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What is the Appraisal Institute's Green and Energy Efficient Addendum?

The Appraisal Institute’s Residential Green and Energy Efficient Addendum is a standardized form designed to assist appraisers in accurately evaluating homes with green or energy-efficient features. This addendum ensures that such features are systematically documented and considered during the appraisal process, leading to more precise property valuations.

Purpose and Importance

As sustainable building practices become more prevalent, homes increasingly incorporate features like solar panels, advanced insulation, and energy-efficient HVAC systems. Traditional appraisal forms often lack dedicated sections to capture these enhancements, potentially leading to undervaluation. The Green and Energy Efficient Addendum addresses this gap by providing a structured format to record and assess these features.

Key Components

The addendum encompasses several critical areas:

  • Third-Party Verifications: Documentation of certifications such as LEED, ENERGY STAR, or the National Green Building Standard (NGBS).

  • Energy and Water Efficiency: Details about insulation types, HVAC systems, water-saving fixtures, and other efficiency measures.

  • Renewable Energy Systems: Information on solar panels, including ownership status, capacity, and energy production estimates.

  • Indoor Environmental Quality: Data on ventilation systems, air quality measures, and materials used that impact indoor health.

  • Site and Location Attributes: Considerations like proximity to public transportation, walkability scores, and landscaping that affects energy use.

Who Should Complete the Addendum?

While appraisers can fill out the form, it’s often beneficial for individuals with direct knowledge of the property’s green features to complete it. This includes builders, architects, energy raters, or homeowners who have undertaken energy-efficient upgrades. Providing a thoroughly completed addendum to the appraiser can facilitate a more accurate valuation

Benefits

  • Enhanced Valuation Accuracy: Ensures that energy-efficient and sustainable features are appropriately valued.

  • Informed Decision-Making: Provides lenders and buyers with comprehensive information about the property’s performance and potential cost savings.

  • Market Differentiation: Highlights the property’s unique features, potentially leading to a competitive advantage in the market.

Accessing the Addendum

The latest version of the Residential Green and Energy Efficient Addendum (Form 820.05) is available for download on the Appraisal Institute’s official website:  .

For those seeking guidance on completing the form, the Appraisal Institute also offers a detailed instructional guide:  .

Utilizing this addendum can play a crucial role in ensuring that the full value of green and energy-efficient features is recognized during the appraisal process.