Sustainable Homes Are Being Undervalued – Why Is That?

Sustainable Homes Are Being Undervalued – Why Is That?

By Rose Morrison, managing editor of Renovated

Homes with eco-friendly features should be flying off the market, with high demand driving increased prices. However, the reality of home sales tells a different story. Why is this?

The undervaluation of sustainable homes is particularly baffling when you consider that 82% of homebuyers are willing to pay more for eco-friendly options. Most consumers cite wanting to save on their monthly energy bills as a driving force, although climate change concerns aren’t far behind.

Something else has to explain the gap between consumer desire for conservationist features and the prices that sellers of such properties end up accepting. What other factors influence real estate trends? Here are four possible reasons why sustainable homes are being undervalued.

See our resource hub: Sustainable Construction: A Comprehensive Guide

Perceived Roadblocks Associated With Sustainable Design

One possible explanation for the undervaluation of sustainable homes lies in the perception buyers, sellers, and agents alike might share regarding the work that goes into maintaining eco-friendly options. Solar panels immediately spring to mind. Those who have never used them before could have nightmares of crawling on their roof in a blizzard to remove snow from panels if they hope to have heat to power through the winter cold.

Sellers should educate themselves on the facts. While heavy snow may harm a PV system’s support structure, innovations in designs – like removing frames – make it less likely to occur. Furthermore, such systems are usually connected to the grid, meaning residents won’t have to scale a ladder to get power amid a storm. Finally, the elements have some benefits, with snow acting like a scrub brush to leave panels without a speck of dirt.

Another hurdle to selling a home with solar panels lies in the lease conundrum. Although tax credits allow some homeowners to purchase their panels and recuperate the costs come April 15, others lease. That leaves current sellers with two options: Buy out the lease or pay the company they contracted with to remove them before the sale.

While sellers can transfer the lease to a new buyer, many hesitate. Buyers may balk at setting up a further expense – but here’s where a bit of sales savvy comes in handy.

Unlike other amenities like swimming pools, solar panels pay for themselves. Savvy sellers can net a better price by showing prospective buyers evidence of the savings they receive each month, which may make up for most of the price of the lease. They should emphasize that such panels are low-maintenance and won’t add regular costs the way chlorine, shock treatments, and pool cleaners do.

Buyers may fail to recognize other sustainability upgrades unless sellers indicate them in listings and tours. For example, some homes embrace passive solar by using special window coatings that eliminate the need for drapes and blinds. Such materials let residents see out while showing passersby only their reflection.

However, buyers might not pick up on this advantage unless the buyer or their agent addresses it. They can also mention how this design choice prevents damage to floors and furnishings by blocking the UV rays that cause oxidation.

Other upgrades, like LED lights, may likewise go unnoticed unless sellers point to them during a tour. Here’s an exercise prospective sellers can do:

  • Write a list of sustainable upgrades you’ve made to your home.
  • Decide how to feature them in listings and tours.
  • Talk with your agent and ask them to highlight these features.

The Professional Community Needs Time to Raise Awareness

Another factor influencing the undervaluation of sustainable homes lies in the professional community. Buyer and seller agents alike may overlook the importance of emphasizing such upgrades. Home sellers can do their part with individual agents, but professional associations also play a role.

For example, real estate agents must complete a minimum number of continuing education hours every few years to maintain their licenses. Continuing education providers that contract with the National Association for Realtors® should develop courses emphasizing the future of green building, its benefits, and strategies for marketing such properties.

Furthermore, appraisers likewise need continuing education. They may not understand the value that sustainable upgrades bring.

Another issue lies with the repairs and maintenance all homes need at some point. Although the field is growing, only 3,000 certified green professionals are currently in the United States. Buyers could rightly fear challenges in finding the right contractor when something breaks – few have the patience to wait months for a qualified individual to arrive.

Sustainable Homes Are Being Undervalued: View inside a white-walled tiny house with wooden furniture
A typical tiny home

Other Factors Take Precedence

Consumers value sustainability, but it isn’t their only concern when buying a home. For most people, this purchase represents their biggest investment and they must weigh multiple pros and cons besides eco-friendly options. Other considerations influencing a buyer’s choice and a property’s value include the following items.

1. Home Size

A tiny home may offer the ultimate in sustainability, but it could understandably frighten young buyers who look forward to someday starting a family. Generally, the less total square footage your home has, the more sustainable it will be.

However, demographic changes also influence the search for homes of the right size. For example, more families today are gravitating toward multigenerational living to better manage the high costs of both housing and child and senior care. Older family members can help watch growing toddlers, and keeping grandma close to home makes it easier for caregivers to perform their duties.

2. Neighborhood

The most sustainable house in the world won’t sell for a high price if it’s located in a neighborhood plagued by crime and surrounded by deteriorating properties. Crime and poverty aren’t the only factors that can lower property value. Buyers might also stay away if they deem a community isn’t welcoming and inclusive, the schools are low-quality, or a high number of registered sex offenders live in the immediate vicinity.

Likewise, nearby nuisances can detract from the property’s value. For example, a sustainable off-grid home located in a heavily agricultural area might be downwind of a particularly aromatic farm. The bad odors could drive away buyers.

3. Proximity to Work and Amenities

Often, homeowners who seek sustainability first and foremost live relatively far from the madding crowds. That’s fabulous for people with the option to telecommute 100% of the time. However, those who face an hour’s commute or more to work each way won’t be likely to cough up the cash for such a model.

Likewise, many people want the convenience of nearby stores and coffee shops. Sustainable homes located too far in the sticks to make walking to the corner store feasible face a harder row when it’s time to sell.

4. Price

Real estate prices might be cooling, but the tumult of the last several months has already made homeownership an impossible dream for many.

Even those who play by the rules, scrimp, save to maintain good credit, and come up with a downpayment find they can’t compete with corporations and investors willing to pay cash. Such investment firms rarely plunk down the big bucks for sustainability options – they’re more interested in properties they can turn around and immediately rent for profit.

5. Other Features

The bottom line? Sometimes, other features matter more than sustainability, even among buyers who value going green. One person might need a three- or four-car garage to park their toy collection. Another might seek acreage and yours doesn’t have the expanse they want.

Climate Fatalism Is a Thing

One final, dismal reason people undervalue sustainable homes is because of climate fatalism. The problem seems overwhelming and unsolvable to many, especially among younger generations who comprise the first-time homebuyer pool. Many of them feel it is too late to fix climate change – so why bother paying more for an eco-friendly abode?

There’s little sellers can do to overcome a buyer’s melancholy at the state of the world. However, they can arm themselves with statistics that show all is not lost – and address how encouraging more people to choose sustainability can halt global warming.

Why Are Sustainable Homes Undervalued?

Most consumers say they’re willing to pay more for green options. If that’s the case, why are sustainable homes undervalued?

Many possible factors are playing into the price discrepancy. The best that savvy sellers can do is educate their agents and prospective buyers by emphasizing the immeasurable value that comes from doing their part to protect the environment while reaping energy savings.

Rose Morrison

About the Author

Rose is the managing editor of Renovated and has been writing in the construction industry for over five years. She’s most passionate about sustainable building and incorporating similar resourceful methods into our world. For more from Rose, you can follow her on Twitter.