There’s an otherwise nondescript home for sale about to test just how attractive green features are in today’s market.

The owner has taken many of the proscribed steps to improve comfort and performance. An extensive remodel updated the home and improved accessibility. A screened-in porch and rustic steps capitalize on proximity to the park and river. Fruit plants and trees replaced much of the lawn. Two rain barrels capture runoff from the solar-paneled roof, and a compost bin stands guard near raised bed gardens. With new windows, a blower door test, and LED lights, it achieved silver status from Pearl Certification. Its location in a compact mixed-income city neighborhood with front porches and a vibrant street takes a page right out of the New Urbanism textbook.

Even in a seller’s market, and even though the home is under $300,000, the asking price is well above the going rate on the street. But none of those homes had those green features. And none of those homes had a Pearl Certification.

Green home advocates predict this home will have no trouble selling at the asking price. After all, the National Association of REALTORS® reports that more than 80 percent of homebuyers prioritize environmental features in their purchase. Heating and cooling costs are most important, followed by energy-efficient windows, doors, and siding. Efficient lighting and ENERGY STAR® appliances rounded out the top tier.

Certification advocates predict this home’s Pearl Certification will improve the owner’s chance of selling at a higher price in fewer days on market.

But it all hinges on owners and real estate agents marketing the green features, buyers searching for that information, and appraisers valuing it appropriately. Fortunately, the Charlottesville Area Association of REALTORS® (CAAR) was a leader in including green features as a searchable function. Michael Guthrie, Broker/CEO of Howard Hanna/Roy Wheeler Realty Co., and Greg Slater, Associate Broker with Nest Realty, were two of the leading proponents of that improvement.

Guthrie says, “Our motivation was simple. We sought to make it easy for buyers to find what they wanted while helping sellers capture the value they had invested in their homes. Frankly, most buyers, especially Millennials, expect that there is some consideration for environmental impact in a home they are likely to purchase.”

And there are a lot of different ways to identify that environmental impact.

The Standards

HERS. EarthCraft. ENERGY STAR®. Passive House. LEED for Homes. Net Zero.

The list of home energy performance standards keeps growing and the acronyms can be dizzying. Typically, the standards compare performance to the current building code and represent efficiencies 20 to 100 percent better than homes built to code. As building science and technology improve, homes become more efficient, and new standards are added to keep up.

Customized for the southeast, EarthCraft takes into account our steamy summers and cool winters. As with most other standards, EarthCraft projects are certified by a third party through onsite inspections and pressure tests. Dominion Custom Homes is one of several area EarthCraft builders.

A concept gaining traction among builders and buyers is net-zero. Generating as much energy as it uses, net-zero homes appeal to penny pinchers and environmentalists alike. Net-zero, or even net-positive, is likely to become the definitive standard before too long.

Getting to net-zero requires keeping energy consumption extremely low through systems that are as much as 100% more efficient than conventional homes. Builders orient the house to optimize the sun’s warmth and light, wind direction for cooling, and use superior insulation and an airtight building shell, along with high-efficiency systems and appliances. Add on-site energy generation to produce as much or more power as the household uses, and, voila, you’ve reached net-zero.

These improvements come with a price tag. EarthCraft builders report an average increase of up to three percent in construction costs. Others may be as high as 10 percent. Over the life of the home, substantially lower utility bills recoup the initial investment.

The Department of Energy’s Zero Ready Home attempts to reduce those upfront costs. Zero Ready stops one step short of achieving net-zero status. Basically, it’s a net-zero house without its own energy system. It includes all the super-efficient features of a net-zero home, and later the homeowner can add solar panels or another energy source. This approach results in a home with lower up-front costs that is still incredibly efficient.

Chris Fuller, of The Housing Lab, is shooting for Zero Ready for a pocket neighborhood in Crozet. Having received zoning approval, Fuller expects to get Bamboo Grove’s site plan approval soon. “(Bamboo Grove) is pretty small, but it will have a rain garden for the parking area and the houses not built by Habitat are supposed to be net-zero ready… if the builder can pull it off.”

Because these standards are verified through third-party certification, just trying to achieve an efficient home isn’t good enough. The proof, and certification, lies in the final testing numbers.

Building it Right

Researchers estimate that most United States houses last 40 to 75 years. With roughly 20 percent of greenhouse gas emissions coming from household energy use, it’s worth getting it right with every new house built. We will pay for the problems of wasteful homes or reap the benefits of increased efficiency for decades.

“In this area, our builders do a great job of incorporating energy efficiency into all of their new homes,” says Guthrie. “We really benefit from being on the cutting edge of the whole movement.”

Many area builders have committed to building all their homes to one of the myriad home performance standards available.

Three area builders have also chosen to partner with Pearl Certification to register and verify energy efficiencies in their new construction. Hudson Signature Homes works mostly in Waynesboro and Augusta County. Bramante Homes is a custom builder in Charlottesville and the Shenandoah Valley. Southern Development Homes, based in Charlottesville, uses their EcoSmart program in conjunction with Pearl.

Frank Balliff, President of Southern Development Homes, likens Pearl Certification to a credit score for your home. “This registry enables homeowners to make sure their home gets the most value for all the green features that we build into it. Our homes score Pearl standard gold, placing them in the top 10 percent of homes nationwide. We’re really proud of that.”

Not Just for New Homes

So how can a 40- or 75-year-old home, or that nondescript house coming on the market, compete with new construction?

Therein lies the strength of Pearl Certification.

