Energy Efficient Homes Sell For More

When a seller decides to make improvements to get their home sold for the highest price, painting, landscaping, de-cluttering and staging are the things they are most often told to do by their real estate agents.  After all, most buyers don’t examine the insulation in the attic or check for drafty doors and windows when they’re looking at home. But since buildings use 40% of all fossil fuel energy in the United States, the idea that sellers can quantify energy use is becoming a more marketable factor in home value.

Occasionally buyers will ask what the utility costs are when they have seen a home they would like to consider. And occasionally sellers will proactively display monthly utility costs if they happen to be pretty low. Since the cost of utilities is a recurring monthly expense just like a mortgage it make sense to think of the utility bill as part of the overall cost of home ownership.

Just like buying a car, homebuyers are looking for something physically attractive.  In other words, they aren’t going to buy a house that is unattractive to them just because it’s energy efficient.  But surveys show that energy efficiency is becoming more and more important to buyers.  In fact 39% of all homebuyers say energy efficient is a very important factor in their home buying decision.  New home building codes are mandating higher levels of energy efficient standards.  However, older homes have no such requirements.  So a seller who consciously improves the energy efficiency and has an agent who knows how to market these improvements can expect more interest in their home and possibly a better price if the home has the other attractive features a homebuyer is looking for.

In order to assess the energy efficiency of a home the homeowner should first have an energy audit performed by a reputable auditor.  Once the report is in hand the homeowner can proceed to systematically make the improvements necessary to make the home more efficient.  And the improvements don’t need to be cost prohibitive or so expensive that the seller won’t recoup the investment.  For instance, windows don’t necessarily need to be replaced if they are old and single pane. Simply caulking and/or new storms can dramatically improve efficiency by cutting down on drafts.  On the other hand, if the home won’t be sold for a number of years, new windows may be worth the investment.

If the HVAC system in a home is more than 15 years old it might be worth replacing even if it hasn’t broken down.  In 2006 the SEER rating (Seasonal Energy Efficiency Rating) was mandated to be at least 13, which was a fairly dramatic increase in energy efficiency.  Today HVAC systems with SEER ratings between 18 and 23 are available.  The lifetime cost of operation for a 23 SEER rated HVAC system is half that of an older 8 SEER system.  The cost for a new HVAC system is much less than a complete kitchen remodel for example, and if properly marketed in the sale of the home, may be a better investment.  After all you can’t account for someone else’s taste in kitchen design.  But knowing you have a new furnace that will save you hundreds of dollars in energy costs over the course of a year, and is good for the environment because of lower greenhouse gasses, is certainly a good selling feature.

Insulation is a biggy and a very cost effective improvement.  Using an insulation material that is free of formaldehyde, which is not good for  the indoor air quality in a home, adds yet another marketable eco-friendly feature.  This article from the Sierra Club Green Home has some great tips on insulation.  If you’re thinking of replacing older appliances to add value and appeal to your home be sure they’re Energy Star rated.

A Realtor who understands the importance of marketing energy efficiency and eco-friendly features of a home can add thousands of dollars to the seller’s bottom line.  To often when I preview or show homes I recognize features that I point out to clients, but that are nowhere to be found in the marketing material, either online or in print.

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Gale10

Gayle Fleming

http://www.goinggreenhomesva.com

gaylefleming48@gmail.com

703-625-1358

My purpose is to serve my clients and advocate for their highest and best good, so they attain their real estate goals.

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Energy Efficient Mortgages Reduce Your Monthly Housing Expenses

When a lender figures the monthly mortgage amount that a buyer can afford whether it’s a purchase or a refinance, the amount is calculated to include principle, interest, taxes and insurance or PITI.  But there’s another cost that is beginning to be taken into consideration—utilities.  If you buy an older home with old single pane windows, old appliances, an old furnace, poor insulation, etc., the monthly cost to own the home can increase dramatically.  If you don’t have the money to replace some of these items immediately you could spend hundreds of dollars more each month on energy   costs.  And if you decide to make some of the improvements or buy appliances on your credit card that just adds to your debt at pretty high interest rates.

