The Appraisal Institute, the nation’s largest association of appraisers, has released a new form focused on adequately valuing the green features of a property.
Appraisals have a long, storied history with many Realtors and builders, and sometimes not in a good way. From lower-than-expected values to how foreclosed properties are handled, the appraisal process can be enough to inspire the ire of any agent.
One particular area of contention, though, has involved how green features are evaluated in an appraisal. In an Aug. 24 article on Chicago Agent that covered appraisals, builder Chad Ray had commented that “anything you can’t put a dollar figure on is undervalued … things like indoor air quality, lower carbon footprints, lower maintenance costs — you can’t put a dollar sign on it, so (the appraisers are) just not seeing it.”
According to the Appraisal Institute, the new green form corrects those flaws.
The form will function as an optional appendum to the Fannie Mae Form 1004, the industry’s most common appraisal form. Appraisers will be able to identify and describe the home’s green features, such as solar panels or green appliances, alongside the home’s other features. All appraisers have to do is ask for the green form to be included.
Previously, 1004 forms included no sections for green features, and appraisers either ignored the features or described them in lengthy narratives that were also frequently ignored.
Appraisal Institute President Joseph C. Magdziarz said the forms will be an important first step in properly recognizing the value of green features in homes.
“It will help the industry standardize the way residential energy-efficient features are analyzed and reported,” Magdziarz said.
Additionally, Magdziarz said he hopes the new form catches on, and that appraisers and homeowners alike take advantage of it.
“We hope lenders, home builders, real estate agents and homeowners will take advantage of this new tool,” Magdziarz said. “We also encourage lenders to provide the green addendum to homeowners so they can fill it out and provide it to their appraiser. If a new home is being appraised, home builders can use the addendum to provide data to appraisers. Real estate agents also can use the data to help populate the MLS.”