Find green homes in Chicagoland MLS!

It just got easier for buyers interested in green homes to find them!  On Thursday, the Multiple Listing Service that serves Chicagoland (called MRED) released new fields that cover the green features of a home.  

The fields cover general green features of a home, such as if it includes a tankless water heater.  They also cover "dark green" features such as the green-building certification that a home was built to, or the HERS (Home Energy Rating System) score of a home.  Buyers can find the most green details about a home by searching for homes with the new "Green Disclosure" on file.  This optional form includes extensive information from the seller with everything from insulation values to the walking distance to public transit to the products used to promote healthy indoor air. 

The fields and the disclosure is optional.  Once you identify a home that has the disclosure on file your REALTOR can pull the disclosure from the listing record.  Then it is up to you, the buyer, to evaluate if the green features of the home meet your needs, and as with everything else in a home purchase, to validate the seller claims for yourself.

I know these features will prove to be an extremely valuable tool in our market.  The fields will allow sellers of homes with green features to fully promote them, for buyers to find them and for appraisers to fairly evaluate the value that the green features bring. 

Year-end DIY Projects (and a tax credit too!)

Winter has set in for sure just as the final days of 2009 are winding down. If you’ve been by annoying winter drafts this week, I’d suggest you make a quick year-end resolution. You’ll feel more comfortable and earn a quick tax credit in the process!

Each household is eligible for up to $1500 in energy efficiency tax credits for projects done in 2009 or 2010. Here are some tips on a few projects that are doable by the end of 2009 if you’d like to claim part of your deduction right away! These projects will help you earn the tax credit, cut your utility bills, make your home more cozy and appeal to buyers when you go to sell your home.

• Insulation - A big majority of homes in MORE’s market area were built at a time where gas was cheaper than insulation! This means that most homes could benefit from any bit more of insulation that your budget will allow. Attics are the best place to start since heat rises. Be sure to assess attic ventilation to avoid future mold issues before adding attic insulation. You can find qualified insulation contractors through the Better Business Bureau, Angie’s List, etc. Schedule right away if you want to add insulation during 2009!
• Air Sealing - The vast majority of cold air leaking into a home comes from gaps where two different surfaces meet. For example, where window flashing meets the brickwork of the house, or where a water pipe exits from your basement. The notes below describe some quick do-it-yourself steps to do a little air sealing in 2009!

Air Sealing Quick Start Guide

Materials Needed: Insulating spray foam product like Dow’s "Great Stuff" (caulk is helpful as well but better in spring/summer/fall to make sure you have adequate outside temperatures to ensure the best seal)

Where to Start: Unfinished sections of your basement

Cost: Approximately $20 per can or less (Some air sealing products are eligible for the 30% energy efficiency tax credit. To qualify, make sure you get a copy of the "Manufacturer's Certification Statement")

Time: 1-4 hours of work depending on how many areas you have to seal

How To:

• Consult the State of Illinois’ Keep Warm Illinois brochure. The booklet describes how to shop for insulating spray foam and where to use it. It also lists problem areas for air leakage typically found in a basement.
• Look at every place where a vent, pipe or other material passes from the basement to the main level or outside. Follow the instructions to seal the gaps closed.

More projects: Keep Warm Illinois outlines many more air sealing “how to’s” for your main level and attic if you want to seal up your home even more!

Have a happy and cozy New Year!

Saving Energy in the Laundry Room

I know, everyone's favorite topic...laundry (not in my house!).

Okay, so it's not my favorite past-time and probably not yours as well but I did find an interesting article on the National Association of REALTORS site on saving energy (which equals saving money) in the laundry room and thought it made some good points. We can all use some cost saving strategies during the holidays, right?

#1.Use cold water. According to Michael Bluejay (also known as Mr. Electricity), if you switch from just hot to cold, it can cut as much as $215 a year off your electric bill. If you already have a high-efficiency washer the savings would be about half that.

#2. Full loads only. It takes the same amount of electricity to run a small load as it does a large one. If you can scale back by 1/4 you could save about $15 a year. $15 may not sound like a lot but that could buy me three grande frappuccino's so I'm all for it!

#3. Spin it faster. Setting the washer to the fastest spin cycle will reduce the amount of time in the dryer. Cutting the time reduces the amount of energy it takes to dry the clothes.

#4. Clean lint filter and exhaust. If your lint filter is full, it takes the dryer that much longer to dry because it's not running as efficiently. It is recommended to clean the lint filter before drying a load and the exhaust line once a year. I don't think I've ever cleaned the exhaust line but I think it's about time I start!

#5. Activate energy-saving features. If your dryer has an automated moisture sensing device, use it. Hmm, no idea if my dryer has this but I'm going to check it out!

#6. Dry like with like. Some items take longer to dry than others and therefore, extends the drying time for everything which increases energy costs.

