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Energy Audit Can Raise Your Home Value

A home energy audit might not be at the top of your to-do list, but if you’re getting your home market-ready, here’s why you should make it a priority.

If you’ve ever been in the market to buy or sell a house, you’re probably familiar with a few key questions when it comes to utilities. Septic or sewer? Oil or gas? And how much will it cost to heat and cool this place?

The answer to those questions can affect the final offer, because what buyers want to know is, how much will this place really cost me? The monthly mortgage payment is one consideration, but ongoing maintenance and utility bills are also part of a smart consumer’s equation.

In other words, an energy-efficient house is an attractive house. So while a home energy audit might not be at the top of your to-do list when getting your home market-ready, it should be. In fact, in some states, an energy audit is required before selling a home.

Energy labels for homes exist — LEED (Leadership in Energy & Environmental Design) and Energy Star, for example — but you don’t need an official (and sometimes expensive) title to reap the benefits of efficiency. What you do need is an energy audit from a reputable provider who can measure your home’s performance. Is it drafty? How’s the HVAC? Is the insulation effective? Think of this as the equivalent of a miles-per-gallon rating for your home.

With that in mind, here’s how an energy audit before selling a home can boost your property’s value when it’s time to sell.

1. Show you where to put the money

A home energy analysis, such as the Home Energy Rating System Index, provides a detailed report regarding energy problems and fixes. Results in hand, you’ll know where to put your home improvement dollars, making your home more attractive to prospective buyers.

2. Lower utility bills

Once you know where to make cost-effective fixes, you can pinpoint the ROI on those upgrades, large or small. Repairing caulking, say, or sealing a fireplace may be key to reduce your monthly energy bills. Alternatively, a bigger investment, such as replacing old windows, could cost more upfront but make a bigger impact on the value of your home overall.

3. Competitive advantage

A theoretical buyer looks at two similarly priced houses in the same neighborhood. House #1 has an energy bill of $1,000 per year; House #2 clocks in at $3,000. The math is simple: Over the course of 10 years, House #2 would cost $20,000 more. For a 30-year mortgage, that’s a difference of $60,000. Which is more appealing to buyers? Memo to sellers: Be House #1.

4. Increase purchasing power of potential buyers

It may sound wild, but energy-efficient homes can actually leverage a homebuyer’s purchasing power if they apply for an energy mortgage. These mortgages work in two ways: A homebuyer adds a sum — say $4,000 — to a mortgage loan to finance energy-efficient upgrades. Though the monthly payments are higher, they’re offset by the new energy savings. Or buyers may qualify for a bigger loan if they can show that lower energy costs offset what they’d spend on a higher monthly mortgage payment.

5. Boost your market value

According to the Residential Energy Services Network (RESNET), the market value of a home increases by $20 for every $1 decrease in annual energy costs. The result, says RESNET, for homes that are highly energy-efficient, could equate to an increased value of up to $10,625 compared with other comparable properties. Another study showed that in California, the value of a home increased by 9% ($34,800 for the average home) if it had energy labeling.

6. Improve indoor environments

Increasingly, homebuyers are seeking out homes that tout indoor air quality and home emissions as amenities. Energy-efficient homes tend to get checks in these new must-have boxes. With a cleaner HVAC system, fewer allergens and pollutants enter the home; and an efficient house is less polluting. Plus, ultimately (whether you care about being green or not), homes that cool and heat rooms effectively are simply more comfortable.

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