Valuation 2011 Fourth Quarter

From the desk
of the president
ONpoınt

By Joseph C. Magdziarz, MAI, SRA

BY NOW I HOPE YOU’VE HEARD that the Appraisal Institute has released a form intended to help analyze features and values of energy-efficient homes. It is the first of its kind intended for appraisers’ use.

The new Residential Green and Energy Efficient Addendum is another example of how the Appraisal Institute is the industry leader in green valuation. AI issued the form as an optional addendum to Fannie Mae Form 1004, the appraisal industry’s most widely used form for mortgage lending purposes.

Currently, the contributory value of a home’s green features is rarely part of the equation. This addendum will help the industry standardize the way residential energy-efficient features are analyzed and reported.

The Appraisal Institute’s new form allows appraisers to identify and describe a home’s green features, from

06 VALUATION FOURTHQUARTER 2011

AI’s new ‘green’ addendum leads the valuation profession ENERGY EFFICIENT

solar panels to energy-saving appliances. Form 1004 devotes limited attention to energy efficient features, so green data usually doesn’t appear in the appraisal report, or it is included in a lengthy narrative that often is ignored.

The addendum also will make it easier for appraisers to determine whether recent home sales should be used as comparable sales.

The Appraisal Institute hopes that lenders, home builders, real estate agents and homeowners will take advantage of this new tool. Mortgage lenders who want to see energy features analyzed should request the green addendum to be included with Form 1004. AI also encourages lenders to provide the green addendum to homeowners so they can fill it out and provide it to their appraiser. If a new home is being appraised, home builders can use the addendum to provide data to appraisers. Real estate agents also can use the data to help populate the MLS.

The Appraisal Institute long has been at the industry’s forefront as a leader in green valuation, and it has

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