#7. Skip it. Hanging clothing to dry outside or a rack inside costs nothing. Well - probably won't work right now in Chicago but come spring I may try it! 

Do you do any of these things already? Have any of these items really made you think about other ways to save energy? Let me know! I always want to hear from you!

Information taken with permission from Houselogic, a website created by the National Association of REALTORS.

Psst...How to Turn that $6500 into $8000

Last Friday was a big day for what we call "move up" buyers.  Not only was the first-time homebuyer tax credit extended, but now many folks who already own a home are eligible for a $6500 tax credit too!  This is really big news for all you HGTV-watching, Realtor.com-surfing,fence-sitting homeowners out there.  (And I know you are out there!)  The tax credit means it just got a little easier for you to take advantage of low interest rates, nice inventory and make your desired move-up a reality too.

So let's just say you go ahead.  Here's the little secret I offer to make the most of that tax credit:  spend as much as you can of it on energy efficiency features for your new home.  You'll earn another tax credit for 30% of what you spend on materials.  The program caps at $5000.  At that top level you would qualify for another $1500 tax credit, bringing you up to $8000 in credits for your family! 

Why start with energy efficiency instead of new appliances or furniture?

• Energy efficiency saves you money...when done right you can save 10-30% on your gas and electric bills. A new couch won't love you back like that!  You can bank the savings to complete cosmetic upgrades down the road.
• Energy efficiency protects the long-term resale value of your home. When you go to eventually resell this home, buyers will be shopping based on features and utility bills. Why not lock in that value right away?
• Energy efficiency means you will enjoy your new home more with less drafts and hot or cool spots. From that sense, being comfortable might even be better than a shiny new flat-screen TV. 

Please check out my 5x10 Challenge program to learn more about the right way to plan an energy efficiency upgrade.  The "toolkit" page outlines the important steps.  You can sign up for my newsletter on the homepage to get free coaching and resources!

If you want the super-condensed, bare minimum, older home, Chicagoland quick answer here it is:  from your $6500 homebuyer credit be sure to budget about...

• $500 for an energy audit,
• $250 for do-it-yourself winterizing, and
• at least $1500 for attic insulation. 

You'll be amazing at the savings just by getting those immediate and important improvements done first.  Every house is different so that's why the energy auditor is important - he or she will be able to give you customized info on how you can save the most money specific to your new home.  And the tax credit requirements are very specific, so be sure to talk to a tax professional to find out which insulating and winterizing materials are covered.

Green Financing Part 2 - Products Available

Part 2 of this post about green loans addresses the types of financing available.  Part 1 outlines the process of gettign green financing which can be found in my earlier post. There are two categories of green loans today.  The first type offers incentives for homeowners to go green.  Usually the benefits are based on how much the homeowner can expect to save on utilities after the .   The second category makes cash available to do green improvements.  Some products are a combination of both options.

Energy Efficient Mortgage (EEM) – New/Remodeled Homes, and Energy Improvement Mortgage (EIM) – For “Fixer-Uppers”/Refinance to Remodel

How they work:  Incentive = Higher loan amount.

How to find them:  EEM/EIM’s are approved by Fannie Mae, Freddie Mac, FHA and HUD so they are available, but not widely used.   Contact your lender.

Pros:  May make buying a state-of-the-art efficient home more realistic, or provide the equity to make one that way.

Cons:  Not appropriate for someone who is most comfortable at the low end of their loan range.

 

Private Green Loans – For New/Remodeled Homes, “Fixer-Uppers”, Refinance to Remodel

How they work:  Incentive = Discounts which vary based on buyer’s credit scores and the extent of the green/energy efficient features.  Certified green homes purchased by buyers with top credit earn the best rates and lowest fees. 

How to find them:  To my knowledge, the players in this space are very limited. Agents who have earned a green designation such as EcoBroker Certified or NAR Green can help.  Or contact me for a list of the three big players in Chicago today.

Pros:  Save money each month on your mortgage payment on top of the discounted utility bills!

Cons:  Limited sources today.

203(k) Home Rehabilitation Loan - For “Fixer-Uppers”

How they work:  Incentive = Equity to complete green improvements.  No energy audit required.  This is a special FHA product for “fixer uppers” and energy efficiency improvements are approved.  The program requires two appraisals, one for the property as-is and another based on planned improvements.  The loan amount cannot exceed $410,000 in Chicagoland and improvements cannot cost more than $35,000.  Additional restrictions apply, so discuss these and the payout plan to your contractors with your lender.

How to find them:  The 203(k) program is approved by FHA and HUD so they are widely available.   Contact your lender.

Pros:  Provides the convenience of one loan to make funding home improvements a reality.

Cons:  The convenience usually comes at a higher interest rate.

