The passage of the Inflation Reduction Act of 2022 feels like a huge win for those of us who have been working to improve the efficiency of residential housing for years. The groundwork has been laid to support our changing built environment throughout the real estate industry:
Did you know that about 53% of owner-occupied homes in the United States were built before 1980? Or that there are areas within the US that don’t have building codes? The Inflation Reduction Act is providing billions of dollars in incentives and tax credits for Americans leading to hundreds of billions of dollars in investments to improve the operational efficiency of our homes over the next ten years. Each state will implement a program to support this federal initiative.
The need for home energy assessments and a verified record of any energy efficiency attributes will grow in importance as the Inflation Reduction Act (IRA) stimulates substantial growth in home performance upgrades, and provides a rebate on the cost of a home energy assessment (up to $150). These upgrades are assets and must be recorded using industry standards for future use by homebuyers and the lending market.
Over half of all homebuyers find their home on the internet. A Multiple Listing Service (MLS) is the primary source of original listing information. What happens when an MLS doesn’t have important home performance data? How would a homebuyer know what to expect in terms of energy costs or climate-friendly features?
MLS executives should consider a part of their job to support home performance data - consumers are looking for it, and agents recognize its value when included in listings. This is no longer an ‘early adopter’ situation. This data has a real impact on the market.
Does your Association and/or MLS have a Sustainability plan? The National Association of Realtors(R) (NAR) Sustainability website is a great resource for ideas to put into place. Incorporating data and data fields are easy and readily available components of your sustainability plan that can be implemented today.
Taking a look at the newly available RESO Analytics, reveals significant room for improvement with the adoption and use of the fields that support green verifications and renewable energy (power production). Here is a chart that shows where we are currently at:
What this means is that most MLS systems don’t have standardized fields for this data, and even when available, these fields are not being used. We need to do better. We can do better, it’s easy.
When home performance data is available, it’s an easy thing to do to consider sustainability when buying a house. Understanding our impact on climate change is challenging, and impossible without the right data in order to make informed decisions. A recent first-time homebuyer in Portland, OR, recalled their experience using the U.S. Department of Energy’s Home Energy Score (HES) as a factor in their home buying process (which is a mandatory time of listing policy). They felt that Home Energy Score was a very useful tool for homebuyers allowing them to tailor their search criteria to meet their circumstances. They felt an underlying message that things are changing - it's not the old days anymore, and people are caring. It was super helpful to have this data show up in real estate listings consistently. It's a real thing, it's not fake - it's approved by the government, so it was trustworthy. As a first-time homebuyer, who had never shopped in another market, they were stunned to discover that not everyone in the US currently has access to this data.
Home performance data can be easily auto-populated into listings to provide a consistent, comprehensive, and accurate representation of this information. The Green Building Registry (GBR) has aggregated the third-party certification and energy rating data and reports directly from national and regional programs across the country to make it easy for real estate practitioners to promote the performance information of homes that have already completed one of these energy audits.
You can also support energy labeling discussions in your State - Get involved with your local and/or State Energy Office. Show your support for growing this data in your market, and ensure you have the fields in your MLS to support the green verifications and property features. Decarbonization = electrification, so it’s a good time to align your fields to the RESO standards for this data.
The more home performance data available in a market, the easier it is for buyers and sellers to have context around the meaning and value of the data.
There are currently no disclosure rules at the national level for home performance data inclusion in listings. However, according to NAR, “Failure to Disclose” is a top claim against agents. In their November “Member’s Edge” it was reported that “You can be sued for misrepresenting a property’s condition if you don’t tell buyers all the material facts about a home, including defects." Learn best practices in a recent Window to the Law to protect yourself from legal action. Home performance data is important information about a home’s condition.
Be sure to do your Green Check at the Green Building Registry website at us.greenbuildingregistry.com and add this data to your listings. If you are interested in the ability to incorporate this data into your tax/public records system and then auto-populate this data into listings, please reach out to us.
Earth Advantage®, a non-profit focused on helping to facilitate a more informed and humane residential real estate marketplace, is providing the largest single source of home performance data with the Green Building Registry®, a wholly owned and self-funded data initiative for the real estate and finance markets.
As we start the new year, do yourself and your members a favor by adding the data fields to support this home performance data. Make sure it’s available for search, is included on property reports, and is available in data feeds out of your system. Support data transparency to combat appraisal bias, reduce greenwashing, and help buyers make a more informed purchase decision.
To learn more, please email us at meg@greenbuildingregistry.com. Because #HomePerformanceMatters.