"Imagine, adding “energy” to the long-standing formula of key expenses—principal, interest, taxes, and insurance—to calculate how much money someone could potentially borrow from a bank to buy a home.
"Imagine, a home’s ability to capture savings in heating and cooling and electricity costs factoring into that house’s relative value—including location, square footage, and other comps—in an appraisal for resale.
"These two principles are what’s driving Congress to consider changing laws around housing finance that could cause people, home builders, remodelers, and the real estate industry to change the way they think about “green” and “sustainable” home building.
"Under the Sensible Accounting to Value Energy (SAVE) Act, federal mortgage loan agencies would consider a homeowner’s expected energy costs when determining the homeowner’s ability to make monthly mortgage payments. The average homeowner spends more than $2,000 each year on energy costs – more than on either real estate taxes or home insurance, both of which are regularly accounted for in mortgage underwriting. The SAVE Act would address this blind spot, giving a more complete picture of the costs of homeownership and borrowers’ capacity to service debt. It would also enable homeowners to finance cost-effective home energy upgrades as part of their traditional mortgage, lowering their utility bills and creating consumer demand for energy-efficient homes and home improvements. The SAVE Act is predicted to create 83,000 new jobs in construction, renovation and manufacturing."
Sounds like a re-make, or an extension of, the Cap and Trade bill. I can imagine millions of vacant, older homes that cannot be sold, because of their energy rating. These homes will be so inefficent, that they will not be worth the tens of thousands of dollars to up-grade them. They can never be sold. Think of the billions of dollars in lost tax revenue to cities, counties, and states.
Banks will be left holding the titles, ask billions from the government because of defaults, neighbor hoods will see their values decrease again, etc.
As discussed in many other threads on this message board, because of the decreased energy usage of the home owners, utility companies will have no choice but to raise rates. They are not going to lose money. They must keep their stockholders happy. Look for double-digit utility increases.
This is nothing but political and government spin, designed to shaft the American home owners and consumers. Contractors want this bill, so they can make money. Thats all. Will they do the proper up-grades needed? Who will police these people? What will be the actual costs involved? If the home buyer can barely afford the loan, how will they afford the financing of the up-grades?
We will know it will get done right.
We need the work.
We will not shaft the consumers with high prices.
We will be honest, professional, and will serve the clients properly.
We have the insurance, education, memberships, all to do the repairs properly.
We have access to InterNACHI.
At least, perhaps, we can be the police of the up-grades; not untrained appraisers and lenders.
Utility prices are up 19.3% for the year so far from same period a year ago.
Gas is up in September alone 2.3%.
Sure, energy audits and home up-grades will save energy, but they will actually will not save money. When you figure in the cost of the upgrades, the rise in utility costs monthly, the average home owner will actually be losing money.
It is not the buyers that will have to pay for the upgrades, it is the current owners that will have to do the upgrades before the house can be sold, because it will have to meet a certain minimum score before you can sell it. For this reason older neighborhoods will be blighted, older homes will not be able to be sold and people will either continue to live there until they die or just walk away leaving the banks with a useless piece of real estate. This is another well intentioned feel good plan that has not been thought through properly. It is designed to appease a certain demographic so as to get their votes.
I don’t know about the untrained appraiser part on assigning a value, lol. In Florida, we have to have a college degree, obtain many hours in specific appraisal courses and log at a minimum 4,000 hours under a mentor (and the log has to be line by line of every hour with mentor signature next to every hour). What adjustment would you make in value when considered against another home (comparable)? What if the homes I compare it to have the same green features, there would be no adjustment at all? What if my comparables have better features? There can not be a value assigned to any one item without checking what the market will pay for it. Just like someone putting a $40k solar system into a home that is located within a market of $60k homes. Might not add any value at all. To assign a value to a feature requires looking at a compilation and correlation of data and then using technics of matched pairs, comparable sale extraction, the allocation method, cost minus depreciation etc. to come up with a value. In realestate, i stick with my scope of work and never cross that line. The same in appraising, I stick to what my expertise is and my scope of work. If I step outside that as a “licensed professional”, the public can and will hold me to what I say.
Sounds like this may be similar to the stupid “Cash For Clunkers” Fed program which did nothing but hurt poor people.
Destroying inefficient vehicles that were in good running condition took a lot of used vehicles off the market. Not very many folks can afford a brand new car in this economy.
In many places there is no public transit and a cheap old inefficient vehicle could make the difference of being able to get to work or not.
The SAVE Act establishes two methods for determining expected annual energy costs: (1) average utility costs, derived from the Department of Energy’s Residential Energy Consumption Survey (RECS) database and adjusted for the square footage of the home, or (2) if available, a qualified, independent energy report of the subject property.
The cost of operating the home (energy costs) is critical information for a home buyer.
Utility companies all have energy consumption figures on all homes. They will sell this information, to make money, to appraisers, banks, and lenders, who will then make money from the home owners and buyers who pay for the “energy audit”. Appraisers have access to history and size of the homes, and the records of former transactions.
Appraisers, and their companies, will then be running the RE transactions, with agents, inspectors, RE offices, all left out; a take-over if you will.
Nope, sorry you got it wrong again… you need a better research analyst or a web search research firm to help you out, it’s obvious the web search function you are using is not working well for you…
Just trying to get an opinion. So many appraisers, insurance agents, engineers, contractors, even RE agents that all doing home inspections and home system checks, who are not required to be licensed or insured. Many utility companies and contractors are offering free energy “audits”, all for a reason.
If you are a home inspector, it seems that you are now left out of the RE transaction, as being the “alarmist”.
Perhaps he doesn’t understand that the utility company is paying the certified auditor for the service so that their client can get it for free or at a reduced rate. I am doing that for SWEPCO in Arkansas.
For Michigan inspectors:
Learn how InterNACHI home inspectors can boost their business by being a part of the home energy upgrade industry.
Presenting: InterNACHI, EPA Home Performance with Energy Star, Consumers Energy (Michigan utility company), and local REALTORS, auditors, appraisers and home performance contractors.
