"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.
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.