Starting January 1st, 2018 all Portland home sellers are required to pay a new mandatory fee and have an energy audit done on their home before advertising it for sale.
Here's a look at what the new policy is, and how it will impact buyers and sellers once it's in place.
What Is the New Mandatory Energy Score?
The new mandatory Home Energy Score program will be very similar to the home energy audit program the Energy Trust of Oregon is phasing out. A trained and licensed energy assessor will visit homes to look at all of the systems in place. This includes windows, insulation, furnace, water heater, ducting, appliances and the home's overall envelope. The assessment will provide a home ranking, estimated energy use, and list of upgrades that would make the home more energy efficient. The energy assessor will just be looking at the home's systems, not past utility bills. This process will be very similar to standard home inspection a home buyer typically has done once they're under contract with a home.
The assessor will upload all of the data they collect into their online system while they are at the home to provide an instant report once they are completed. This report is a 2 page document that will be uploaded by real estate agents in the MLS system for prospective buyers to view.
What's included in the report?
Ranking from 1 to 10: First and foremost, your home's report will have a big number at the top between 1 to 10 (10 being the best and 5 being the average score) that is it's energy efficiency ranking compared to homes within a 2 mile radius. From everything I've read to understand this number, it feels incredibly vague and unhelpful. Because the score is solely based on homes within a 2 mile radius, it's near impossible to know what this score really means. A standard home surrounded by old portland homes with old systems and minimal insulation would get an exception score, while that same home surrounded by newer construction would get a low score.
Estimated Energy Costs: The report will provide an estimated annual dollar figure for gas and electricity to heat and run the home. This includes energy costs to heat water, but not the actual water or sewer costs.
Estimated Carbon Footprint: Similar to the 1 to 10 ranking, a sliding scale graphic shows where this home's carbon footprint ranks compared to the average home. It will also provide an estimated figure for the annual tonnes of carbon it will take to run the home.
Recommended Updates: The report concludes with a list of recommended energy upgrades to the home and estimates annual savings from completing the upgrades. These recommendations can range from fairly minor items like improving the sealing of the home to major updates like new windows throughout. I have been told that all recommended updates on this list have to have at least an estimated payoff within 10 years.
Who pays, and who has to have it done?
Portland is requiring anyone who will be publicly selling their home which has four or fewer dwellings to have an energy assessment done. This is an assessment that is paid for by the seller of the home, not the buyer like homeowners are typically used to seeing for all other inspections. The energy assessment has to be completed prior to a home being publicly marketed for sale.
What will it cost?
The cost of the assessment is purely speculative at this point as licensed energy assessors will be able to set their own price. A very similar program is already in place in Austin, Texas and costs range from $100 to $300 depending on the company and size of home. We expect pricing will start high and come down as more companies and energy assessors get licensed over time. As of right now, roughly 100 energy assessors have been licensed by the city while Portland area sees on average 4,000 new homes come to market each month during the summer.
What are the benefits?
For buyers: Buyers will have more insight into what their utility bills will cost with each home. While Portland is already fairly progressive, this initiative could help spur even more focus on the fight against emissions and energy waste. New home owners will have a list of upgrades they are armed with to decide if there's anything they want to do to decrease their carbon footprint and monthly expenses.
For sellers: Sellers that already have an energy efficient home will have another arrow in their quiver to market and stand out from the pack. They'll also have a list of energy upgrades they can choose to take on as an opportunity to try to increase their score.
How Will This Impact Home Sales?
The impact of Portland's new home energy scoring remains to be seen, but it could be large. Anyone interested in buying your home will be given a two page pamphlet that provides a score from 1 to 10 comparing your home to your neighbors, estimated energy costs and carbon footprint, and a long list of recommended improvements that will make your home more energy efficient. In theory, this is good. Buyers should have more transparency into what their energy costs will be and given a list of energy updates they can decide if they want to take on after buying the home.
Here are some of my concerns:
- This is a new requirement and item for home sellers to add to the list in what can already be an expensive process to sell their home. To get top dollar in selling your home there can already be costs in repairs, updating, cleaning, staging, and freshening your home.
- Buyers are often already paying for this service in a home inspection. A good home inspector outlines the home's systems and what upgrades could be made for better energy efficiency. They will point out how well the home is sealed and where it can be improved. They show the buyers if the home is insulated and make recommendations. This will bring more clarity to some buyers, but there is a lot of overlap with what a home inspection already provides.
- The overall home score feels vague and hard to apply. It compares the home to other homes within a 2 mile radius; it's hard to know where you stand when you don't know who the competition is.
Whether someone does or doesn't like the new initiative, it will officially be in place January 1st, 2018 and they will have to have an audit done before marketing their house. The best thing sellers can do is make sure they are ahead of the pack and they not tripped up this. I'm making sure any sellers we work with have an assessment on the books well before taking their home to market.
It's never too early to be prepared! If you're planning a move, I'd love to answer any questions you have and give you my ideas of what you can do to maximize the value of your home.
Here are links to Portland's site with more info along with the non profit that is helping with this agenda: