Builders, developers, and owners are constantly complaining that high-performance buildings rarely get their due from appraisers who, they say, don’t have good measures to compare one building’s energy savings over another’s, or how those savings affect the value of the building.
The Appraisal Foundation, a nonprofit organization authorized by Congress to establish appraisal standards, is working methodically to alter this perceived image of cluelessness. Within the next few weeks, the Foundation is expected to issue the final draft of its guidance related to background and competency for appraisers valuing green buildings.
John Brenan, the Foundation’s director of appraisal issues, tells BD+C that states may elect to start adopting this guidance by early next year. And while the guidance would be voluntary, Brenan believes it may serve as a safe harbor for appraisers performing appraisals on green buildings.
The final guidance relating to the valuation of green buildings may offer methods and techniques to allow compliance with the Uniform Standards of Professional Appraisal Practice (USPAP).
That Board—which utilizes panels of experts, including those with green-building expertise—is one of three independent boards that comprise the Foundation, the other two being the Appraiser Qualifications Board and the Appraisal Standards Board.
The Foundation is also working on more specific guidance for appraisers to use when valuing the “greenness” of one- to four-unit residential buildings; and commercial, multifamily, and institutional properties.
Brenan says these guidances would contain methods and techniques that show appraisers what to look for and how to compare a building’s green features, materials, and construction management with other buildings in a market.
He expects an initial “exposure draft” of these guidances could be available for public comment in the first quarter of 2015. “Our hope is that all three advisories are adopted by late 2015, so the Foundation would have a tool kit for appraisers and regulators to use.”
At press time, Brenan was unable to elaborate on the proposed methodologies. And he is quick to note that appraisers don’t set values; “they just mirror what’s going on in a market.”
He did note, however, that the guidance being developed includes how to compare properties that have sold with like green features, and how to recognize market-to-market differences.
“One of the most interesting potential [guidances] would be to look at anticipated cost savings over an extended period of time,” he says.
Brenan points out that there is never going to be a “plug-in formula” for green valuation that fits all buildings. “It is still completely market-driven, and markets are stratified. Just because you have green features doesn’t mean the appraisal will be apples to apples. It’s kind of a sliding scale.”
That being said, Brenan readily acknowledges that there aren’t enough appraisers out there who are competent enough to assess how high performance should be factored into a home’s valuation. He’s speaking from experience. “I live in California, in a home that has a solar photovoltaic system, and the appraiser didn’t know what to do with it. So that became a little educational experience.”
Brenan says that anyone in the building, design, and construction sectors who wants to get involving in helping to develop these guidances can contact him directly at John@appraisalfoundation.org.
Related Stories
| Jul 21, 2014
16 utility questions to answer during your building project
We need electricity to power our building projects, along with water and gas and a faultless sanitation system. That’s what we think about when we think about utility requirements for our building project, but are we missing something? SPONSORED CONTENT
| Jul 21, 2014
Commercial real estate development growing at strongest pace since recovery began: NAIOP report
Industrial, warehousing, office, and retail sectors see strong gains; Texas leads the nation in construction-value stats.
| Jul 21, 2014
Economists ponder uneven recovery, weigh benefits of big infrastructure [2014 Giants 300 Report]
According to expert forecasters, multifamily projects, the Panama Canal expansion, and the petroleum industry’s “shale gale” could be saving graces for commercial AEC firms seeking growth opportunities in an economy that’s provided its share of recent disappointments.
| Jul 21, 2014
Workplace trends survey reveals generational patterns in office use
Data analysis from Mancini•Duffy indicates significant variations among age cohorts in the workplace.
| Jul 20, 2014
IPD contract saves time and money for cancer center [2014 Building Team Awards]
Partners share the risk and reward of extreme collaboration on this LEED Silver project, which relies heavily on Lean principles.
| Jul 20, 2014
Why every major U.S. city should be nurturing ‘Innovation Hubs’
Today, more than ever, tech districts are the key to economic growth for metro markets. A new report from the Brookings Institution calls tech hubs the superchargers of innovation economies and creators of highly coveted tech jobs.
| Jul 18, 2014
Contractors warm up to new technologies, invent new management schemes [2014 Giants 300 Report]
“UAV.” “LATISTA.” “CMST.” If BD+C Giants 300 contractors have anything to say about it, these new terms may someday be as well known as “BIM” or “LEED.” Here’s a sampling of what Giant GCs and CMs are doing by way of technological and managerial innovation.
| Jul 18, 2014
Top Construction Management Firms [2014 Giants 300 Report]
Jacobs, Barton Malow, Hill International top Building Design+Construction's 2014 ranking of the largest construction management and project management firms in the United States.
| Jul 18, 2014
Top Contractors [2014 Giants 300 Report]
Turner, Whiting-Turner, Skanska top Building Design+Construction's 2014 ranking of the largest contractors in the United States.
