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Make Those Green Features Count: Appraisers Add ‘Green’ Form

By Melissa Dittmann Tracey, REALTOR® Magazine

Green or energy-efficient features in a home often don’t get factored into appraisals. But they can be an important selling point in a home, and many home owners say “green” should count when valuing homes.

A new form by the Appraisal Institute aims to make sure these key selling features–from those energy-efficient appliances to solar panels–are no longer overlooked and are factored into the equation. The form is also viewed as a big step in helping the appraisal industry standardize the way residential energy-efficient features are reported and analyzed.

The form is an optional addendum to Fannie Mae Form 1004, which is the appraisal industry’s most widely used form for mortgage purposes. It is used by Fannie Mae, Freddie Mac, and the Federal Housing Administration.

“We hope lenders, home builders, real estate agents, and home owners will take advantage of this new tool,” says Joseph C. Magdziarz, president of the Appraisal Institute. “Mortgage lenders who want to see energy features analyzed should request the green addendum to be included with Form 1004. We also encourage lenders to provide the green addendum to home owners so they can fill it out and provide it to their appraiser. If a new home is being appraised, home builders can use the addendum to provide data to appraisers. Real estate agents also can use the data to help populate the MLS.”

Download the form here.

Melissa Tracey

Melissa Dittmann Tracey is a contributing editor for REALTOR® Magazine, writing about home & design trends, technology, and sales and marketing. She manages the magazine's award-winning Styled, Staged & Sold blog.

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Comments
  1. This is such great news. Especially where I am, in environmentally-conscious California, green homes can easily sell for quite a bit higher than their non-green counterparts (a recent LA Times article said as much as 30% more). Furthermore, due to current economic conditions, I see more and more buyers looking for homes with a lower cost of ownership (i.e. energy efficient appliances), so even those who aren’t concerned with the environmental benefits are interested in buying green homes. Thus, we really need an appraisal system that takes the added value of green features into account. I’ll definitely encourage my team to use the new form.

  2. Sue

    The green form is a great addition but the realtors need to add this additinal info on there MLS listing. It’s hard enough for appraiser to compare apples to apples because real estate agents do not take the time to completely fill out the MLS form. Some homes will say recently updated but in reality it was updated 5 years ago. An appraiser can only use information they can verify and when an MLS sheet says recently updated we believe that it was updated. People wonder why thier value is lower well remember we used that sale that said completely updated. So the current house must not be worth said selling price. Now we add a green form. How many realtors go into attic’s and look at outside A/C units. More work for appraisers and no increase in pay for appraisers.

  3. I have already used this form as a lender when we were not actually originating an Energy Efficient Mortgage and we had to educate the appraiser on where to find the actual MEMO LETTER from the appraisal institute as he did not know this existed but saw the FORM and realized this was official. But note appraisers don’t have to give it value, but it worked in my case as we were adding a new HVAC, resealing duct work, and insulation and the question was asked on the page was there any ENERGY IMPROVEMENTS and the appraiser initially stated NO, so we sent the addendum over as a reminder that he missed this feature on the escrow repair of our FHA 203k and he agreed and gave another evaluation.

  4. John Appraiser in New Orleans

    I am a certified appraiser and think that all this green stuff is just dandy but guess what? It has NOT been proven to truly increase value enough to justify the costs, except for that “Prius” effect. I have another one. The “Pottery Barn” effect. If a realtor stages a house with cool colors and stylish furnishings it usually sells higher. The when the people move in and refi a year later it is worth what the other homes like it are. My point is SOME people will pay a little extra for “Green” but we appraise for the typical buyer. Not the 1 or 2 in 100 that may come along and have enough disposable income to spend more, AFTER getting what they require in a house like 3 bedrooms 2 bathrooms, nice area, 2,000 sf, etc. they THEN choose to spend the extra money on the “Green” items. Most of us working stiffs buy a house we can barely afford… or can’t afford (remember the crash we just had)… so we don’t have the extra cash for “Green” items that reduce our carbon footprint, unless you are really into that as a social movement. IE the “Prius” people. The government has been pushing that higher balue thing for years and if it worked people like myself that flip houses would add those items. If I put Low “E” windows in a huse I do it for charity because people don’t pay extra for those houses vs. the ones with regular $200 dble pane windows. BUT I do see the value and I do add “some” value for major items, but not enough to really matter.

    Just my .02 from being in the biz as a seller and appraiser

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