One of the nation‚Äôs largest professional associations of real estate appraisers recently released a form intended to help analyze values of energy-efficient home features.
An industry leader in green valuation, the Appraisal Institute issued the form as an optional addendum to Fannie Mae Form 1004, the appraisal industry‚Äôs most widely used form for mortgage lending purposes. Used by Fannie Mae, Freddie Mac and the Federal Housing Administration, Form 1004 is completed by appraisers to uphold safe and sound lending. Currently, the contributory value of a home‚Äôs green features is rarely part of the equation.
According to the organization, the Appraisal Institute‚Äôs addendum allows appraisers to identify and describe a home‚Äôs green features, from solar panels to energy-saving appliances. Form 1004 devotes limited attention to energy efficient features, so green data usually doesn‚Äôt appear in the appraisal report, or it is included in a lengthy narrative that often is ignored.
Appraisal Institute President Joseph C. Magdziarz, MAI, SRA, points out that the Appraisal Institute‚Äôs form also will make it easier for appraisers to determine whether recent home sales should be used as comparable sales. Sales that are truly comparable are key components in determining a property‚Äôs value.
‚ÄúWe hope lenders, home builders, real estate agents and homeowners will take advantage of this new tool,‚ÄĚ Magdziarz says. ‚ÄúMortgage lenders who want to see energy features analyzed should request the green addendum to be included with Form 1004. We also encourage lenders to provide the green addendum to homeowners so they can fill it out and provide it to their appraiser. If a new home is being appraised, home builders can use the addendum to provide data to appraisers. Real estate agents also can use the data to help populate the MLS.‚ÄĚ
For more information, visit www.appraisalinstitute.org.