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Legislation Introduced for EE and Clean Energy Investments in Appraisals

May 22, 2024 BuildersGeneralProvidersRaters


U.S. Senator Michael Bennet (D-CO) and Congressman Sean Casten (D-IL) introduced the “Getting Renewable and Energy Efficient Neighborhoods (GREEN) Appraisals Act”, legislation to encourage energy-efficient and clean energy features to be considered as part of the residential home buying, appraisal and mortgage process.

According to the legislation’s sponsors, the GREEN Appraisals Act will help home appraisals accurately reflect the value of clean energy and energy-efficient features of a property, standardize the value of energy-efficient features across the housing market, encourages sustainable building practices, and supports green jobs in the housing industry.

Specifically, under the legislation appraisals will need to consider the energy efficiency characteristics of the property, any renewable energy-related features, estimated energy savings, the energy consumption for the property compared to similar properties, and whether such characteristics are relevant to the market value of the property. It also requires additional educational requirements and training for appraisers for them to qualify to provide accurate green appraisal reports.

The appraisal will rely on energy reports specified in the legislation. The bill specifically recognizes RESNET in producing the energy report stating:

… estimates the expected energy generated from installed renewable energy features; 8 and 9 (C) is conducted … in accordance with HERS by an individual certified by the Residential Energy Service Network, unless the Secretary finds that the use of HERS does not further the purposes of this section …

The bill also directs the Federal Housing Administration (FHA), Federal Housing Finance Agency (FHFA), and Department of Veteran Affairs (VA) to require lenders, when making the disclosures under the Real Estate Settlement Procedures Act (RESPA), to notify home loan borrowers they have a right to request an energy report, as well as a right to provide an energy report to the lender or a qualified appraiser, which must take the energy report into consideration when developing an opinion of value for a home.

The legislation also requires an appointment of an advisory committee to advise the affected federal agencies in carrying out the program, stating:

The heads of the covered agencies shall jointly establish an advisory committee of stakeholders to advise the heads of the covered agencies in carrying out this section, which shall consist of representatives of housing advocates, energy efficiency and renewable energy organizations, energy raters, home builders, architects, single-family mortgage creditors, consumer advocates,  appraisers, and other interested groups.

The sponsors of the legislation commented:

“By cutting energy costs and reducing emissions, energy-efficient and clean energy home upgrades play an important role in our country’s transition to a clean energy economy,” said Senator Bennet. “This bill will help ensure property appraisals reflect the complete value of homes in Colorado and across the nation by accounting for energy-efficient and clean energy investments.”

“When you put a solar panel on your roof or install a heat pump, you add value to your home that must be properly reflected in appraisals,” said Congressman Casten. “This legislation both incentivizes homeowners to reduce their energy costs and helps in the fight against the climate crisis.”

RESNET has joined Appraisal Institute, American Society of Appraisers, National Consumer Law Center, Pearl Certification and Building Performance Association in endorsing the legislation.

Senator Bennet’s office was visited as part of the RESNET Capitol Hill Day that occurred in conjunction with the RESNET 2024 Policy Forum.

To download the legislation go to Getting Renewable and Energy Efficient Neighborhoods (GREEN) Appraisals Act