To learn more:  HUD website - http://www.hud.gov/offices/hsg/sfh/203k/faqs203k.cfm

Seller Credit for Green Improvements - For “Fixer-Uppers”

How they work:  Current federal underwriting standards allow for a credit up to 3% of the purchase price from the seller to the buyer.  The buyer could request this credit and apply it to green improvements.  The credit still needs to be approved during the standard underwriting and appraisal process.  It is important to involve your lender early on if you are interested in structuring a loan to include a seller credit towards green improvements.

How to find them:  Work with your existing lender if the seller agrees to provide the credit.

Pros:  Use your existing lender and approved interest rate.  Potentially share the cost of energy efficiency improvements with the seller or finance the improvements over the life of your loan.

Cons:  Many approvals to meet.  Need to have good documentation to support the appraisal and show receipts paid.

To learn more:  Contact me.

Green Financing Part 1 – The Process

One aspect of green real estate isn’t quite keeping up - the financing end.  Energy Efficient Mortgages known as EEM’s have actually been around since after Jimmy Carter and the oil crisis!  But it is still pretty rare to find one that has closed in the Chicago area.  Part 1 of this post will explain what a green mortgage is and the steps required.  Part 2 will outline the different green loan options available. This topic has the potential to change a lot so be sure to contact a trusted lender for more information.

Green financing is available for the purchase of a new green home, or to make improvements to what I call a not-yet-green home.  A green improvement loan could apply either for your existing home or to purchase a new home you plan to fix up.

Steps Required

The thing that makes green loans different is that an extra step is typically required - an Energy Audit or a HERS Rating.  An appraisal assesses the value of the home.  An energy audit assesses the energy efficiency of the home.  (HERS stands for Home Energy Rating System.)  In Chicago these tests usually cost at least $400-600 with the HERS Rating being both more thorough and more expensive.  Results help the lender determine how much you can expect to save on your utility bills.  In most cases, the cost of the additional inspection can be rolled into the amount of your loan. 

The process typically follows these steps:

Step 1 – Buyer/home owner completes the Energy Audit or a HERS Rating. 

Step 2 – Lender increases your approved mortgage amount based on projected monthly utility savings. 

Step 3 – The rest of the closing process is similar to a traditional loan.

Tips:

· Plan ahead so you can complete the extra steps in time. 

· To get the best results, don’t ask a lender if they offer an EEM.  Ask the lender if their local office has closed an EEM loan.

 To learn more about Energy Efficiency Mortgages check out these recommended links:

· EcoBroker International -  http://www.ecobroker.com/misc/lenders.aspx

· HUD - http://www.hud.gov/offices/hsg/sfh/eem/eemhog96.cfm

· RESNET (professional association for energy auditors) - http://www.natresnet.org/ratings/overview/faq_mortgage.htm

Even the White House is Going Green!

Inhabitat magazine announced last week that the White House is looking at a remodeling effort to earn LEED certification.  The Leadership in Energy and Environmental Design standard is offered by the US Green Building Council.  (Learn more about green building standards here.) 

These plans by the Obama family follow efforts by Carter and Clinton which focused on energy conservation, and by the first Bush family to introduce solar panels.  If the plans push forward, the certification will make the Obama effort different from the others.  The existing green building certifications require a wholistic approach to new green buildings or remodeling of existing buildings.  To earn LEED certification the White House will have to significantly improve energy efficiency and the quality of the indoor air throughout the property.  This takes a focused effort beyond the more one-product solutions previously introduced at the White House. 

Whether you live at 1600 Pennsylvania Avenue or not, this wholistic look at home improvement is the smart way to enjoy your home more, save money, and cut utility usage. 

Stay tuned for updates on the efforts to make the White House green!

Got a Clunker in Your Kitchen?

If you've been wondering what buyers are going to think about your appliances when it comes time to sell your home...now just might be the right time to make some updates. 

Beginning late fall, rebates of up to $200 will be available if you upgrade to more efficient ENERGY STAR refrigerators, dishwashers and washers.  (Stoves, ovens and dryers are not rated by ENERGY STAR.)  Each state was given funding by the Federal government to cover the rebates.  States have until October 15th to define their rebate plan.  I'll post an update when the Illinois plan is available.

It's a great opportunity to save money, cut your monthly energy bills and invest in the long-term resale value of your home!

In the meantime, you may be able to take advantage of ComEd's Smart Ideas Appliance Recyclingprogram.  They will pay you $25 and haul out that outdated beer fridge burning electricity in your basement!  It's a great program that I took advantage of myself! 

The "So What?" about Certified Green Homes - Part 2

In my previous post I outlined the similarities and differences between the most popular third-party certified green home standards.  This post follows up with the all-important question, "So what?"

