Sustainability 2: Marketing the Sustainable Home

With consumers showing growing interest in green living, REALTORS ® are striving to support the green real estate market by capturing and conveying the benefits of sustainability in more meaningful and measurable ways.

“One of the things I’ve learned is you just can’t keep throwing around the word green,” said Rick Thompson, a REALTOR® and co-owner of Bright Leaf Homes, a home builder specializing in sustainable construction in the Chicago suburb of LaGrange. “If everything is considered green, nobody thinks anything is green. It becomes a hollow claim.”

Thompson is one of nearly 3,500 REALTORS® who hold NAR’s Green Designation through a NATIONAL ASSOCIATION OF REALTORS® (NAR) program that provides advanced training to help REALTORS® seek, understand and market green properties — skills that can unlock the value of sustainability and provide a competitive edge in the marketplace.

Marketing a high-performance home takes more than targeting people who bleed green. It also means translating sustainability into desirability for the masses.

“One out of 10 buyers might be really into green and buy a green home because ... they’re environmental enthusiasts,” Thompson said. Most buyers look at environmentalism as the cherry on top, he said, so it’s important to sell them on the meat-and-potatoes benefits of green homeownership.

Energy efficiency is the most marketable benefit of sustainability.

“That’s something that can be quantified and people can wrap their heads around,” Thompson said.

The Home Energy Rating System (HERS) Index and the Home Energy Score (HES) are recognized by the Department of Energy, the Environmental Protection Agency (EPA) and the Department of Housing and Urban Development (HUD) as a gold standard for quantifying a home’s energy efficiency.

The HERS Index was created by the Residential Energy Services Network (RESNET), a nonprofit organization that helps homeowners make their homes more energy efficient through a variety of services. It generates a score relative to the size, shape and type of any given home. The lower the HERS score the more energy efficient the home is. A score below 100 means a home is more energy efficient than a comparable home built in 2006 and a score above 100 means it’s less energy efficient.

A certified RESNET energy rater uses special equipment to test the amount and location of air leaks in the building envelope, the amount of leakage from HVAC distribution ducts and the effectiveness of insulation inside walls and ceilings. The results are combined with other variables such as the performance of HVAC and water heating systems to calculate the home’s HERS Index Score.

“I compare it to a miles-per-gallon sticker on a car,” Thompson said. “If you’re buying a car, you can see how efficient the car is. Why not try to [evaluate energy efficiency] when you’re looking for a home?”

Providing a HERS Index Score can make a green home more sellable if it shows the home is less expensive to live in, Thompson said.

Even if energy costs are bearable now, they can spike at any time. Thompson touts energy efficiency as a way to “future-proof homes” against the threat of rising prices. “The other thing about green homes is that they’re built to be more comfortable,” he said. “You don’t need to buy space heaters or rearrange furniture just to deal with drafty doors or windows.”

Energy efficiency and other green selling points need more visibility at every step in the sales and marketing process, Thompson said.

“A big part of NAR’s Green Designation is to help [REALTORS ®] push education about green homes to consumers, appraisers, lenders and other real estate professionals and get green information at the forefront MLS listings where all the great features and benefits” are plain to see, Thompson said.

MLS listings come in various shades of green. NAR developed a template to help REALTORS® encourage more multiple listing services to include a wider range of green features in their standard data fields.

REALTORS® in San Diego are working to green their local MLS with fields for drought-tolerant landscapes — increasingly coveted in parched California — owned versus leased solar panels and other sustainable features, said Daniel Geddis, a broker’s assistant and green designated REALTOR® with One Mission Realty.

Such information can be included in a listing’s remarks section, but inconsistent terminology, spelling and abbreviations can leave holes in online search results. The standardized fields mentioned previously can help to change all that through data consistency and the ability to search by a specific feature, like the solar panels Geddis mentioned.

“Remarks are very subjective in how they’re written,” Geddis said. “The fields allow you to have yes or no answers. We think [green fields] will help increase the exposure and marketability of green homes and their value.”

A HERS Index Score , LEED (Leadership in Energy and Environmental Design) certification, Energy Star certification and other sustainable designations carry a lot of weight with buyers, but formal certifications remain the exception for most homes. Geddis makes a point to question the sellers he works with about all of the green features in their home to generate an informal report card.

“They may not even realize they have a green feature in their home like a whole house fan that helps keep the house cool in the summer and reduces how often you have to run your air conditioner,” he said.

The Appraisal Institute, a professional association in Chicago, offers a Residential Green and Energy Efficient Addendum that sellers can use to document green features and improvements.

One green metric that is already ubiquitous across the MLS ecosystem is WalkScore, an online easy button that rates homes on their proximity to stores, restaurants and parks and the ease of walking to them.

“I don’t know that every buyer is looking for that [but] if they are, that’s a tool that’s easily available to us,” Geddis said.

Some listing sites are already incorporating scores or information that inform buyers about a property’s readiness for solar panels. Other sites are including home performance data through scoring. As the demand for energy information continues to grow as an asset in the home buying process, it is possible that an ‘easy button’ for energy ratings could appear on listing platforms in the future.

Integrating lower utility bills, reduced transportation costs and other sustainability savings into the loan qualification process is another opportunity to support the green real estate market. Through its new Residential Energy+ program, RMI is working with “one or two” groups in the mortgage underwriting field to factor in energy savings when qualifying buyers for loans, Miller said.

“It’s not just the physical asset of the home that lenders [should consider],” he said. “It’s the cost to operate the home and to get to and from the home — the total cost of ownership.”

Miller advises REALTORS® to build a network of greencertified contractors, appraisers and other real estate professionals to help them provide clients with the advice and services they need to maximize the benefits, valuation and marketability of a sustainably built home.

REALTORS® should also encourage sellers to disclose their utility bills even if the bills are high, Miller said. “It’s a proxy for transparency that demonstrates the seller doesn’t have anything to hide ... and that you’re telling them everything you know about the home.”

REALTORS® could even pay for an energy audit — either on behalf of a seller to market their home or a buyer to shed light on the total cost of ownership. “Maybe [the audit] costs $300, but if that’s what they need to seal a deal with a client, it might be worth it,” Miller said.