Green Features: Yea or Nay?

Kevin Guerrero
Published on April 28, 2016

Green Features: Yea or Nay?

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Installing geothermal and solar systems may appear to be a plus point when it comes time to sell your home, but will it really make a difference to potential buyers?

Many home buyers are keen to hear about a property’s LEED certification, solar panels, geothermal systems, and Energy Star rated appliances. Likewise, today’s property developers and sellers like to promote their property’s green features…mostly because they have invested so much to upgrade the property with those features. But do they really affect the way a buyer feels about a property? Will they be willing to pay more money for a property because of these features?

Can green features get buyers to part with more cash?

Home buyers spend extra money for features they can physically feel and show off to impress family and friends…a media entertainment room, spa bathroom suite, chef’s kitchen. Most buyers may have reservations about paying extra for features that are concealed or are not easily appreciated, such as a new high efficiency furnace, plumbing system, or roof.

Green features seem to lie somewhere in between. There is a certain appreciation and cool factor for a property’s solar panels or environmentally friendly smart phone controlled thermostat. If a home’s green features have a cool factor a buyer may be willing to part with some extra dough. But if the home’s green features aren’t really that apparent, such as a concealed air filtration system, buyers may not be as likely to spend more than for a similar “non-green” property. Unless maybe there are demonstrable operating cost savings that could recoup the extra cost of the home in a reasonable amount of time.

Money saving green features

So maybe if a potential home buyer could see the cost savings, it would tip the scales in favor of a green home. But it’s not clear whether the average home owner would stay in a home long enough to realize all of the cost savings. Various sources claim that the average LEEDS certified home can save the owner up to $70 per month in energy cost. But if the green features cost $10,000-$15,000 on the front end…well, that’s a lot of months to make up the difference. Probably longer than the average homeowner’s stay in their home.

When it comes to resale, it’s not likely the seller will recoup the full cost of the green features. Like a redesigned kitchen or upgraded bathroom, the cost is built into the total value of the property. This could present a nice target of opportunity for some buyers…they may be able to reap the benefits of a green feature home on par with the cost of a similar non green feature home.

New builds: including green features or not

For new builds, buyers need to make a very detailed cost versus benefit breakdown when considering homes with green features. Developers usually offer a choice of floor plans and custom features to buyers, including geothermal systems for heating and cooling a property. The extra cost of these systems is usually offset somewhat by federal and state tax credits.

But if a buyer doesn’t plan to live in the property for the long term they may not benefit from the lower monthly energy bills, and future buyers may be hesitant to pay extra for features that promise marginal monthly energy cost savings…especially in a slow housing market. Buyers that plan to spend a long time in the property, or want to commit to being “environmentally friendly,” may feel differently about including green features. But I think most people will add green features if they think it will save them money in the long run.

A growing market

A growing niche of the housing market is willing to spend extra on green features because they truly believe they can make a difference. To them I say — good luck! Their little house is unlikely to make a difference on anything except maybe their energy bill. But who am I to say.

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Green Features: Yea or Nay?
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