Home Value

Discussion in 'General Discussions' started by TechGromit, Jan 1, 2009.

  1. TechGromit

    TechGromit Member

    As the yet, despite advice that Geothermal systems increase the value of your home, in reality it does not. Someone has to be willing to pay the added benefits of a geothermal system when buying a house for it to be worth more on the market. Most people haven't a clue what geothermal is, let alone that it's the best heating system money can buy. Even during the recent spike of oil and natural gas prices, I haven't heard or seen one commercial about geothermal systems, but heard dozens of radio commercials about how efficient the new gas or oil systems are, "Buy one today!"

    Someday in the future when gas, oil, propane prices reach unaffordable prices or perhaps the federal governments new energy policies pushes geothermal heating systems your house may be worth more on the open market to buyers, but until then don't count on it.

    When buyers are looking at a house they are asking how many bed rooms, bath rooms it has, how big are the rooms, the location, but no one asks what the heating / cooling system is. 50 bucks says that without a home inspection, during the housing boom, I could have sold a new house without a heating / cooling system and the new owners wouldn't notice until they moved in and tried to heat or cool the house.

    When energy costs become so high, that heating methods become so important, that's when one of the first questions buyers ask is what kind of heat it has. THAT'S when you house will be worth more on the open market, with a geothermal system installed.
     
  2. urthbuoy

    urthbuoy Well-Known Member Industry Professional Forum Leader

    Easiest $ add on

    Would be to take the energy savings and add a year multiplier. People will pay more for an energy efficient home.
     
  3. waterpirate

    waterpirate Well-Known Member Industry Professional Forum Leader

    In my area there is an all out media blitz by several different companies touting geothermal. Business is good and we are gowing green all at the same time.
    If the economy continues to spiral and flip flop, the value comes from the balance sheet that you present to your realtor. It costs "x" to operate this home on a yearly basis. Freeing up more money available for the mortgage. Or more savings monthly.
    I would say that like a kitchen remodel you may get back in sale price more than the cost of the install.

    Eric
     
  4. TechGromit

    TechGromit Member

    In a perfect world the value of your house should increase with the additional of a Geothermal system. But in reality most poeple don't think that way. Take two houses exactly alike, for sale right next door to each other, one heated with propane, the other geo, add 30k to the price of the geo house. I say 9 times out of 10, buyers will pick the cheaper house. People can't look far enough in the future to know that a Interest only teaser mortgage isn't a good thing, and your going to tell me that they going to make a sensiable choice what it comes to picking the proper heating system for there new house?

    Go ahead, add 50k to the value of your house, but good luck what you try to sell it. Most buyers aren't going to want to pay you for it, they are going to go for the cheaper house 9 times out of 10. You can assign any value you want to your house, but the true value is in what someone else is willing to pay you for it.
     
  5. waterpirate

    waterpirate Well-Known Member Industry Professional Forum Leader

    WTF

    Now that we are in a full blown recesion, Yes I said the "R" word. :eek: People allready know that the decisions they made in the past were very poor ones in regard to mortgages and rates.
    I think that the world is more forward thinking at this point and the value will be relized. I am old enough to remember the odd even days for fueling your car, this last go round brought back memories. Even the lemmings have realised that that hummer/expedition/suburban/diesel dually, was a bad choice.

    where I live there has allready been a huge investment in public infrastructure in geothermal for the long haul and the general public is following suit. I am sorry if it not happening in your location.
    Eric
     
  6. MarauderX

    MarauderX New Member

    There are no $ invested to $ value increase comparisons for geothermal. It is as much perceived value as actual. You may be able to show the realtor, but the geothermal may be just one reason the house sells instead of sits on the market. I wouldn't anticipate an increase in value unless the geothermal system is replacing a much older HVAC system.
     
  7. Looby

    Looby Member Forum Leader

    Who knows what evil lurks in the minds of R.E. "appraisers?"

    OTOH, I believe many folks set their home-buying budgets on the basis of
    monthly out-of-pocket cash flow. So, every dollar saved on heating/cooling
    costs is another dollar available for the mortgage.

    Assuming a 30-year fixed-rate mortgage @ 5.00% APR, each $100/month
    saved on energy is equivalent to an $18,500 increase in purchase price.

    Also, the relative stability of electric rates (compared to fossil fuels) should
    be very attractive to home buyers -- for example, I switched to geo when
    my heating oil dealer offered me the "opportunity" to lock-in at $4.79/gallon
    (way back in August).

    ...there's no fuel like an old fuel,

    Looby
     
  8. jrstacey

    jrstacey New Member

    New Home Construction Appraisal

    Hi Everyone:

    I noticed that most of the posts here were a few years old. I'm building a new home and the appraiser is giving me nearly no value for a new geothermal system. This is causing me quite a predicament since the cost to install is high. I know that in the long run I'm going to be way better off but my bank just sees the $$$ signs. I am attempting to get them to reconsider this as I found a quote on this website that states:
    Does GeoExchange cost more?



