Green is the Smart Home Buying

Perhaps you’ve heard that this is a good time to buy a new home in Northern California because of historically low prices and interest rates and the price id down. This is certainly true, and there are many bargain homes on the market to choose from, but some are in run-down condition and need considerable work before moving in. Too often new owners do not see the opportunity to take advantage of all of the sustainable improvements they can make and simply add a new coat of paint, install carpet and a couple of kitchen appliances, mow the yard and that’s it.
Today, however, it is possible to do substantial sustainable upgrades to make your home much more energy- and water- efficient, improve indoor air quality, and allow you to live comfortably while both saving money and having a positive impact on the environment.
Fortunately there are many resources for buyers who want to upgrade a home into a healthy, high- performance green one. So with a little planning, proper financing, and a skilled contractor, along with some rebates and tax credits, your new home could actually cost less at the end of the year to live in than comparably priced homes without these improvements.
Here’s how you can purchase and turn a toxic, run-down, energy-wasting house into a beautiful green home:
First, get pre-qualified by a mortgage broker not only to determine your price range but to choose the best mortgage or mortgages for you.

Two of the best ones are the FHA’s 203K and Energy Efficient Mortgage (EEM) because most of the costs of improvements can be included in the mortgage package. Make sure your broker has knowledge and experience with these kinds of loans.

… A proprietary combination of FHA EEM / Renovation financing which has been optimized with the power of our “Superior Financing” system...to deliver homeowners and homebuyers with market rate financing that has been specifically structured to fund “Acquisition/Greenovation” & “Refinance RetroFit/Greenovation” projects .

The Superior Financing program is focused on one goal…
To identify the “lowest total cost of ownership” for the homebuyer / owner.

¨ Base loan amounts up to $729,750
¨ Energy Efficient Retrofit allowance up to $29,312.50 (without apprais-al considerations), over and above $729,750.
¨ Alternative Energy Systems allowance up to 20% of the value of the home, over and above the $729,750 (subject to appraisal considerations)
¨ Can be combined with Renovation Loan OR Conforming Loan
¨ H.E.R.S. (Home Energy Rating Systems) Report establishes “savings”

Now you are ready to contact a REALTOR® to help search for your dream home. Be sure your agent is familiar with existing green features of the homes you are considering, since these can save you money right away.

News flash to buyers!!
The old mantra “location, location, location” has now been replaced by “location, location, energy rating.” You will soon find out why.

When your offer is accepted, open escrow, and if you are using an EEM or 203K, you will need to hire an energy auditor and contractor. They will test the home to find air leaks and other sources of energy losses, and then help draw up a plan for improvements and upgrades along with cost estimates. Your real estate agent can apply for a rebate of up to $250 for the energy audit from the California Association of Realtors. Make sure your agent does this for you.
Your upgrades will usually fall into the following categories. Improvements in energy and water efficiency carry the most weight in green certification programs, followed by air quality.
• Energy Efficiency. Possibilities could include increasing insulation especially in the attic, caulking air leaks, installing low-e windows and new efficient lighting, ENERGY STAR® appliances and a high-quality HVAC system, all aimed at making your home very energy efficient. These will save you money every month on electricity and gas.
• Water Conservation is very important in California. Some homeowners have noticed as much as a 50% decrease in their water bill simply by landscaping the front yard with native vegetation and using drip irrigation. Indoors, you might be looking at replacing toilets, water faucets and shower-heads, as well as dishwashers and washing machines for increased water efficiency. These upgrades will also save you money every month.
• Air Quality. Check on the chemical content of products you will use, especially paints, finishes and glues, as well as carpets, pressed woods and all other materials for volatile organic compounds (VOC’s), especially formaldehyde, and in homes built before 1978 check for lead-based paints. Make sure the home is well ventilated.
• Materials. There are many environmentally friendly choices here. Choose woods, carpets, flooring, countertops, and cabinets that have been certified as non-toxic and renewable. Have fun choosing materials as well as paint colors because they are highly visible and will reflect your personal decorating style.
Some good resources for green rehabs are Eric Corey Freed’s “Green Building and Remodeling for Dummies” and the U. S. Green Building Council’s “Green Home Guide.” (www.greenhomeguide.com)
Don’t forget about rebates and tax credits. Energyupgradeca.org and local city, county and water district offices are sources for rebates, and so are the manufacturers of products you are buying. Your accountant can give advice about tax credits.
Want to have your new home certified green?
The ultimate green home meets standards of organizations such as the U. S. Green Building Council, California’s Build it Green, and ENERGY STAR®. Ask your contractor about these when you are drawing up a plan for your home.
Now you are ready to close the transaction. Some improvements might have already been made, but others will be completed follow closing depending on the terms of your mortgage. Enjoy living in your new home, knowing that it will be comfortable, high-performing and economical, as well as very beautiful.
Example of a HERS rating by an energy auditor. (Source: U. S. Department of Energy. For a HERS 2 rating certificate, see car.org)
Victoria Wells, DRE# 01252398
Eco-Broker, Bradley Real Estate 415-710-4090 Http://www.MarinBestHomes.com

