The Challenges of Green Home Valuation in Massachusetts

My newest report of the high-performance home sale market of 2013 will feature some surprising statistics regarding Massachusetts real estate sales professionals reporting of green-home features.

We are fortunate to have one of the top ten multiple listing services, the data base that agents use to detail home features, in Massachusetts. Many people don’t know that the Multiple Listing Service (MLS) is actually a network of approximately 900 independently owned organizations in the U.S. that vary widely in how home data features are recorded. The predominant MLS in Massachusetts is Multiple Listing Service Property Information Network (MLS PIN) located in Shrewsbury, Massachusetts. MLS PIN was one of the first MLSs to adopt specific green fields in their database in 2009.

MLS PIN’s green data fields include several fields for listing agents bringing a high-performance home to market. For a developer that has hired a real estate agent to bring their green home to market, it is important that the listing agent accurately enter all of the homes features accurately in the data base. Inaccurate representation of a home’s green features are problematic for a variety of reasons. Over stating the homes energy features is known as ‘green-washing’ a opens all of the parties in the transaction to potential litigation; under-reporting of the homes green features is marketing opportunity lost to a growing audience of home buyers searching the data base for energy efficient homes built with sustainable products.  Under-reporting of data also can make valuing the home accurately by real estate appraisers and underwriters a challenge.

In my upcoming report, I discovered a substantial amount of evidence that both under-reporting and over-reporting of a home’s green features was prevalent in Massachusetts real estate sales of 2013.

MLS PIN offers a listing agent an opportunity to note if a home has been green certified by independent third party certifying institutions. When a listing agent checks the ‘Yes’ box asking if the home or condominium has been green certified, a drop down menu allows the agent to check if the certifications is Energy Star Home Certified, LEED certified, NGBS certified, or Other (See Remarks).

I first discovered there might be a problem of under-reporting when I was searching form green condominiums for a buyer earlier in the year. When I searched for available green certified condos, I realized that there were units not appearing in the search although I knew that they were, in fact, green certified. I decided to investigate this issue more closely for my 2013 report.

I discovered that there was evidence that supports for every one green certified single-family home accurately recorded in Massachusetts in 2013, 1.5 was under-reported. For condominiums sales, evidence of accurate reporting by listing agents was even worse, for every one condo accurately recorded two were not.

There was also evidence that the MLS PIN data field ‘Solar Features’ was over used by listing agents. Evidence suggests that this field may have been inappropriately used 39% of the time in 2013, up from 28% that I reported in my 2012 study.

Given that the signs of a vigorous high-performance home market are taking hold in Massachusetts, real estate agent education about the accurate use of MLS PIN’s green data fields seems in order. Evidence suggests that real estate sales professionals need an immediate update on the high-performance home systems. Quite frankly, real estate agents and brokers should have a deep understanding of all aspects of a home that they are selling. Those agents that are not taking the responsibility to increase their awareness of features of a home’s energy efficiency are a challenge that must be faced in our industry.