Home Buying in Long Beach>Question Details

Mike Dressler,  in Long Beach, CA

As a buyer, would you be willing to pay more for a home with a "Green" designation? If yes, how much more?

Asked by Mike Dressler, Long Beach, CA Wed Aug 10, 2011

Help the community by answering this question:


Hi Mike,

"Green' is just another word. What features does the house have and what are they worth?

In a depressed market where features as significant a swimming pools tend to get 'bundled' in terms of the overall value of a property, there would have to be some pretty serious hardware to make much of a dent in the overall price for me. Though green features save money, make sense, and may make the home sell quicker, I think that it's ultimately just a case of so many new windows, etc. in many peoples minds.
1 vote Thank Flag Link Fri Aug 12, 2011

In the SF Bay Area, most buyers are NOT willing to pay more for ‘green’ – although everyone is enamored by the buzzwords and the concept, green is usually much more money and many buyers are not forward-thinking enough to run the calcs to see if energy savings will offset additional upfront costs. It also means a commitment to buy and stay for longer periods of time to actualize savings – many don’t want to make that commitment.

Products ranging from door weather seals to energy efficient dual-pane windows, insulation to more efficient furnaces, ENERGY STAR rated appliances to low flow toilets and, for those wanting to reduce reliance on the power grid, solar panels or windmills … can be VERY expensive.

Saving energy is a worthwhile goal and it’s certainly time to become less dependant on offshore fuel suppliers. However, at least for the near future, the price of ‘green’ tends to make our buyers … blue.
1 vote Thank Flag Link Wed Aug 10, 2011
There is an article in last Sunday's LA Times on this very question. The link is here:
The short answer appears to be yes, they sell for more and also sell faster - if they have s third party certification (LEEDS and others).

I enjoyed this question.

Gene Scott
ERA Buy America Real Estate Services
0 votes Thank Flag Link Tue Aug 30, 2011
Great responses from everyone involved in the discussion. I think the general consensus is that there does seem to be some green fatigue out there amongst the public as the marketing of the next big green thing has become little else than a buzzwords to get that little extra bit of attention, and sales dollars! I struggle with use of the word “green” myself. I try to use it as little as possible and actually prefer to refer to sustainably built homes as “high-performance.” That really is what they are. They perform at a higher level in terms of energy and water efficiency and promote better health for those that live in them.

I really appreciate Scott’s response. It’s good to hear from those working with energy efficient homes. The big-ticket items such as photovoltaics that seem to get the most attention from the media really are some of the last things that should be considered, especially when retrofitting an existing home. The basics, such as properly installed high-value insulation, duct sealing, envelope enhancements, and energy efficient appliances and systems can be incredibly cost efficient and produce a relatively fast ROI. When coupled with green features such as high-performing water features such as water-circulation pumps, high-efficiency toilets and showerheads, any home can be made far more sustainable than the majority of homes out there. The real trick is translating that sustainability into property value. I look forward (hopefully in the near future) to seeing more data on home sales for homes with designations such as the ENERGY STAR Homes or Green Point Rating. There are a handful of isolated studies that have been done that do show a slightly higher sales price for designated homes, but much more information needs to be collected to get a national perspective on the value of green rating systems.

I’d like to ask Scott if he is seeing a premium on the ENERGY STAR homes in Missouri? Or at the very least, are those homes selling at a faster clip than your standard new construction models?
0 votes Thank Flag Link Tue Aug 16, 2011
Thumbs up to Andrew. I've been reading some of his comments on various threads and he's a pretty insightful and commonsensicle (Johnism) guy.
0 votes Thank Flag Link Sat Aug 13, 2011
Personally as a general contractor and a RE broker? I'm not all together sure about all the 'GREEN" hoopla. I'd say if you like the home pull the trigger.
0 votes Thank Flag Link Fri Aug 12, 2011
It seems as though "GREEN" is in it's infancy:
We hear that people recycle less than 10% or what they could.
We see the garbage barges leaving New York on a daily basis and we hear about the GARBAGE TIDE CYCLONE in the Pacific Ocean that is 1500 miles in diameter!

It seems that the only people who care about GREEN are the people who are making money off of it.
I would say that that association is a little hypocritic and distastefull.

An evidence of this would be the number of Tankless Water Heaters that Lowe's and Home Depot sells as opposed to the Old Fashioned kind.

It is going to take many years until the average American buys into GREEN; they've been lied to too many times, and they don't like the Government shoving things down their throats.

Sorry, Mike
0 votes Thank Flag Link Fri Aug 12, 2011
We sell Energy Star Homes with many green features. The extra cost for a new “green home” is 3-5% of the total cost of the project. We include tank-less water heaters, extra insulation, HERS certifications, LED lighting technology, energy star appliances and high efficiency HVAC equipment. We combine universal design concepts to help keep cost low and we even add some accessible features. Items which we feel have no ROI is expensive new green technologies such as geo-thermal, wind or solar. We try to put together a package which is both affordable, makes sense and has good ROI. For more information visit http://www.randshomes.com PS: the appraisal issue has not been a problem since we keep it affordable and not over the top. It also helps to give a long narrative in the MLS with details about the green products, cost and potential ROI.
Web Reference: http://www.randshomes.com
0 votes Thank Flag Link Fri Aug 12, 2011
As loan broker and realtor I see a question here that goes beyond what th buyer is willing to pay? It is whether the property will appraise so the buyer can get a mortgage. Appraisers are not typically giving significant credit to green homes. So the comps would be normal properties.

Maya Swamy
List Buy Save
0 votes Thank Flag Link Fri Aug 12, 2011
It would depend on the buyer and more importantly the area. I could see having the "green" stamp on a higher level home would cause much more interest and the buyers wouldn't be so skeptical to pay more when they know in the long run it will save them money. As for more of an entry level home, I would say most buyers wouldn't care.

Jonathon Villaescusa
Owner at Excellence Real Estate
0 votes Thank Flag Link Wed Aug 10, 2011
I think a buyer might be willing to pay more, if he or she knew they could sell it for more at the end. Only a very few buyers are going to enter a transaction knowing that they are losing thousands of dollars the minute they sign their documents.
However, if you have two fairly equivalent homes in terms of price and amenities, and one is green, I believe a preponderance of buyers would take the green home, all things being equal. So, being green in my mind is one more attribute to differentiate yourself from the competition when it is time to sell your home.

I will check back to see what others have to say. Great question.

Gene Scott
ERA Buy America Real Estate Services
0 votes Thank Flag Link Wed Aug 10, 2011
Absolutely, Laura. You've touched on two of the most important aspects of the issue, comparable properties and return on investment. With a lack of comparable "green" property data, it is a challenge to determine an appraisal value for designated green homes. As local MLS systems incorporate more and more ways to help us identify homes with sustainable features, it will become easier to collect data on whether or not greener homes are seeing higher sale prices. As for return on investment, it is again tough to determine because the ROI will vary from homeowner to homeowner. Factors such as energy usage, equipment upkeep and proper installation all affect how well the systems perform and ultimately how quickly the homeowner will see a return on the investment.
0 votes Thank Flag Link Wed Aug 10, 2011
I think a buyer would have to take into consideration what the comps were in the area and how much they would be saving in the long run depending how long they plan on living in the house.
0 votes Thank Flag Link Wed Aug 10, 2011
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