For a home buyer, there are many advantages to purchasing a certified green home.  First, it gives you the confidence that the home really was built to be green, and is not just a marketing claim made by the builder.  (There are stories out there about homes with a few ENERGY STAR appliances being advertised as "green".)  And when it comes to resale, it gives you something concrete to pass on to your buyers to assist in the marketing of your home, and most likely earn you a higher sales price.

For additional insights into the benefits for a certified green home, I asked the builders of the two new green homes in Elmhurst.

The LEED-candidate home was built by Linda Marick of LINDAM PROPERTY GROUP.  She explained that she opted to build a certified green home because it helped her create a better product.  "Green building is the future," she explains.  "LEED's position was not to wait for local building department to set green standards and then play catch-up.  They decided to define those standards."  Using the checklist gave Marick a jump-start on best practices for construction that she was able to incorporate into the home.  "It really is a state-of-the-art home," she says."LEED inspired me to lead."

The NAHB home was designed and built by Styczynski Walker & Associates.  Bill Styczynski is president of the firm and was the lead architect on the project.  He is also a trained verifier for NAHB projects outside his firm.  He explains that both the LEED and NAHB standards take a wholistic approach to green building.  They both require a unified focus on how water and energy efficiency conservation, lot planning and indoor air quaility come together to create a green home.  "You really have to have all of these to be 'green,'" he explains.  He finds that the wholistic approach to certification is especially useful for consumers.  "Homebuyers often just focus on part of the picture, like indoor air quality or energy efficiency," says Styczynski.  The certification tells a homeowner that every aspect was addressed, even if they pay most attention to just one part of it.

A third-party green certification is a useful tool for homebuyers to find the right home, as well as to explain important features when it comes time to sell the home.  Be sure to ask your home builder about certification details if you are shopping for a new green home.  

Understanding Certified Green Homes - Part 1

Green building has been around for some time for commercial buildings.  Now we are starting to see it take off on the residential side.  For example, in my local market of Elmhurst two green homes just a few blocks from each other popped up on the market almost simultaneously.  They each were built using a different residential green building standard.  It sort of begs the question...what are these green standards all about, and what's the difference to me as a home buyer?

Part 1:  An overview of the most popular certifications

• The US Green Building Council offers the Leadership in Energy and Environmental Design standard, known as LEED for short.  The LEED for Homes webpageprovides details on the program.   
• The National Association of Home Builders (NAHB) offers the National Green Building Program.  More details are available on their What Goes Into a Green Home? page.
• The US Environmental Protection Agency/US Department of Energy offer the ENERGY STAR Qualified Home program.  Details can be found on their Energy Efficient Home Features page.
• Cities around the country are offering their own programs as well.  For example, The City of Chicago offers Chicago Green Homes certification. 

The programs each work a bit differently.  For the most part, LEED and NAHB are fairly similar.  They both define a green home through some common concepts.  Then the builder has to set a plan in terms of how the house will be both designed and built to achieve required and optional points in available categories.  The labels are a bit different for each, but LEED and NAHB share several common categories.  For both, projects must address water and energy conservation.  They both require attention on ventilation as well as the materials brought into the home to encourage healthy indoor air quality.  And they both require a thoughtful process around how the specific home is planned and built on its site to reduce the amount of resources required to build it, protect existing vegetation and rain runoff and encourage energy efficiency.   

For both LEED and NAHB homes, the builder must work with a trained, third-party verifier.  The role of the verifier is to review project plans or the building itself to confirm that the green steps the builder says he or she took were actually put into place.  Both programs offer different levels of certification.  And in both cases, certification comes after the house is complete.  Sometimes verification can take up to a year.  It is also possible, and not entirely uncommon, for a house to not earn enough points to actually earn a certification. 

In Elmhurst, the new green homes include a custom home built to achieve NAHB Gold certification, and a spec home built to LEED Silver certification. The family of the custom home moved in on Earth Day.  The home earned it's NAHB Gold certification the next day.  Both homes were recently featured on Chicago Magazine's "Deal Estate" real estate blog.

The City of Chicago green home certification uses similar categories to LEED and NAHB and relies on City staff to verify certification.

ENERGY STAR Qualified homes go through an entirely different certification process.  The program looks exclusively at the energy efficiency of the home as well as the quality of this aspect of the build.  The key difference is that these homes are evaluated primarily based on a third-party energy audit which provides measurable stats on how efficient the home is.  While ENERGY STAR is different from the other certifications it is still closely linked to them.  The other standards either require or provide points for an energy audit, and many homes built to one of the other standards also apply to earn ENERGY STAR certification. 

To offer a more complete solution, the EPA has recently rolled out a sister certification to ENERGY STAR Qualified homes. Now new homes can also earn the Indoor Air Plus certification which address indoor air quality.

The number of certified green homes is growing.  Information about the certification can be a valuable tool for home-buyers as it means an independent party can back up the claims by the builder that the home was built green.  More information on how a green certification can help home buyers in my next post.