On the House: In real estate, it isn't easy figuring out what's green

I wrote about green building a few weeks back, and about how some studies show that houses with sustainable features sell for 10 percent to 14 percent more than comparable houses without them.

I had interviewed Jim Maransky, president of E-Built L.L.C. and builder of the Icehouse in Fishtown, who, while confirming those results, added that the appraisal process is the place "where the green premium many times falls apart."

Others had made the same complaint, and I also was aware that the Appraisal Institute has been trying to address it for several years.

Recently, the institute came up with a form intended to help appraisers analyze the values of various energy-efficient features found in commercial buildings.

The form is useful for others involved in a transaction even if the property in question does not have formal "green" certification.

Since such green features as water and energy efficiency are key to higher net income, appraisers should take care to identify these features, the institute said.

"The market has many different ideas of what makes a property green," said institute president M. Lance Coyle.

"After the construction of a building, the construction features are often forgotten, and the blueprints and specifications are often misplaced or overlooked," Coyle said.

What about appraisals of residential properties?

That question led me to to look a little deeper into the appraisal process, and I came upon an older form for residential green evaluation.

That form states that a green building has attributes that fall into the six elements of sustainable construction: site, water, energy, materials, indoor air quality, and maintenance and operation.

It notes that "a green building will be energy efficient, but an energy-efficient building is not synonymous with green building."

Appraising a property is fairly complex to begin with, and from what practitioners tell me, they get thrown a curve ball just about every day.

Dealing with green building is no different, obviously.

I know solar-panel basics, for example, because I've talked to experts over the years.

And I realize that some real estate agents acknowledge the value of solar in lowering utility costs but question the aesthetics and whether enough buyers in the market want solar features to justify investment in them.

But ask me to put a value on them for appraisal purposes, and I wouldn't know where to start.

The Appraisal Institute's form has 22 questions, many highly technical, about solar features. Some I could answer. Others made my head spin.

Maransky said green building and its worth in the marketplace is a no-brainer in California, where high value has been placed on sustainable construction for many years.

The Philadelphia Building Industry Association has a green committee - Maransky is chairman - to bring clarity to many of the issues involved.

"The most frequently discussed subject is the cost-versus-benefit analysis" - meaning do buyers care, are they willing to pay more for a green building or home, and "does the certification label create a premium?" he explained.

"The question for builders," Maransky said, "is that they know it will obviously cost more to build to the green-certified level, but will you see a benefit on the revenue side of the equation," and will that benefit exceed the cost?

"Green home construction is expected to have considerable growth in coming years all across the country," he said, and "it appears that these new studies are confirming these forecasts to be true."

215-854-2472 @alheavens