Performing an Energy Inspection When Selling a Home Would Seem to be a Good Idea
In 2009, there was legislation proposed in several cities to require an energy inspection when selling your home. The theory behind the new legislation was good.
Buying an energy efficient home makes sense. Home sellers who have installed appliances and feature to reduce power use would have an advantage when selling their home.
The timing of such legislation was bad. The housing market had already take a bit hit due to an economic crisis in the U.S.
Those pushing this new legislation had been working toward their goals for years and were not willing to slow their activities due to bad economic conditions.
While sellers had been offering energy inspections as part of the features that might help sell their home, other sellers of older homes or non-renovated property were not so excited.
In 2009 even real estate experts were predicting a quick rebound in sales of homes across the country. Today we know how overly optimistic those plans were.
Home sales have continued to decline since the financial crisis that began in late 2007. Home prices have fallen more than 30% in some areas of the country and there is still no end in site.
Reasons to Require
At times, there may be good reasons for a city or county to require energy inspections. This was the case in Austin, TX in 2009. The city was trying to avoid the need to build a new power plant and upgrading homes to energy efficient standards seemed to make sense.
In a good real estate market, this move might have been acceptable to many home sellers. The cost of $200-300 for the seller to hire an energy audit of the home isn't a lot of money when considering selling a property worth six figures.
The problem is the buyer expectations exceeded reality. Cash strapped, out of work home sellers were often selling out of necessity. The idea behind energy inspections was to provide buyers with a list of improvements that could be made.
What happened was buyers then either cancelled contracts or asked the seller to make the expensive improvements before the sale was closed. Energy inspections conducted for home sales were also being used as a tool to further reduce the sales price of the home.
In Springfield, Massachusetts, proposed energy audits would give a home for sale an energy performance "grade". This would include a list of energy problems and energy efficiency of a particular home on the market.
Not surprising there was great opposition to the Springfield plan. This is an area of the country with many old, historic homes.
These homes will never be as energy efficient as a home built to new energy efficient building codes. Receiving a low "score" could cancel a sale and negatively affect home sellers.
In areas where energy inspections were made a requirement for home sellers, many of the original new laws have amended. Today, there are areas and cities that either recommend or require energy inspections but most now exempt older homes from the requirement.
This allows sellers of new, energy efficient homes to attract more buyers due to a high grade received from an energy inspection. At the same time, it does penalize those selling older or historical homes built long before the term Green Energy existed.
Utilities Push for Legislation
Many public utility systems producing electricity are operating at top capacity today. The cost of building new power plants is huge and companies are especially reluctant to build fossil plants at a time when renewable energy seems to be the goal for the country.
For such a utility, encouraging energy efficient houses and reducing the load on the power grid is exactly what they need. Environmentalists also get behind the idea of mandatory energy inspections when selling your home.
Home sellers with newer EnergyStar homes or homeowners who have upgraded the systems in their homes to use less electricity can benefit from the grade given in an energy audit.
Owners of older homes who cannot spend the thousands of dollars that might be necessary to improve energy efficient of their property could lose out on a potential sale in a market where home buyers are scarce.
Rating a Home
Inspectors look at specific facets of your home when conducting an energy inspection. Energy loss is rated by percentage for each of the specific areas of concern and then compared with the aver percentage of a energy efficient home.Home systems that are examined are:
- Floors, Ceiling, Wlls
- Doors and Windows
- Fans and Vents
- Electrical Outlets
In areas where most home sold are 40 years old or more, it is common to find that a home has only 2 or 3 energy saving features.
In practice, inspectors advise buyers to focus only on using an energy audit as a negotiating tool when there are serious problems in a home's energy efficiency.