4 Tips on How To Value Green Property Improvements

by JIM SIMCOE on MAY 13, 2011

If you’ve added green features to a property you’re selling, its key that you have a process to quantify the value of those features. Without it, you cannot gain the maximum additional profit increase from that feature.
Here’s what to do to Value Green Property Improvements:
1. Research your neighborhood and get a monthly average utility (water, gas and electric) bill estimate. The estimate should be for similar homes as the one you’re selling. The easiest way to do this is to call the utility company and get the previous bills from the property. If they don’t have it (or won’t provide it) call three property managers and ask them to give you estimates for a similar home. They almost always will have this info on hand as this is a question they get asked a lot.
2. Check the EnergyStar.gov site and get some data on the average savings* for the green features you installed.
* You’ll see in the example below how this all ties together.
3. Call your local utility company and get their data on their estimated average savings for the green features you installed. It’s very important that you use the local utility where the property is located.
4. Take the savings percentage and figure the total amount the new buyer is going to save monthly and annually.
EXAMPLE:
▪ You are selling an investment property in a neighborhood where comps are approx. $300K. You can sell your place for $300K and anything you get above that is additional profit. To make the math easy let’s also assume that a typical mortgage payment on a $300K property is $3000/month. Let’s say you installed a water heater blanket, weather stripping, foam gaskets, sink and shower aerators and blown insulation in the exterior walls.
▪ After going through past bills and calling the utility company you see that an average bills are $300-$400 a month for all utilities in this neighborhood for this size house, broken down as follows:
▪ Water is 50% of the bill ($150)
▪ Gas and electric are 50% of the bill ($150)
▪ Based on Energy Star and your local utility company data, you are going to save 50% of your water expense based on the green improvements you made. That equates to $75 saved every month.
▪ Based on Energy Star and your local utility company data, you are going to save 60% of your gas and electricity expense based on the green improvements you made. That equates to $90 saved every month.
▪ Your total projected utility bill is now $135 instead of $300. Comp utility bills are still $300 so the buyer who buys your home saves $1980 a year and $9900 in 5 years.
▪ Here are the impacts to you as the seller:
▪ Your property is more valuable than any other in the neighborhood because it costs less to live there.
▪ You can sell your property much faster (no competition, saves $).
▪ You can sell it for a higher price* since over the long term it will cost the buyer less utility expenses.
5. *Email me directly if you’d like a copy of a spreadsheet we created to determine the exact break-point of additional profits you can gain on any deal while still having the buyer pay less per month than a comp. On this deal it would have been approx. $18,000 in additional profit to the investor.
 Adding green improvements to a property is great! Great for the buyer, the environment, our future, etc. For it truly to be great for you you must know exactly how to quantify those features so you can see what additional profits you are earning.
For all your green real estate concerns and suggestions, please contact me: Victoria Wells, Green MBA Sustainable Enterprises, Eco-Broker, vwells@greenmba.com, 415-710-4090