Green home sales to get a boost from big data: Part I | U.S. Green Building Council
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Are you ready to answer questions about HERS, PV and IAQ? Details about green features like these are coming soon to a Multiple Listing Service (MLS) near you.

Closing the sale fast, at a high price: that’s the name of the real estate game. Green features can be key parts of making this happen—but do you know how to sell them without “greenwashing” by making inflated or inaccurate claims? Do you know how to detect subtle hints that buyers are looking for these features? 

This is very new territory for most real estate professionals. Sandra Adomatis, SRA, consultant with Advanced Energy and instructor at the Appraisal Institute, shares a story about when her MLS adopted a field for a standard measure of energy savings—the Home Energy Rating System (HERS) index score. It initially appeared that her locale had a multitude of net-zero-energy homes. 

Oops. Sadly, it turned out that real estate agents are trained to put a “0” in any field that they are unsure about or don’t have information for. For most fields, this indicates “not applicable,” but on the HERS index, a zero denotes zero energy use. 

“It’s not all about baking cookies and hosting open houses,” says Laura Stukel, a real estate agent with L.W. Reedy Real Estate in Elmhurst, Ill., and high-performance home advocate with Elevate Energy in Chicago. Stukel describes real estate agents as “inventory scientists” who need to constantly track activity and trends throughout their markets. The MLS is where this inventory is aggregated—and most MLSs are just now starting to catch up with the need to include green features in a standardized way that real estate agents understand and can use to make the sale.

What makes a home green?

Real estate pros in most markets are beginning to see that a “comparable” home for today’s home buyer is not just about a similar age, size or school district. Many homebuyers want to know about the energy efficiency or the average annual utility costs of a home they are thinking of purchasing. Some want to know about the indoor air quality or toxicity of the materials used in the home’s construction. 

Having this information can make a huge difference, according to Stukel, who points to a study by her company that found that single-family listings that voluntarily disclosed annual energy costs closed at a higher percentage above the asking price and spent less time on the market than comparable homes. 

Another recent study found that the mean “green premium” for a high-performance home was 3.5 percent in Washington, D.C., based on 32 paired sales. 

Questions about green features are new for most real estate agents, and conveying the answers is certainly a new role for the MLS. Yet the successful exchange of this information is critically important to capture the value of sustainability upgrades for a seller and to validate whether certain features are worth a premium for a buyer. Appraisers also need this data to support their market valuations. 

If you haven’t been following how green information is being incorporated into the MLS, now is the time for an update, because big changes are on the horizon.

Avoiding liability with green claims

Some MLSes have already adopted fields allowing real estate agents to highlight energy-efficient appliances or rating labels such as LEED. Stukel shares that at least half of the members of the best practices trade group for the industry, called the Council of MLS, offer some fields for home energy information. However, with nearly 880 independent listing services out there and an ever-growing number of green labels and programs, progress has been relatively slow and fragmented so far. There is yet no official count of how many MLSes in total have adopted green fields. 

Even when meaningful fields have been adopted, entering the specialized data has sometimes proven confusing for real estate agents (as related in the example of net-zero-energy homes above). Training is certainly part of the solution, and resources like the guide to “Unlocking the Value of an Energy Efficient Home” from Elevate Energy (formerly CNT Energy) and the National Home Performance Council advocates that real estate and efficiency professionals alike utilize forms such as the Appraisal Institute’s Residential Green and Energy Efficiency Addendum. 

However, relying on manual inputs by builders or remodeling contractors will always involve the risk of user error and could even expose real estate agents to added liability if they don’t fully understand the green claims that are made.

Hints of progress with big data

Despite these challenges, the effort to “green the MLS” has suddenly gotten a second wind, and luckily, the latest focus is on automated data. 

The U.S. Department of Energy (DOE) recently launched an accelerator program that is seeking to automate information exchange between existing assessment and rating programs—such as Home Energy Scores, Zero Energy Ready Homes, Energy Star Homes, LEED and Green Button—and those who influence and record a property’s value. That’s spurred a lot of tech talk about big data and how it might align with the MLS. 

For example, at the Real Estate Standards Organization’s “PlugFest” in Austin, Texas, participants recently had the chance to pair energy information datasets with MLS data and attempt to create interoperability between the various standards. Data from USGBC’s Green Building Information Gateway is among those that have potential to bring a lot of energy-efficiency data to the point of sale.

Check back tomorrow to read Part II of this article.

Read more about profitability in green home sales

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