When valuing green buildings, real estate appraisers’ analysis must be supported by market data on the subject property that helps explain why it stands out from its conventional peers, according to guidance issued today by the Appraisal Institute and the Institute for Market Transformation.
Seeking to assist owners who retrofit an existing building or build a new one with energy-efficient features, the two organizations issued “Green Building and Property Value A Primer For Building Owners and Developers.”
“As owners and developers enhance buildings with energy-efficient features, appraisers can help make the case for green appraisal value,” said Appraisal Institute President Ken P. Wilson, MAI, SRA.
According to the organizations’ guidance, because these buildings with energy-efficient features are different from traditional ones, owners have had to change not only how they design, build and market, but also how they approach financing and construction processes. Otherwise, owners may pay for green — with certifications, capital improvements and marketing — and not fully realize the expected market benefits.
Moving beyond the value that accrues to owners from rents, operational savings and market recognition at sale, the guide helps building owners and developers understand the appraisal process and how green, high performance characteristics and data can be used by appraisers to help fully maximize valuation.
The Appraisal Institute’s and Institute for Market Transformation’s guide also includes sections on:
• Leading Indicators (local market, comparables, incomes and expenses, tenant demands, costs).
• Four Components of Value and How Green Fits In (revenue, occupancy, operating expenses, risk).
• Navigating the Appraisal Process (internal valuation, refinance, sale).
• Talking to Lenders.
• Getting an Appraisal That Values Green (helpful interventions by the building owner).
• Owner Checklist for Appraisals.
• Green Asset Value: Positive Considerations and Downside Risk.
“The Appraisal Institute encourages building owners to work with appraisers who are experienced in the area of green valuation to help ensure a credible, reliable opinion of value,” Wilson said. “Building owners can help their cause by providing as much data as possible to the appraiser, along with any relevant market research.”
For the full report see here.
Seeking to assist owners who retrofit an existing building or build a new one with energy-efficient features, the two organizations issued “Green Building and Property Value A Primer For Building Owners and Developers.”
“As owners and developers enhance buildings with energy-efficient features, appraisers can help make the case for green appraisal value,” said Appraisal Institute President Ken P. Wilson, MAI, SRA.
According to the organizations’ guidance, because these buildings with energy-efficient features are different from traditional ones, owners have had to change not only how they design, build and market, but also how they approach financing and construction processes. Otherwise, owners may pay for green — with certifications, capital improvements and marketing — and not fully realize the expected market benefits.
Moving beyond the value that accrues to owners from rents, operational savings and market recognition at sale, the guide helps building owners and developers understand the appraisal process and how green, high performance characteristics and data can be used by appraisers to help fully maximize valuation.
The Appraisal Institute’s and Institute for Market Transformation’s guide also includes sections on:
• Leading Indicators (local market, comparables, incomes and expenses, tenant demands, costs).
• Four Components of Value and How Green Fits In (revenue, occupancy, operating expenses, risk).
• Navigating the Appraisal Process (internal valuation, refinance, sale).
• Talking to Lenders.
• Getting an Appraisal That Values Green (helpful interventions by the building owner).
• Owner Checklist for Appraisals.
• Green Asset Value: Positive Considerations and Downside Risk.
“The Appraisal Institute encourages building owners to work with appraisers who are experienced in the area of green valuation to help ensure a credible, reliable opinion of value,” Wilson said. “Building owners can help their cause by providing as much data as possible to the appraiser, along with any relevant market research.”
For the full report see here.
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