But the FHA 203(b) loan, or Energy Efficient Mortgage (EEM) Program can help buyers and refinancers to make their homes more energy efficient and save a considerable amount on their monthly utility bills.  “The EEM Program recognizes that the improved energy efficiency of a house can increase its affordability by reducing operating costs.  Because the home is more energy efficient, the occupants will save money on utility costs” and significantly reduce the amount of money needed each month to operate the home. So here’s how it works.  When you take out an FHA 203 (b) loan you can add up to $8,000 to the loan amount even if it goes over the FHA maximum loan amount or over what you qualify for.  This additional amount is at the same rate as the original loan.  So if you lock in at say, 4.25%.  The additional amount is rolled right into the loan at the same rate. Here are some of the things you can do to improve your home’s value and energy efficiency: New windows, insulation, passive or active solar improvements, heating and air conditioning systems, appliances.  Now needless to say $8,000 won’t cover all these things.  So the borrowers needs to determine what things they want to do and how much it will cost.

Prior to settlement the borrower submits a home improvement energy package and the costs to the lender.  Then a HERS  (Home Energy Rating System) energy rater has to inspect the property to determine whether the cost savings over the life of the loan will be greater than the loan amount.  The buyer, seller, lender or agent can pay for the cost for the inspection.  Once the rating assessment has been done and a satisfactory rating has been determined, the lender can escrow the amount of money in the proposal.  All work must be completed within 90 days. Most lenders don’t even know about this loan or if they do they don’t offer it.  Don’t ask me why.  So I was very happy when I found a wonderful loan officer at PMG Mortgage who made it his business to research the loan and convince his company to offer it to borrowers. Vince Coyle  is ready and willing to work with borrowers on this loan product.

Given the low interest rates right now this loan is an excellent way to get a lot more bang for your energy efficiency buck.  Plus, after you make some of these improvements most states have some tax credits and incentives that you might be eligible for.  Here are the federal tax credits that are available now.

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Gale10

Gayle Fleming

http://www.goinggreenhomesva.com

gaylefleming48@aol.com

703-625-1358

My purpose is to serve my clients and advocate for their highest and best good, so they attain their real estate goals.

The End is Near and In With the Old and Out With the New

TAX CREDITS END THIS YEAR

On December 31, 2010 it’s lights out for the federal tax credits for energy-efficient windows, doors, insulation,roofs, hot water heaters and HVAC systems. So if you’ve been putting off making some energy efficient improvements to your home it’s time to stop procrastinating and as the Nike commercial says, “Just do it!”  Until December 31st you can get a tax credit of 30% of your costs up to a maximum of $1500.

Now if you want to really trick out your house with solar panels, residential wind turbines or geothermal heating there is no upper limit to what you can spend to get a 30% tax credit. And this credit is in effect until December 31, 2016.  This link will tell you what you need to know to get the tax credit.

BUT before you rush to do any of these things, have an energy audit.  Getting a tax credit for spending money you don’t need to spend is like buying something on sale that you already have and don’t need just because you’ll save money. When you have an energy audit which will cost you around $300-400, you may find out that you don’t need to spend that $20,000 on new windows–you just need to do some serious air sealing with caulking and insulation.

INSULATION

Speaking of insulation–the best and the most cost-effective insulation aren’t necessarily the same.  In a recent blog on the Green Building Advisor website, Carl Seville, an advisor who certifies green homes, discusses the downside of fiberglass insulation.  This is the insulation that most of us are familiar with and the least expensive choice for insulation. The biggest problem seems to be that it’s hard to install properly. If you’re thinking about doing some insulation before it gets really cold, you might want to check out his post.   Foam and blown in cellulose insulation are considered better choices but do cost more.

REDUCE, REUSE, RECYCLE

This is a motto we would all do well to live by to reduce the burden on our fragile planet.  But this philosophy can do more than save green trees–it can save green backs too.  So maybe you have some home improvements you want to make.  Most people would head for Home Depot or Lowes, right?  Well how about heading for ReBuild Warehouse or ReStore where you can buy new and gently used home improvement products and save more than 50%!  These are both Northern Virginia locations so if you’re reading this blog from another area, check the web to see what’s available in your area.  ReBuild Warehouse is affiliated with a company call Deconstruction, LLC, an environmental company that disassembles homes for builders or home owners doing major rebuilds or remodeling. ReStore is affiliated with and run by Habitat for Humanity

“BABY IT’S (GETTING) COLD OUTSIDE”

I have a great Energy Saver booklet to share with you.  If you email or call me with your address (if I don’t have it) I would be happy to mail it to you.  It has wonderful cost effective advise on energy savings for homes, appliances, cars, electronics, etc.

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Gale10

Gayle Fleming

http://www.goinggreenhomesva.com

gaylefleming48@aol.com

703-625-1358

My purpose is to serve my clients and advocate for their highest and best good, so they attain their real estate goals.