    Not necessarily. It depends on how you measure cost. While they sometimes cost more to install in homes than conventional systems because of the ground loop piping, GeoExchange systems typically have the lowest life-cycle cost of any heating and cooling system. Heating and cooling costs for a typical 2,000-sq.-ft. home can run as low as $1 a day.
    Moreover, installation costs have declined substantially in recent years, and they're expected to continue to fall, as more builders and contractors offer GeoExchange systems, and as the industry develops innovative ways to install the systems faster and more efficiently.
    Altogether, GeoExchange systems are a sound investment. The amount they save the homeowner every month in energy costs is more than enough to offset their higher installation cost.
    Remember, too, that GeoExchange means extra savings on repair, maintenance, and hot water bills.
    Furthermore, the energy efficiency of the system adds value to the home. The National Association of Realtors Appraisal Journal estimated that a home's value increases by $10 to $25 for every $1 reduction in utility bills. That's a lot of equity to build just by choosing GeoExchange!


    I changed the type to RED above and bolded it. A very conservative estimate based on those figures would put an additional $20,000 value on my home appraisal but I can't actually find the National Association of Realtors Appraisal Journal that is cited above. Can anyone help me out with this? Has the market turned a corner in acknowledging the value of geothermal in light of the high cost of oil and propane now?
     
  9. Looby

    Looby Member Forum Leader

    Can't help with the appraisal journal, but I had a refi appraisal in Sept 2010
    (20 months after geo retrofit), and the appraiser "upgraded" our valuation
    by $10,000 relative to his list of comparable properties.

    IMO, this was ridiculously small adjustment (since geo is saving us over
    $3,000/year in total utility costs) -- but the appraisal came in high enough
    to satisfy the bank, so we didn't challenge it.

    ...just one data point,

    Looby
     
  10. jrstacey

    jrstacey New Member

    good to know

    Thanks very much! I appreciate that information. I estimate that I am going to save at least $2000 per year in heating costs by installing geo. Unfortunately, the banks appraiser is really killing this since the cost of install is high and it will force me to go with a higher rate mortage with PMI which effectively kills all savings for the year.

    Anyone else heard anything on this?
     
  11. jrstacey

    jrstacey New Member

    Links - References

    I sent all of these links to the appraiser. It didn't help me. They maintain that ultimately, the economy is bad, the real estate market is bad and that no one is going to pay more for a geothermal system in this market so it's value is nil. I can fight it and get a second appraisal but after all is said and done I might be better off just taking the FHA mortgage with the PMI and deal with it.

    I wish anyone in the same boat much success! I am still going ahead with the geothermal, it's just going to make my start up costs a bit higher than planned.


    http://thbes.com/blog/2011/10/real-estate-appraisers-value-energy-efficiency/

    http://www.matrixrealestate.com/about-matrix/market-news/green-homes-finally-get-due-appraisals

    http://contractingbusiness.com/indoor_air_quality/sell-geothermal-0412/

    http://library.hsh.com/articles/homeowners-repeat-buyers/lenders-and-appraisers-are-catching-up-with-green-homes.html


    Property Valuation/Appraisals: Value of Geothermal heating/cooling system, geothermal energy, contributory value

    Real Property Appraisals: Value of Geothermal heating/cooling system, triple pane windows, cost efficiency

    Geothermal heating- General Appraisal Discussion - Appraisers Forum

    http://geoheat.oit.edu/pdf/tp111.pdf

    Go Green with Pace Legislation

    Green Home Appraisal Woes | GreenBuildingAdvisor.com
     
  12. Altnrgy

    Altnrgy Member

    Just in case it’s not clear to everyone it’s important to keep in mind that appraisals validity is totally reliant on the “comps”.

    In my experience the appraiser is looking for at least 3 examples of SALES (not other appraisals or listing prices) of very similar homes within just a few blocks to the one they are appraising. IE; 3 bedrooms, 2 bath walkout basement can only be compared to the same. By the time comps get miles away they are completely invalid in most financiers mind.

    Exotic construction such as monolithic domes as well as homes with solar on them also suffer similar problems. You think getting your bank to loan you more money for your home because it has GEO is a pain try to getting them to loan youa penny on a dome home! No, I don’t have a dome home but know a guy who builds some fantastic ones.

    I’ve frequently heard in energy efficiency circles some version of houses are worth $20 more for every $1 per year that the utilities of the home in question are lower than a comparable. Makes sense, but when I’ve asked appraisers about this they’ve never heard of this or are willing to entertain discussing it.

    I’ve been in the energy efficiency industry for over 20yrs and this has always been a problem. There are a variety of “energy efficiency mortgages” but not all banks have them and they may or may not have the most attractive terms.

    Hope that helped or will help someone in some fashion.

    Best, Travis
     
  13. johnny1720

    johnny1720 Member

    How did you ever make out with this?



     

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