Why should I pay the extra money to certify my new home green?
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Will a certification help me sell my home? I can just spend the money on more green features in my home. As far as I can see, the only tax incentives are for products and not whole-home certification.
Officially certifying your home under one of the myriad of programs currently available is definitely an added cost that doesn’t make sense for everyone. Certification and commissioning fees can range from under a thousand dollars for some local or state programs to $5,000 or more for some of the national programs which require third-party consultants on an hourly basis over a period of several months.
In addition to the cost, you also need to decide which program makes sense for your project type and/or your geographic area. There are some programs that are largely focused on a single primary trait regardless of your climate zone (such as Passive House, which is all about energy and doesn’t adjust for different climate zones). Some programs focus on the whole project as a system; geography, materials used, materials NOT used, community impact, energy requirements, conservation, etc. (such as USGBC LEED for Homes).
And there are some programs which fall in between and are very regionally or geographically specific (such as Earthcraft in the South or BuiltGreen in the Pacific Northwest). There are also programs for both new construction and existing homes.
Then after navigating through that sometimes confusing range of choices to find the one that makes sense for your goals, you face the inevitable financial question: Why spend the money for a “piece of paper?” To be sure, there are instances when certifying doesn’t make any sense and, as you suggest, your money is better spent on materials or improved outcomes. Sometimes you can even use a given program as a how-to manual; doing everything it requires to meet their criteria and still not going for the certification. This way you personally still get the benefits of the improved design strategies, but if you’re on a tight budget you save the commissioning costs.
But there are times when certification is a good decision, and the resale and taxes that you mention are just two of those. In no particular order, here’s a list of potential benefits of deciding to commit to a certification program:
- As consumers become more aware of and interested in the benefits of green building, it could certainly help one home sell faster than another. People are increasingly gun-shy of “green-washing” and may not simply take your word that you’ve built green.
- There are real estate agents now who specialize in green-only properties and some regions that have created “green” MLS systems which use the certifications to determine eligible properties for inclusion.
- EEMs (Energy Efficient Mortgages) are lending products which, depending on the lender, offer reduced closing costs, lower interest rates, high debt-to-income ratios, etc. Some also allow you to roll in the cost of more expensive systems (such as solar or geothermal) which conventional mortgages typically disallow. These require a verification process to be eligible to participate.
- In the real estate appraisal community, there is a movement underway to create a structured method for giving credit for green upgrades. Currently many of their guidelines don’t or won’t even recognize the fact that you just spent $20k on new solar, for instance. They are looking at certifications as one avenue for establishing that added appraisal value.
- Some municipalities are offering various types of property tax incentives for green building. A great website for finding incentives available for your specific area is http://www.dsireusa.org/ This site shows that your county has over a dozen different programs, including breaks for sales taxes, property taxes, reduced permit fees, utility rebates, etc. Granted, many of these are product-based vs. certification-based as you mention, but some are for design, as well.
- There are also a handful of homeowners' insurance providers now who are offering discounts of up to 8% for certified homes. The theory being that green homes are more carefully built with higher quality products and as such; they are less likely to suffer water leaks, mold, rot, storm damage, etc. Some of these companies are Fireman’s Fund, AIG, ACE Group, Travelers & Liberty Mutual. And Fireman’s Fund also now offers special rider coverage just for green equipment (i.e., solar and geothermal) which is frequently excluded from conventional policies.
So, financially speaking, if you are able to work the various programs in your favor and take advantage of short-term benefits like tax incentives and rebates, AND also much longer-term benefits such as reduced mortgage rates, reduced insurance rates, reduced property taxes and increased appraisal values, etc., certification can start to make a lot of sense.
But all of that requires good research and planning ahead of time on your part. And speaking of planning and research, some additional benefits of a certification process which can be harder to monetize but are still very valuable include the following:
- For some homeowners, the certification process provides them with a legitimate, audited way to reach their green goals. They may not feel comfortable navigating the process alone, or their builder may not be capable of recommending and implementing the proper strategies without some outside design assistance. Going through the third-party modeling, planning and verification process can be a huge help for those folks.
- It also helps with strategy coordination, above and beyond products. Paradoxically, there is now so much more “generic” information on green building than ever before that it can be very difficult to sort the good from the bad and the marketing hype from the legitimate building science. And even if it’s legitimate information for one area (say snowy Minnesota) it could be disastrous for you in the dry, desert Southwest. Many certification processes will flag those types of strategy errors.
- It can provide you with a level of comfort that you’ve got the right people building your project for you. Typically, the firms that are willing to build (and capable of building) a certified project are ones that are more professional, financially stable, interested in continuing education, and likely to be around long afterwards when you need them. The war stories you hear about contractors typically don’t come from these guys. The same is also likely to be true of the trade (sub)contractors that they use. These are often going to be the best of the bunch who care about doing the job the right way.
- And finally, careful and methodical advanced planning can often reveal ways to achieve a particular result while actually costing you LESS money because the folks on your certification team have learned a few tricks of the trade along the way. They will also have enough experience under their belt to know what works and what is a waste of money so that you don’t have to learn lessons the hard way on your own home.