You also should be aware of the Green MLS Tool Kit, an industry collaboration aimed at promoting relationships, ensuring fair valuation of green homes, and educating consumers and industry participants.

Valuation issues

Understanding fair valuation and appraisal trends is another important aspect of establishing your sustainable-financing credentials. By learning the intricacies of valuation, you can position yourself and your company appropriately.

In the aftermath of the housing collapse, Americans are keenly aware that real estate doesn’t always increase in value. On the other hand, most people don’t give energy savings its due respect in relation to home values. According to some estimates, a home’s value increases by $10 to $25 for every $1 reduction in annual utility bills. In other words, a $100 monthly reduction in energy usage could increase a home’s value by $12,000 to $30,000.

Federal legislation introduced by Sen. Michael F. Bennet, D-Colo., could potentially promote energy-efficiency renovation by requiring mortgage underwriters, when working with federal mortgage programs, to include a home’s monthly energy payments into the principal, interest, taxes and insurance (PITI) calculation. In other words, PITI would become PITI plus E (energy). This would let borrowers with lower utility bills qualify for larger mortgage amounts.

Mortgage originators should pay careful attention to this legislation — dubbed the Sensible Accounting to Value Energy (S.A.V.E.) Act — and other efforts to mandate changes focused on the economic and environmental sustainability of the mortgage and real estate markets. You should strive to become an expert on developing trends before they gain widespread attention.

Green homes and energy-wise mortgage products will continue to gain market popularity for years to come. In the near future, energy calculations could become a key ingredient of every home purchase. Mortgage brokers and originators who embrace the shift — and who place it in a larger context of sustainability — can provide the value today’s homebuyers seek and enjoy the rewards that often follow major market adjustments. 

Susan Frost, president and broker of Alliance Mortgage and Marketing, is a National Association of Realtors Green Designee. She entered the mortgage business in 1983 and helped grow a small brokerage into a full-service mortgage bank. Frost later expanded her knowledge into real estate investing, property management and marketing. She founded Alliance in 2007. The company specializes in government and conventional forward and reverse mortgages for residential properties. Reach Frost at (916) 473-1317 or suefrost@ammloans.com.

Page: 1 2 3 Previous