Mandatory transparency, not mandatory change
Local Realtors share their take on the Home Energy Score
My name is Mike Tucker. I’m a real estate broker with Windemere Real Estate. I’ve been working in the Central Oregon market for 5 years. I participated in the Working Groups that the Climate Action Steering Committee used to solicit feedback from stakeholders and community members. I am also an Earth Advantage advisor at the state level and have spoken personally with the Portland City staff who oversee the mandatory home scoring program.
I support the Climate Action Plan as it was submitted, and especially the creation of a mandatory Home Energy Score Program.
There is a problem though. A problem I haven’t heard either side of this issue mention. The home energy improvements we are hoping builders and homeowners will implement are largely hidden from view and home features hidden from view are difficult to place a value on. Unlike granite countertops, performance upgrades aren’t seen to by home buyers. This is a market-wide problem and until recently energy upgrades have been challenging to measure and price. Not only are hidden upgrades difficult for Realtors and Appraisers to value they are challenging for us to understand. If these upgrades cannot be valued by agents and buyers, builders and homeowners are not going to be reimbursed for these improvements.
The good news is that technology is allowing us to see and measure home performance in ways we couldn’t just a few years ago. This technology enables us to quantify home performance. If we can measure and compare it we can place value on it. “Home performance” is now just as important as granite countertops and square footage . . . and just as important, the technology to measure home performance is inexpensive, reliable and very easy to apply.
I’m a capitalist and have always appreciated the saying “if you want less of something tax it, if you want more of something incentivize it.” I tend to lean towards less government regulation. But I also see the need to reduce energy consumption, take easy steps towards efficiency, and work together as a community to achieve greater impact.
Buyers don’t want to purchase inefficient homes. They regularly ask me who the better builders are. But currently, there is no easy way for me to show them this. We have no market system that measures and evaluates performance in a meaningful and comparable way, allowing buyers to make an educated purchase. Home scoring prior to sale, when it’s most useful to the buying decision, allows buyers to include home performance in their purchase. This is the step that puts a price tag on energy efficiency and creates the market.
Today, without a transparent marketplace, if a client looking to sell their home said they had $5,000 to invest in the home before listing it, I would never suggest they invest this money in energy performance upgrades because these investments cannot be easily seen and recouped. I would suggest classic improvement like countertops, paint, and flooring because these upgrades can be seen, valued, and recouped. If a mandatory energy scoring program were in place, energy investments would be highlighted in an easy to understand report created by a professional. This report (with a simple to understand home energy score) brings out hidden investments and presents them in a way that is easy to compare and put a price tag on. A mandatory system will create a marketplace where energy performance investments are spotlighted, compared and valued, allowing them to be recouped and incentivized. Mandatory scoring creates a market place. This market place is the key to incentivizing builders and homeowners voluntarily to make energy improvements because they can recoup their investments.
Without a marketplace, when we suggest builders make improvements the market cannot easily put a price tag on, we are asking them to take a financial risk. To reduce the builders’ financial risk and improve market standards, we can take one of two paths. 1) We can mandate a building code increase. Guaranteeing all homes improve at roughly the same price and speed, leveling the risk. 2) Or we can create a market where a builder taking a financial risk on an energy efficient upgrade, will likely multiply their investment because it’s measurable and valued. A transparent marketplace supports these investments and also creates the opportunity for innovators and leaders to be incentivized for their risk. Likewise, poor builders will be penalized by the market place for failing to innovate.
You are considering a third option – asking a builder to take risk inside a marketplace that cannot value and compare the financial upgrade they are investing in. Without market support builders are less likely to see a positive outcome – and we are setting ourselves up for failure and a market that will only innovative if we regulate it. An option I do not want to see!!
The Home Energy Scoring Program creates mandatory transparency, not mandatory change or improvements. It creates a marketplace where Home Performance is measured, compared, and valued. This value incentivizes improvements voluntarily. It is not a tax or regulation.
Mandatory scoring creates a market system where builders can be rewarded for leadership and innovation. The opposite of this approach is to create regulations and new codes to force the bottom of the market to catch up. Mandatory performance scoring, prior to sale, creates a new market that incentivizes and rewards those who build better.
However, asking builders to make improvements without creating a system that supports their efforts and investment, leaves them exposed and vulnerable to loss. Mandatory transparency creates a market that supports risk and innovation instead of masking weak products.
The best part of a mandatory transparency program is these cash incentives will be paid by buyers who want these products, who now own better homes, and have more valuable investments… not by taxpayers.
If you want to see change, incentivize it – don’t regulate it. Let’s use the Home Energy Scoring Program which provides transparency, to create a market that voluntarily encourages innovation and energy efficiency and where builders are financially rewarded for leading the way in energy efficiency.
Mike Tucker / Residential & Investment Specialist
Licensed Broker in the State of Oregon
Earth Advantage Broker / GREEN