Fed Tax Credits Stimulate Your Bank Account Save Money and Energy

So you are feeling compelled to do something about the fact that your home heats and air conditions the outside almost as well as it heats and air conditions the inside–maybe better.  Too much money being wasted and too many CO2 emissions being created.  Rather than trying to guess where the leaks in your home are, you’ve had a professional energy auditor rate your home and advise you on what you need to do. 

Now it’s time to act.  Some fixes may be as simple and inexpensive as caulking or weatherstripping.  However if the fix requires the purchase of windows, a furnace or a/c unit, for example, there are some great federal and in some cases, state tax incentives that will help offset the cost.  President Obama’s stimulus package isn’t just for the fat cats.  There is something in it for you and me.   There is a 30% tax credit that can be used to make energy efficient home improvements for things such as insulation, roofs, doors, furnaces, hot water heaters, etc.  Now this is a one time tax credit with a maximum of $1,500. 

 The credit can only be claimed once in either 2009 or 2010.   So if,  for instance, you buy a $3,000 A/C unit in 2009, your tax credit would be $900.  Then you spend $2,000 on insulation which will give you a tax credit of $600.  These two improvements will max out your tax credit of $1,500.  So even if you also have new windows installed you can only claim the credit up to the $1500. And at least for now it’s a one time credit.  That could change of course as the Obama administration pushes for more ways for the country to conserve energy.  The EnergyStarwebsite explains in more detail which improvements qualify for the tax credit.  Be sure to bookmark the EnergyStar link because it has all the guidelines and some efficiency factors have changed.

Now if you really get adventurous and are thinking about geothermal or solar heat, the incentives really heat up, pun intended.  Either one or a combination of both of these options could reduce your energy costs by up to 70 percent.  They are relatively expensive to install but over years they more than pay for themselves.  The tax credit for these is 30% tax credit  with NO  limit on what you spend. The credit can be claimed until 2016.  So if you spend $10,000 on a solar system, for example, your credit is $3,000. 

Some state governments have incentives as well, so check with your state’s  Department of Taxation.  In Virginia , of instance, from October 9th through October 12th their will be no sales tax on certain energy efficient home improvements. Sales tax in Virginia is 5%.  This is modest but many states offer even more incentives.  Maryland as an array of state AND local (county) incentives for residents.  Do your homework before you purchase much needed energy saving products and services and take advantage of everything that’s available to save you money.

Be sure to watch the cute, short video on geothermal heating and cooling.

First Things First–Seal Your Home

So you buy or already own an older home and have decided to renovate and remodel “green”.  You have visions of a remodeled kitchen and baths–maybe even an addition.  You’re thinking bamboo, no VOC paints, paperstone or recycled glass countertops, and other cool green products.  But wait–before you get to the hip elective stuff, you have to get a good grade on the boring basics , to use a metaphor.

I was in a home built in the 1950’s the other day that had been nicely remodeled.  The kitchen had been gutted and enlarged. They had added a huge designer bath in the lower level–all nicely done.  But the first thing I noticed was that it was freezing in the house.  The house still had the original single pane windows with broken sashes, cracked and rotted wood frames and no storms!  I didn’t go into the attic, but I’m pretty sure I wouldn’t have found good insulation.

The very first step in greening an existing home is to make it more energy efficient.  It’s another one of those substance over style things.  So the first thing to do is have an energy audit. An energy auditor will tell you where your home is leaking energy and what you need to do to tighten the home up.  There’s nothing you can do that’s more important than stopping the energy waste inherent in an old home.  It’s important to have a trained energy auditor to assess your home so that you spend your dollars wisely. Many of the energy improvements that may be recommended are things you can do yourself.

More than half of all energy used in a home is for space heating and cooling and a lot of that energy escapes through poorly sealed and under insulated attics.  Only 20% of all homes built before 1980 were well insulated. 

Windows are another big source of energy loss but they don’t always have to be replaced.  Sometimes just caulking and sealing around the glass can do wonders.  If you do need windows though, make sure they’re Energy Star rated with low-e glass, multiple panes and gas filled.

Here’s a cool graphic I found on the Dept. of Energy website on what you can do to save energy.

And remember, when you’re ready to by or sell in Northern Virginia, call me your Going Green Real Estate Advisor.

Email me at gayle@goinggreenhomesva.com

Call me at 703-62501358

Visit my website at www.goinggreenhomesva.com 

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