The green housing: Appraisals holding it back

Developers would like to see green housing projects jump quickly. While environmentally friendly technologies are speedily advancing, there is one aspect which still has not fully kept pace with the emergence of green housing on the housing market the issue of appraisals. Imagine you are about to build a standard $500,000 home. You decide that you want the property to be more environmentally friendly, therefore you ask your architect to design the new property so it takes advantage of the sunshine and you put in high quality insulations and solar panels. This will cost you some hefty money, so let's say the full charge goes up to $600,000.

Nonetheless, your bank's appraiser looks at it another way. David Snook says "It doesn't do a lot of good to simply add value based on cost, but the question is, How much will the market pay on resale?' , he should be able to tell us, as David is an appraiser and member of the real property committee on education for the American Society of Appraisers.

Shall we continue with our hypothetical example? Whilst the build cost an extra $100,000 the bank or mortgage lender will only approve the price of the property has increased by $50,000 This swells your deposit by $50,000 based on a 20% down payment. With a high-ratio mortgage 5% down payment, you will have to save $77,500 instead of $27,500. That is a large difference in particular if you are on a budget and every bit of savings matters. So with such a big down payment you have to assess your priorities and these could be forgetting about going green, or using cheaper and conceivably inferior technology.

Still, as a green Toronto listings expert I see wanting to go for a green home does make a difference. If you look at the Green Work Realty opinion, you will see why green properties are better financially, with their increased resale value of more than 8% and the fact they sell 22% faster. This information doesn't help you though if you are dealing with bank or mortgage business appraisers who don't have much if any experience with the green home technology.

While you can show the appraiser the figures, until they have the knowledge then there is not a lot you can do about it. Support could be on the way for appraisers and future owners if strong initiatives are put in place that will standardize environmental and energy efficiency. Green housing is not only about the environment, it's also about cash. Take getting a car - would you buy a motor vehicle without knowing how fuel efficient it is? Therefore it is only normal progression when using the same analogy when buying a property.