The State of Oregon is considering a bill that would change the face of real estate disclosure. In the past sellers have disclosed what they know about a property. House Bill 2839 would require a seller to investigate what they do not know when it comes to the energy efficiency of their home.
“House Bill 2839 would require sellers of real property to obtain an energy audit and provide a copy to each buyer that makes a written offer to purchase. This would allow a buyer to withdraw an offer within three days after receiving an energy audit.” The average audit or performance test costs $350-$500 for a typical residential home and takes over a week to get results.
In Queensland, Australia sellers are required to disclose what they do know about the energy efficiency of their home. Their version is the Sustainability Declaration. Reference guide to the Sustainability Declaration states:
A home cannot be advertised for sale (by a seller or a seller’s agent) unless the advertisement contains information about where a potential buyer may obtain a copy of the completed sustainability declaration.
A few of the questions in the declaration appear in one form or another in our Real Estate Disclosures but they do go much more in depth than what we have.
I’ve had some interesting conversations about the proposed House Bill. Some of the theory comes from the work by Earth Advantage that was done on our NW Hoyt remodel project which I was interviewed by KOIN News for. I know that I like the idea of having a Miles Per Gallon version for housing. I am not so sure that sellers should have to provide it and that it should not be another potential buyer due diligence issue. I think we’ll see a lot of debate and tweaking before moves much further forward.
Your thoughts? Good? Bad? Ideas to improve?
Image from the Sustainability Declaration reference guide.
Does anyone know if buyers’ agents or sophisticated residential buyers are already requesting similar information?
As a buyer I would prefer to require the seller cooperate with an energy auditor I commission.
I have heard of buyers requesting utility bills but no, I have not heard of this level of information being request by buyers if it was not already being offered. Some “green” certifications require the audit so the seller has it done (new construction/major remodel). I don’t know of any traditional home seller who has done it though. Without it being mandated I don’t see buyers being able to get sellers to have the test done as part of an offer, especially if there was another offer with all other things equal.
Implementation will be interesting: 2883 listings were added to RMLS in February for the Portland Metro area. The capacity to conduct the audits is going to have to be huge to avoid a massive back log.
There is also a question of comparisons. How my 1902 home compares to other 1902 homes is a different comparison than how it compares to a 2002 home. Ultimately the “MPG” would be valid but the expectation would be different.
This is a good idea in theory but would be a bit of a logistical nightmare in practice…. at least for awhile.
There just aren’t enough contractors setup to perform full blown energy audits (blower door tests on the house and ductwork, etc.). This test requires thousands of dollars of equipment and hours of training and there just hasn’t been enough demand thus far to entice many contractors into the business.
Of course, if there were a requirement that would change, but there would be a definite lag time where people were waiting (and anyone able would be charging a super premium for their service).
A much more logical first step would be an enery review where the house is visually looked over and things like insulation amounts, furnace efficiency, window/door types, etc. are taken into account and the house is given an overall grade. Most home inspectors could add this into their routine for minimal expense. Honestly, we look at all the stuff during an inspection anyway. It would take barely anytime at all to separate it out onto a separate format.
Overall, I like the idea of the bill…. I just think there needs to be some baby steps as opposed to pushing sellers off a cliff (as if they aren’t suffering enough these days anyway).
We have to start moving our mind set away from the “all you can eat” mentality our parents taught us and understand the importance of saving energy/water/food.
A basic understanding of the biggest cost to owning a house (heating, cooling, ect) is critical. Once 5% of home owners in a market do this, those owners that don’t will find a discount being pushed at them at sale.
This question can be resolved by asking one question;
Would you buy a car, not knowing the MPG?
Five hundred dollars? For what? How about allowing my energy bills to be public instead, if I decide to sell my house? Yet another scam to siphon more money from middle class homeowners.
This is a waste of everyones time and money. We don’t force anyone to test for radon, lead, or undergound tanks. Heck we don’t even have to make sure the electrical panel isn’t subject to recall. The same should be true for efficiency. Most of the items in an energy audit come up in an inspection anyway. If I go into a 1924 house, my inspector and I can see the 60 percent furnace, single pane windows and insufficient attic insulation with our own eyes. No additional burden needs to be put on the seller to demonstrate that it’s a hog. Conversely, what if you are selling a home with all the ‘green’ bells and whistles? You still have to pay some hack 500 sheckles to tell you there is a freakin solar panel on the roof?
This will also put additional burden and complication on short sales and foreclosre sales. Underwater, unemployed homeowners can list attempt a short sale listing today for little or no cost. With this additional roadblock, many may choose the foreclosure route which is harder on the neighborhood and the lender. Would the government be exempt from this for tax sales? Probably, since they are writing the rules. What about related party sales? Example: my son lived in the house his whole life and I want to sell it to him. he knows as much as I do about the home; in fact he helped install the storm doors and insulation. Should we be required to pay for the audit?
I agree with the other comments that historic utility bills costs can easily be made available and can be very helpful for FREE.
It’s nice that you think you can get utility bills for free, but that has problems, like when the owner cannot get the bills.
I agree with some statements above in particuliarly that audits can be complicated, the costs to the seller could further dampen sellers already under water, radon gas/lead based inspections get overlooked, and possibly hurt the curve of learning something new in an enviroment already in a housing debacle depression. But you have to start somewhere even if the medicine is painful, trust me I know and battle this everyday. I live in MISSISSIPPI and am the only Energy Star Lender specialist for Energy Efficient Mortgages in the Southeast if not one of only a few in the United States, but guess what IT WORKS even in a slow economy. Consumers who buy benefit and the money saved spend in our local communities and are willing to be patient when we audit a house by a HERS auditor and await the contractor to carefully select the sized equipment needed to make their home more energy efficient to reduce sometime up to 45% of their monthly utility costs. That savings speaks volumes to the sustainability and comfort of the home and the potential progress of this country if pointed in the right direction and we do this without any government or local municipality support..just word of mouth. Being a lender years ago where everyone was buying new our business model collapsed overnight and since then our niche focus has been to restore confidence to the housing market by renovating homes under the FHA 203k and Energy Efficient Mortgage platform. Its slow buts its better than doing nothing!
I tried the auditor path (as a home inspector/builder), I have TONS of construction experience and believe in the concept (pure and simple). However, this concept requires a variety of public education that, unfortunately, is not being provided. The entire home energy audit concept is still very fragmented and mostly misunderstood.
Homeowners don’t understand the basics of energy efficiency and because lifestyle habits (whether or not a home owner’s thermostat setting is adhered to, etc) is taken into account, using a home owners’s energy bill to decide how efficient the home is will not be prudent. As a matter of fact I have had more “withdrawal” from the public when I attempt to teach thermostat setting as a means of lower energy usage. The public is completely turned off on the rules of the land “Telling Them” what tempt their home should be. Comfort is very personal.
From a energy rater’s business model point of view, I compete with my local utility company who “gives away” the service that I attempt to make a profit to provide. The concept is broken. Who wants to purchase thousands of dollars in equipment only to compete with a huge corporate utility company. Not a smart business model.
Knee jerk attempts to push this onto the real estate sales transaction is a mistake. The entire concept needs more education. Long Term Education. “Evolutionary” Education.