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What to Know About Home Energy Scores

DAILY REAL ESTATE NEWS | WEDNESDAY, DECEMBER 06, 2017

More cities are requiring home energy scores to be shared with home buyers. This information allows consumers to learn how much energy a home will use, what that energy will cost them, and how efficient the home really is.

Portland, Ore., is the latest city to require a Home Energy Score for most home sales, joining other cities like Berkeley, Calif., and Austin, Texas. These scores, developed by the U.S. Department of Energy, are being included on more public listings across the country. They give sellers credit for investments in energy efficiency and allow buyers to get an idea of their potential energy bills and plan for future upgrades. Starting in 2018, listings for most single-family homes and townhomes in Portland will be required to disclose a Home Energy Score.

As the Home Energy Score becomes more common, Peter Kernan—Home Energy Score adviser with Enhabit, a nonprofit focused on home efficiency—offers these key facts to real estate professionals:

• The score is based on the physical characteristics of a home, not the homeowner’s energy use. Also, by adjusting for climate and utilities, homes are compared only to other homes in the region.
• The score ranks homes on a 1-10 scale, where 5 represents the average home and 10 represents the most energy-efficient homes.
• The score attempts to takes the guesswork out of repairs that might make the home a more attractive listing, by recommending cost-effective ways to improve home performance for homes scoring 5 or less.
• Offering this information may boost sales regardless of the actual score. A study by Earth Advantage found that when sellers listed their home energy costs, the listings sold for 3 to 5 percent more and spent 18 fewer days on the market than homes that did not offer this information, even if the disclosed costs were high.
• A lower score doesn’t mean the home is poorly built—many beautiful, well-constructed homes receive a 4 or less, Kernan says. The score is an indicator of opportunities for future ownersto make improvements to reduce energy use. The home energy report includes a prioritized list of energy upgrade recommendations that offer the quickest return on investment.
• Kernan also suggests encouraging clients to work with an authorized, licensed home energy assessor to ensure the assessment and score are calculated accurately.

Source: Enhabit