HERS Index: What It Means for the Future of Home Buying and Selling

Why should you pay attention to the HERS Index?

Well, as personal finance experts state, a home is the biggest purchase you’ll ever make. Don’t mess it up.

That not only entails looking for value, but also buying a home that’s built for the future. This is where home energy efficiency comes into the picture.

As we talked about in our HERS Index guide, a home’s HERS score indicates the energy efficiency of a residence. The higher the score, the less efficient the home is. A score of zero is excellent, and means the home is a net zero home.

Why does this all matter to the future of home buying and selling? Let’s dig a little deeper and see what the research and trends say. You’ll see the major role the HERS Index will play in home buying and selling.

HERS Index and the value of homes

If you’re selling and want to know how to get your home ready for sale, most realtors will tell you enhancing energy efficiency increases value. And if you’re buying and want a home that will hold long-term value, they’ll tell you to examine home energy efficiency.

That should tell you something right there.

At Brite Homes, we’ve done some more research. After all, we build zero energy ready homes in Florida. Our design and construction center around optimizing energy efficiency and comfort. To ensure our homebuyers are making a great investment, we spend time consulting with home appraisal experts.

“Home appraisers will begin appraising home energy efficiency in 2023,” states Robert Kociecki, President of Brite Homes. “They tell us energy-efficient homes could have 10-15% higher resale values.

That should make you say “Wow!” But it’s not surprising.

In fact, home energy efficiency already correlates to property value. Even in the 1970s, when energy efficiency first became a common element of homebuilding, research from Energy Star shows energy-efficient homes have a higher resale. For instance, Energy Star found in 1978 that the value of energy-efficient homes was $3,248 higher than inefficient homes.

Flash forward to today, and you can find the same sort of correlation. As research from NerdWallet shows, upgrading a home’s energy efficiency with better insulation, appliances, and windows can increase your home’s resale value by 2-6%. Clearly, it pays to improve things like your HVAC system.

When you make such upgrades, what you’re doing is increasing your home’s HERS score. Remember: A HERS score signifies how efficient a residence is. But why is the impact on home value so great?

As HERS ratings experts in Nashville explain, utility bills account for 20% of the cost of owning a home. If a home achieves greater energy efficiency, a large chunk of homeownership costs can get eliminated. That creates value.

It’s more than energy savings. Homes with superior energy efficiency feature exceptional construction quality.

For example, zero energy ready homes, which score near or at zero, feature the highest quality materials and craftsmanship. This equates to fewer issues, such as a faulty AC or leaky roof, and fewer nights in discomfort. Living green means you can live a lifestyle of comfort and luxury.

As required by the Department of Energy, zero energy homes feature:

  • Air-tight construction
  • Excellent indoor air quality
  • Superior insulation and window performance
  • Super-efficient HVAC systems and appliances

Green home builders, such as Brite Homes, have been making great progress. As technology, design, and construction quality improve, energy-efficient homes will only become more comfortable and enjoyable. The HERS score will even serve as a reflection of the quality of life within the home.

HERS Index and the future of listings

Whether you plan to sell or buy a home, pay attention to the HERS score. It will only become increasingly important in the future. Look at the chart below from the Appraisal Institute, the nation’s largest association of professional real estate appraisers:

For similar homes in the same area, a HERS rating difference of 20 points equates to a $10,000 difference in value

Considering such findings, it’s easy to see why there’s a push to make HERS scores mandatory for housing listings. As a report in Green Builder Advisors describes, high-performance builders have long complained that appraisals don’t incorporate enough data on energy-saving features.

Making HERS scores visible will give buyers and sellers more insight into the true value of the home. Because outside of solar panels, determining a home’s energy efficiency can prove difficult.

As RESNET Executive Director Steve Baden states, “Many of the features that make a home energy efficient are hidden behind drywall and aren’t obvious to home buyers. Our goal is to make information, such as the HERS score of a home, visible in the appraisal so that consumers have more facts available to make their decisions.”

Currently, 2 million homes in the United States have HERS scores. If you’re selling a home with a good HERS rating, it makes sense to advertise that. Because savvy buyers will ask about it.

If you’re shopping for a home, it makes sense to inquire about it. It directly affects the value of the property and the quality of life you’ll get inside. As an article in Reator.com notes, look at HERS data because homes with good HERS scores are more comfortable, healthier, and cost less in yearly expenses.

The good news is RESNET has been working hard to get HERS Index data into MLS and real estate platforms. They’ve been collaborating with such platforms and real estate appraisers to auto-populate the data.

Their efforts have paid off. A 2019 Realtors and Sustainability Report found 69% of realtors believe energy-efficiency promotion is very or somewhat valuable for listings. 59% said clients had at least some interest in sustainability.

As you can see, HERS Index data should be on the top of your mind if you plan to buy or sell a home. It’s a key piece of information that will determine the return on your most important investment: Your home!

Buying a Brite home today secures your profit in the future

As we detailed in our blog post on the HERS scores of Brite residences, one of Brite’s homes in Palm Coast provides the household with annual utility savings of $1,133 (relative to the average US home). Over a decade, that’s $11,330.

Do you know that that home’s HERS score was?

It was -16, making it an energy positive home! The Palm Coast residence produces more energy than it consumes. Those sorts of savings make zero energy homes more attractive to buyers.

Industry research backs this up too. A National Association of Home Builders survey found that homebuyers will pay an additional $8,728 if the home shows it reduces energy costs by $1,000 per year.

 

Live in one of Brite’s zero energy ready homes in Florida! Save money and the planet—and enjoy a lifestyle of ultimate comfort and luxury.

So, are you ready to greet the future of home buying? Live in a home with a high HERS score. Live Brite!

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