“Going green” can mean something as simple as using recyclable paper bags from the grocery store to something as complex as buying green Santa Cruz real estate. A greener world is a dream for many people. Even without promotions pushing consumers towards healthier choices and better living, a shift in consumer minds has begun.
What does this have to do with Santa Cruz real estate? Simply this: If you’re a buyer trying to find a green or energy-efficient home, you may be surprised to learn that you could run into some difficulty. And, if you’re selling your green home, you may not get the results you expect.
The Problem with Green
Energy-efficient and green homes are still a fairly new market. In fact, it’s still considered a niche market. This not only affects prices; it also affects appraisals.
If you own a green home and are now trying to sell it, you and the appraiser may have a fight on your hands. For example, new regulations passed down over the past year say that loan originators can’t ask for appraisers experienced in green building evaluation. What this means is that you may very well get an appraiser who knows nothing about the value of green homes or green home improvements.
As well, some appraisers base their evaluations on foreclosed homes in the area.
Depending on how hard hit the area has been by defaults, this could severely affect your appraisal.
Even if the appraiser understands green building and wants to give a fair home appraisal, they may not be able to assign full value for the green enhancements, because the market won’t support it. In other words, you may not get back what you put into the home when you sell it.
Somehow, buying a green home has become as difficult as selling one. Sometimes, the issues don’t make sense in light of the difficulties sellers may have. For instance, the seller may have to take a cut in price when they sell. However, strangely enough, the buyer may end up having to pay more for a green home.
Often (and, again, because many don’t appreciate the value of a green home) the appraisal will come in for less than the home is actually worth. This means that the bank, which has agreed to pay a certain percent for financing, will only cover the percentage based on the appraisal. This leaves the buyer having to make a larger down payment than they might otherwise.
If you’re looking for green Santa Cruz real estate or trying to sell your green home, have your real estate agent negotiate for you before throwing up your hands. Remember that buyers and sellers both have issues with green homes. Be willing to discuss and negotiate so everyone walks away happy.
If you’re trying to find an environmentally friendly home or have one you’d like to sell, I can help you avoid these problems. Call me at 831.662.6522 or email me at Lauren@LaurenSpencer.com for more information.