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Green building costs not always included in home appraisal

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"We had to go back and strip out some energy features like the solar water heaters and cut back on insulation and add square footage, making it bigger and less [energy-] efficient to get to the $400,000 appraisal," says Mr. Chandler, owner of Chandler Design-Build. "Houses that are dramatically more efficient than normal, on average cost $15,000 to $20,000 more than houses built to code standard, but that's not being reflected in the appraisals."

A good example is the way home insulation is valued by a conventional appraisal. Inexpensive fiberglass batts that meet the minimum required by building code are usually estimated to have the same dollar value in a house as more expensive but highly effective foam insulation, although the batts can jack up the monthly cost of operating the home.

"The appraisal industry needs to have well-accepted mechanisms with which to upgrade the values of energy-efficient properties, much like they do with granite countertops or hardwood floors or fireplaces," says Mark Nuzzolo, owner of Brookside Development in Woodbridge, Conn.

Education to address the issues

The Appraisal Institute, a nonprofit educational and professional organization whose members account for more than a quarter of the nation's 100,000 appraisers, is beginning to address the issues. It has developed several courses and seminars as well as a green certificate program for appraisers who want to qualify.

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