In celebration of Earth Day, the Appraisal Institute today called on the world’s real estate community to join in helping ensure reliable valuations for sustainable “green” buildings. The Appraisal Institute is the nation’s largest professional association of real estate appraisers and has members in 60 countries.
“The Appraisal Institute is the world’s leading authority on green valuation, but producing reliable property valuations requires a collaborative effort,” said Appraisal Institute President Joseph C. Magdziarz, MAI, SRA. “Data is vital for appraisers to do their jobs, and we often need cooperation from others involved in real estate transactions to get it. Earth Day is the perfect reminder for us all to work together. When we do, everyone will benefit, including homeowners and buyers.”
Earth Day will be celebrated April 22. Growing out of the first celebration in 1970, Earth Day Network works with more than 22,000 partners in 192 countries to broaden, diversify and mobilize the environmental movement. More than 1 billion people now participate in Earth Day activities each year, making it the largest civic observance in the world.
Magdziarz said that appraisers need to have all information from underwriters, builders, real estate agents and home inspectors related to energy efficient features in order to recognize them and to make appropriate, market-based adjustments. Appraisers frequently ask for ratings information, blueprints and specifications of properties’ conservation features but are not provided the information – either because those involved in their construction, sale or financing mistakenly believe they are not applicable to the appraisal process, or because the data are not generally available.
Magdziarz acknowledged that misconceptions about green valuation exist among many non-appraisers, including a failure to realize that cost does not always equal value.
“It’s not yet clear how well the market recognizes the actual or perceived benefits of a green building,” Magdziarz said. “Do potential buyers view green features as enhancements to a property’s market value or as over-enhancements? The answer likely depends on the particular property and the local real estate market.”
Magdziarz pointed out that that appraisers don’t determine the market; they reflect what’s happening in the market.
“If appraisers have access to the data they need, they can produce more reliable opinions of value,” he said. “Then builders and consumers would begin to see the return on investment, and the demand for new green construction could increase. This will drive the market toward a more sustainable building process, which holds immeasurable environmental benefits for all involved. This Earth Day, that’s worth celebrating.”
The Appraisal Institute long has been a thought leader in green valuation:
- In January, the Appraisal Institute launched its Valuation of Sustainable Buildings Professional Development Program of educational courses.
- The Appraisal Institute was among the sponsors of the Vancouver Valuation Accord, an agreement to address the interrelationship of sustainability and valuation that was signed March 2007 in Vancouver, British Columbia, Canada.
- The Appraisal Institute contributed to the Green MLS Tool Kit, issued in April 2010. The tool kit was created to help Realtors® add a green initiative to their local multiple listing service.
- Published by the Appraisal Institute in June 2010, “An Introduction to Green Homes” provides an overview of programs, organizations and products that relate to environmentally responsible building and remodeling.
- Appraisal Institute leaders last year spoke on green valuation topics at events sponsored by organizations such as the United Nations Economic Commission for Europe and the U.S. Green Building Council.
- The Appraisal Institute’s quarterly publications, The Appraisal Journal and Valuation magazine, regularly include cutting-edge articles on green valuation.
Source: The Appraisal Institute