Sesshu Design Associates in Scottsdale, Ariz. "Personal priorities and pride in the home are the primary drivers for doing green design."

In Shively's line of work, products with green certifications on the label matter mostly because they give homeowners confidence in what they're buying, whether an appliance that will save money or sustainable building material that aligns with their values.

As for Boyer? Instead of focusing on Energy Star, which he calls “mainstream table stakes,” or LEED, which he says can be time-consuming and confusing to homeowners, he says the national Home Energy Rating System Index is most relevant to today’s buyers and sellers.

Since 2006, the HERS Index developed by RESNET has scored more than 1 million homes on overall energy efficiency. Scores range from zero (no net energy use) to 150 (high energy consumption). Put simply, the lower a home's HERS Index score, the lower its energy costs. This practical score is easy to add to listings and explain to clients.

"When a home is enrolled in the HERS rating system, it delivers indisputable measured value as compared to the average new build,” says Boyer.

Why Care About Green Certifications Now?

While fuel costs soar and the climate crisis looms, real estate professionals can help clients understand green homes' cost savings and environmental friendliness.

Keeping up with green trends takes time, but it can benefit your business in several ways:

Understanding green certifications can add value for sellers. When it comes to a homeowner's return on investment, not all green certifications are created equally. WaterSense bathroom faucets affect home value far less than a low HERS score, for instance. "The HERS rating is a measurable outcome that adds value to the life of the home," says Boyer.

Explaining green features can attract budget and eco-conscious buyers. Add descriptions of energy-efficient appliances, water-efficient products and FSC-certified building materials to your listings. Energy efficiency saves money, and sustainability is trending, with over 50% of REALTORS® reporting client interest in green home features.

Green features can also attract health-conscious buyers. Green homes are often better for the environment and the people living in them. "For many of my clients, their health is the number one issue," says Shively. "Reducing health issues due to indoor air quality and the well-being of natural light and a connection to nature are huge intangible benefits."

The bottom line? Understanding green certifications could help you improve your listings, connect with more clients and stand out in an increasingly crowded industry. In the end, it’s just good business.