Pearl also certifies existing homes. Established in Charlottesville in 2015, Pearl now operates nationwide. It identifies, tests, and catalogs how various home features contribute to its energy performance. The home receives a rating based on its combined score across five categories: building shell, heating and cooling, baseload, home management, and renewable energy/energy storage.

The homeowner can update their home’s certification as they make verified improvements. That record of the energy-related assets stays with the home. When the homeowner is ready to sell, the Pearl Certification details those assets in a clear and verifiable way to potential buyers.

Emily Dooley, REALTOR® with Nest Realty, sees Pearl as a tremendous benefit to both buyers and sellers. She partners with Pearl to help her clients explore and, if appropriate, initiate the certification process. “This tool allows 100-year-old homes to compete with new construction. If you have any green features in your home at all, hands down, this is the best way to compare favorably in the real estate market.

“And most importantly, Pearl provides a clear path forward. If you haven’t achieved the silver level, they’ll show you exactly what needs to be done. Same with gold and platinum. The next level might be as easy as changing out light bulbs or adding some insulation.

“This works really well for homeowners who love the idea of energy-efficiency but think it’s unattainable. Pearl lays out a step-by-step action plan. When it comes time to sell, you’re way ahead of the competition. And even if you’re selling an older home, you can point out exactly how your house performs against any other home.”

Homeowners are beginning to understand the power this provides. It’s not just a feel-good strategy. Data shows that Pearl certification provides a solid return on investment. Homes certified by Pearl not only sell for approximately five percent more than non-certified homes, but they also sell more quickly.

It’s no wonder that participation is growing. Joseph Gentile, Vice President of Real Estate for Pearl Certification says, “Throughout Virginia, Pearl has certified over 4,500 homes and has helped more than 750 homeowners capture the value of their performance investments during the real estate transaction.” That’s more than three times the number of homes certified just two years ago. In the eight-county CAAR footprint, nearly 1,200 homes have been certified.

In the Know

To capture the highest value upon sale, everyone involved in the transaction needs to understand the value proposition that green features offer.

Woody Fincham, President and Founder of Accurity Fincham & Associates, Inc., says “First of all, consumers and agents need to be informed. That sets the stage to maximize the value of the investments an owner has made.

“Together, the agent and homeowner should create an MLS listing that clearly identifies the green features, third-party certifications, and other performance ratings. Failing at this initial step can keep a seller from connecting with buyers searching for high performing homes.”

For instance, a search for Charlottesville homes for sale under $300,000 with green features yielded three results. One only listed lead-free paint. The second identified ENERGY STAR® certification, blown-in insulation, low VOC paints, and a programmable thermostat. The third listing just said yes without any other information, even though the home has solar panels. Clearly, the homeowner and agent for the third home didn’t do a very good job marketing their assets.

“Once a home has an acceptable offer, a REALTOR® can, and in most cases should add language in the sales contract requiring the lender to use a green building competent appraiser,” says Fincham. “Without proper training, many appraisers simply don’t know how to value solar systems and other green features. So, even if the buyer is willing to pay the ask, they may not get sufficient financing if the value of the green features isn’t captured in the home appraisal.”

Fincham has very specific advice for homeowners with solar panels. “Put together a package with the system capacity in kW, installation date, whether they are leased or owned, and whether secured by a UCC-1 lien, actual or projected energy production, discounted cash flow, system warranties, and the panel manufacturer.

“Armed with this level of detail, a qualified appraiser can give maximum value for a solar-powered home. But they can’t help you if they don’t know about it.”

Guthrie agrees. Things are certainly getting better. REALTORS® are better informed. The National Association of REALTORS® and CAAR have plenty of training opportunities. These high-performing homes built a few years ago are coming on the resell market for the first time. There shouldn’t be many transactions without at least having the conversation about a home’s energy efficiency.”

Today’s Market

Even in today’s seller’s market, buyers want energy-efficient homes. “The interest is still there, but the current hot market and lack of inventory may mean some buyers let go of their insistence on green features to just get a home, then come back and do energy-efficient upgrades later. Especially when a process like Pearl Certification can clearly identify the low hanging fruit and what steps to take first.”

“But for those homes on the market that come with green features, buyers will pay a premium.”

“There are lots of trends being overshadowed by this seller’s market. As we return to a more balanced market, they’ll play out a little more strongly. Clearly, heat pumps, different heating zones, and smart thermometers are here to stay. People are starting to move away from natural gas. Some buyers are giving a nod to a productive yard with gardens or native plants replacing an expanse of grass.”

Not yet popular here are gray water systems such as a toilet tank-sink combo. Until water shortages like those plaguing the western states are felt here, low flow toilets, showerheads, and faucets may be as far as most Virginians progress.

But a look at health and wellness features that made their way into our homes during Covid – purified air appliances like UV-C fans, and indoor air quality sensors – show that technology stands poised to respond to new demands.

“There seems to be an insatiable demand for energy-efficient homes. It has been substantiated that if you do it right, your home will command a higher value in the market,” says Guthrie. “And it won’t be on the market very long.”

Let’s see what happens with that nondescript Charlottesville home under $300,000.

This article appeared in the 9/29/2021 issue of the C-Ville Weekly and CAAR Real Estate Weekly.

Follow-up: The property described in this post sold for nearly $100,000 more than a nearly identical home three doors up the street with solar panels and no Pearl Certification. Both properties sold in September 2021, the described property in only four days on market.