What Is the Correct Way to Make Green Homes Increase in Value?

Every once is a while I get to appraise some type of energy efficient home with built in solar
panels, wind turbines, light bulbs, furnaces, and home construction. Most of the time, these
types of items will bring you nothing in extra value to your home in the Northwest. Do you
know why? There is a disconnect from the Realtor databases and a lack of data in the MLS
databases, and a sheer lack of similar sales for these "green" items.

I understand that the market will consider these types of improvements positive. With my
professional appraisal experience and after speaking to several Realtors that have listed or
sold these types of properties, it is clear that it could take the home owner 8 to 20 years to
get their money back out in the terms of energy savings.

In terms of home value, your home will be appraised like any other home. If the real estate
appraiser cannot prove that the market is willing to pay for these types of homes, the value
will not increase, nor decrease. In these cases, green homes are trumped by the next best
thing in the market, similar homes.

Here is one of the few ways I see green homes increasing in value. There must be an entire
development that is significant is size that makes up an entire community of green homes.
Let's say a developer put together a development that only offers green homes. One part of
the land is used for both RV storage, but on top of each building there are solar panels.
Around the entire perimeter of the 10 acres development, there were wind turbines. On the
roofs of every home in the development, there will be more solar panels. All homes in the
development are made from green products and energy efficient items. Do you get the
idea? With a big enough development, hopefully, there will be at least one or two sales to
support the value.

The cost of the initial development for this type of development may be 30% more than the
cost of a regular built home. If the market is willing to buy into a development like this,
they will pay more for homes like this. There benefits will be energy reduction,
environmental reasons, and money savings. The negatives may be ugly wind turbines
around the property and acceptance of solar panels located on everyone's home and the
cost to maintain something like this.

But when it came time to appraise homes like this, there will developments that support this
type of technology. There will be comparable sales to select and compare to the subject and
an appraiser can clearly conclude what the market is will to pay for homes in this type of
development and outside the development. In other words, the appraiser can prove it.
That's how to make green homes increase in value.