Capturing Energy Efficiency in Residential Real Estate Transactions: Steps that Energy Efficiency Programs Can Take

A growing number of studies suggest that some homebuyers are willing to pay a premium for energy efficient homes. Real estate professionals are increasingly aware that today’s homebuyers consider heating and cooling costs, efficient appliances, and efficient lighting to be important factors in home purchase decisions. Residential energy efficiency and real estate stakeholders, however, agree that the home resale process frequently fails to account for the value of high-performance home features. If investments in energy efficiency were more accurately reflected in home resale prices, homeowners could have greater confidence that these investments would be recouped at resale, and they might make more investments in efficiency.

While stakeholders at the local, regional and national level are undertaking a number of “green real estate” activities, key gaps persist in transmitting information about homes’ energy performance to the market. Energy efficiency program administrators have a crucial role to play in bridging these gaps. This paper highlights the obstacles and opportunities within the real estate transaction value chain that program administrators are uniquely positioned to address. The paper also provides ideas for a range of relevant activities that program administrators can engage in, and examples of programs that are successfully working with real estate