Today’s homebuyers want to know what they’re buying—and how much it’ll cost them after they move in. In today’s market, that means going beyond monthly mortgage costs and budgets for repairs. Buyers also want to know how much energy a home will use, what that energy will cost them, and how efficient it is.
Home energy bills are a major cost, especially in homes that weren’t built with efficiency in mind. But without transparency or consistent measures of home performance (or how a home’s systems use or waste energy), energy use has been difficult for homebuyers to predict, understand or even see.
That’s all changing. In recent years, cities around the country have started requiring sellers to include a Home Energy Score in their public listings. Developed by the U.S. Department of Energy, the score gives sellers credit for their investments in energy efficiency and provides buyers the information they need to make an informed decision. It’s consistent and reliable, and it’s helping buyers nationwide predict their energy bills and plan for future upgrades.
Portland, Ore., is the latest city to guarantee greater energy transparency by requiring a Home Energy Score for most home sales, joining cities like Berkeley, Calif., and Austin, Texas. Starting in 2018, listings for most single-family homes and townhomes in Portland will be required to disclose a Home Energy Score.
As the Home Energy Score becomes increasingly common, here’s what REALTORS® need to know:
- Apples to apples: The score is based on the physical characteristics of a home, not the homeowner’s energy use. Also, by adjusting for climate and utilities, homes are compared only to other homes in the region.
- Easy to interpret: The score ranks homes on a simple 1-10 scale, where five represents the average home and 10 represents the most energy-efficient home.
- Beneficial to buyers: With the Home Energy Score, there are no surprises—buyers know what they’re purchasing and can predict future utility and energy expenses. The score also takes the guesswork out of future repairs by recommending cost-effective ways to improve home performance for homes scoring five or less.
- Straightforward for sellers: Transparency not only gives sellers credit for their investments in home energy improvements; it also boosts sales for homes with higher energy costs. In fact, a study by Earth Advantage found that when sellers listed their home energy costs—even if costs were high—their homes sold for 3-5 percent more and spent 18 fewer days on the market than homes that did not disclose this information.
- Room for improvement: Even if a home scores below average, it doesn't mean the home is poorly built. In fact, many beautiful, well-constructed homes receive a four or less. Remember, the Home Energy Score is simply an indicator of opportunities for future owners to make improvements to reduce energy use. The home energy report includes a prioritized list of energy upgrade recommendations that offer the quickest return on investment.
When your clients complete their home energy assessment, encourage them to work with an authorized, licensed home energy assessor to ensure the assessment is completed according to today’s top standards and that the score is calculated accurately.
Peter Kernan is a home energy score advisor, leading a team of authorized assessors at Enhabit, a Pacific Northwest non-profit creating social impact through better living spaces. Kernan has worked with several non-profit organizations to provide energy efficiency services in support of changing how customers generate and use energy. He is certified by the U.S. Department of Energy and the Building Performance Institute and is expertly trained in home performance.