Even as bids for homes escalate and houses fly off the market, some buyers are holding out (and paying more) for home features that go beyond hardwood floors and stainless-steel appliances.
In fact, nearly two-thirds of REALTORS surveyed in the National Association of REALTORS' 2021 REALTORS® & Sustainability Report said the promotion of energy efficiency in listings could help attract buyers. More than half said their clients were interested in sustainability, and nearly a third reported they were involved in the buying or selling of a property with efficient features.
These survey results were further validated by a new study Pearl Certification commissioned and Woody Finch, Jr. authored that confirm demand for high-efficiency and environmentally friendly features are on the rise in cities like Charlottesville. The Home Sale Price Premiums study analyzed 26 Pearl Certified high-performing homes in the greater Charlottesville area to determine if and how homes with high-efficiency features fared against other comparable homes.
The study revealed a few things. On par with the rest of the nation, inventory shortage is driving up the costs of homes in Charlottesville. The Charlottesville Area Association of Realtors® (CAAR) Multiple Listing Service (MLS) reported that inventory dropped 57.4% and contributed to the median sales price increasing from June 2020 to June 2021 to 17.6%. While the inventory shortage is a contributing factor to baseline price increases, the study found that Pearl Certified homes still commanded an additional 4.9% average premium boost.
Why?
For starters, from an agent, appraiser, and consumer point of view, green or high-performance rating systems are important. When a home has a green certification from respected organizations like LEED, HERS, EarthCraft, NAHB, or Pearl Certification, homeowners, agents, and appraisers alike know this expert third-party opinion/rating can be trusted and relied upon. Additionally, the study found that Pearl Certified homes averaged 24 less days on the market.
The immediate takeaway from this study is that the return on having a Pearl Certification produces a premium of 5.5% as a median and 4.9% as an average (mean). The premium boost implies that by building a green home or retrofitting an existing home does add value.
While the study validated the ROI of Pearl Certified high-efficiency HVAC and solar home upgrades, continued education and training around “high-performing” is the industry’s biggest hurdle and opportunity. The biggest challenge the study found is that the majority of real estate agents and appraisers do not understand how to value high-efficiency features, and therefore claim they don’t add value.
This is where Pearl can help.
A Champion and Ally in the High-Performing Homes Market
While the concept of “high-performing” homes is still relatively new to the real estate market nationally, studies like the Charlottesville Home Sale Price Premiums [GH2] and the NARS 2021 REALTORS® & Sustainability Report confirm that demand for high-efficiency homes is not slowing.
As the only market-based firm approved to administer the Home Performance with ENERGY STAR® program for existing homes, Pearl is working to close this knowledge gap through education, documentation standards, and proof of ROI.
Here’s five Pearl tools and resources readily available to key stakeholders:
Certification System & Supporting Documents | A point-based home scoring system that evaluates, tracks, and documents high-efficiency home upgrades. Homeowners, appraisers, contractors, and real estate agents can leverage these Pearl Certification reports and home certifications to demonstrate the proof and accurately assess the value of a home’s high-efficiency status and upgrades.
Real Estate Bundle | Real estate agents selling a Pearl Certified home get to a curated collection of ready-to-use documents and tools to help them market and sell high-performing features with confidence. The bundle includes: a home certification report, green fields report, home highlights flyer, social media posts, home tour cards, and letters for lenders, appraisers, and buyers to boot.
Pearl Solar Equity Calculator® | Solar contractors and appraisers can use this app to demonstrate the value solar installations can add to a home. It is the industry's first tool to calculate discounted cash flow using certified contractor data, NREL software to calculate solar production numbers, and an API to Freddie Mac's 30-year mortgage rate.
Green Door | Homeowners can use this app to certify high-performing features, such as efficient HVAC, solar, and smart home installs so homes will appraise and sell for more. Green Door empowers homeowners to understand the benefits of these energy-efficient assets, receive recommendations on improvements, find highly qualified Pearl Network professionals, and keep track of their home’s maintenance.
Industry Insights & Research | Real estate stakeholders have access to Pearl’s library of thought leadership blogs, articles, and commissioned industry studies on the state of high-performing homes that can be used to educate and validate the value, improved home living experience, and ROI of high-performing homes.
At Pearl, we believe high-performing homes will transform the real estate market and create a new standard of conscientious living for homeowners. But just like with anything new, it will take time and a concerted effort by all key partners to raise collective awareness.
To learn more about how you can access these tools and resources, join Pearl’s elite contractor and real estate agent networks or connect with the Pearl team.
