Many of you know that our company was recently reorganized under the banner ‘Veritas Valuations, Inc.’ We are blogging once again and starting out with a bang by interviewing Ms. Sandra Adomatis, SRA. She is a nationally recognized expert on matters related to green buildings and technology with over 25 years of experience.
Ms. Adomatis teaches for the Appraisal Institute and has published articles in The Appraisal Journal, a peer-reviewed journal relied on for guidance by more than 20,000 real estate professionals. She has also written or co-authored several books. Ms. Adomatis owns and operates Adomatis Appraisal Service in Punta Gorda, Florida. You can read more about Sandra and the services she provides on her website.
Exclusive Interview With Green Building Industry Expert, Sandra Adomatis
I interviewed Ms. Adomatis via email over the course of several days to gain some perspective of the current state of the green building industry and future possible trends. Here’s what she had to say.
Tell us a little about yourself and how you came to be involved in the valuations of ‘Green’ homes and buildings?
My introduction to green homes was by surprise. A lender asked me to do a final inspection on a new construction that had been appraised by another appraiser. This was normal for them to have a different appraiser on the final. The owner was already occupying the property and I called her to make the appointment. Upon arriving, I was sitting in the car reviewing the appraisal improvement section before approaching the front door. The owner came to the door and said, “you do know this is a green-house, don’t you?” Well, I looked at the appraisal and up at the house and so brightly stated nothing in the appraisal said it was to be painted green and it was not green.
The owner happened to be the builder also. She was quick to reply that she knew I did not know what I was doing when I appraised the house. I explained I did not appraise it but would love to have her explain what made her house green. We went inside and she began the lecture on the qualities of the home and what they meant to the owner/occupants. With each new fact, I asked how can you prove it or how would an appraiser know such facts. She gave me my first review of a HERS report and a Green Score Card. From that day forward I began studying everything I could find to learn more about this fascinating new building science. LEED classes online were the first things I did.
Soon after that first encounter, the builder and I developed a 3-hour seminar where we took 27 local appraisers into a green home under construction and gave them a hands-on lecture. It is not hard to get excited about green construction when you learn the benefits it has to the owner. Most appraisers taking green courses from me say it is refreshing to learn something new.
What are some of the common construction features that characterize a ‘green’ home or commercial building?
A green building will have characteristics in six elements of green building. Those elements are site, water efficiency, energy efficiency, indoor air quality, materials, and operations and maintenance. These elements would be found in commercial or residential green buildings.
A newly constructed green building would be designed to take advantage of the site’s orientation, maximize the green space, and minimize negatives. Alternatively, a code-built building is typically not designed with the site’s characteristics in mind to the same degree as a green building.
Green buildings will implement more water and energy saving mechanics, appliances, and technology. In some areas, you will spend a little more to gain efficiencies, but the higher cost may be offset in other areas. Some items can serve two purposes. Solar photovoltaics systems do not make a building green but they can generate the electricity needed at a site.
The materials selected can affect the water, energy, maintenance, and indoor air quality of the structure. Choosing good quality materials that are recyclable, durable, and have low emitting materials are the best choice.
Some green buildings are certified by a third party organization that uses a points-based score sheet to qualify the building for a particular green standard. Not all buildings that are built green seek a certification.
Appraisers must carefully consider the construction details of the building, ask questions about the details of construction, and establish the efficiencies and their benefits to the owner. A good place to start is to take the Appraisal Institute’s Green Courses in their Professional Development Program.
You’re obviously passionate about the topic of green buildings. Of the construction features you discussed, is there a ‘typical’ feature that seems to provide the highest return on investment?
The highest return for the dollar spent is in energy efficient features. Studies that have been done around the U.S. show that energy efficiency is important, it is measurable, and if you can measure it, you can value it.
If a house is built with energy efficiency as a goal, the additional cost is affordable and the benefits are many. Homes that are built this way are healthier overall because you should have a better indoor air quality including moisture control. The biggest benefit is monthly savings and “comfort,” a word that people understand and want in not only their clothes but their homes. That means the air is balanced with no hot or cold rooms.
Energy efficiency means implementing natural daylight to minimize the need for artificial lighting. People are more productive and suffer from less depression when natural daylight is implemented. Replacing old fixtures and light bulbs are a quick and easy payback for the money invested in any existing home. Commercially speaking, investors and energy analysts suggest replacing light fixtures that have a 2 year or less payback period to recoup what you spent.
Replacing light fixtures was the first thing I personally did 9 years ago when purchasing an existing home. The lower utility bill was noticed immediately.
How broadly are green principles being adopted in current construction trends and within the field of ‘Green Valuation’, what specific services does your firm provide that would be useful to our readers?
All around the country we are seeing building code changes that are adopting greener standards. In some areas, the building code will meet some shade of green.
We have totally confused the market with so many different third-party green rating organizations. The typical consumer has little knowledge of how to distinguish a green-built home from a code-built home.
Unfortunately, the same is true for real estate professionals including sales agents, appraisers, lenders, and even builders.
The marketing of truly green properties requires agents that can market the benefits to attract a buyer willing to pay for them. Too often, the green-built property is not marketed appropriately and ends up selling at the same price as a code-built property. Does this sale truly meet the definition of market value?
That was clearly a problem in the two studies of green homes we did last year in Northern California and Virginia. When the marketing brought out the green features and benefits, the prices did reflect premiums. Interviewing the agents involved in the listing or selling of the green homes was enlightening. They often said they had no idea how to define a green home or explain the benefits. So, how can you sell it for more if you have no clue what you are selling?
Commercial investors are ahead of the residential home buyer in understanding the benefits because they see it in the income and expense side of the property. Unfortunately, that is not even discussed on the residential side when marketing the home.
Builders are willing to add some green features if they feel the market will pay for them. The code is pushing them to incorporate energy and water efficiency, two elements of green building. Even a small state like Rhode Island is starting to develop green standards and future goals of 1,000 MW installed clean energy by 2020.
Americans need to look at energy and water efficiency as a resource. The less we use them in our buildings due to new building techniques and mechanicals, the less fossil fuels we use.
As for the specific services, my business model has changed dramatically in the past 9 years as I became more involved in the energy and green organizations around the U.S. Prior to the green movement, I was involved in residential and some smaller commercial valuation services. That included litigation and expert witness testimony. Now, my business does more consulting with builders, other appraisers, real estate agents, and various organizations on marketing, education, reconsideration of value when mortgage appraisals ignore green construction, and studies on various green aspects of homes and solar photovoltaics.
The last couple years, much of my time is spent presenting and speaking on green valuation. I’ve done some key notes for conferences and been involved in panel discussions on the topic of valuation.
We want to thank Ms. Adomatis for taking the time to answer our questions about the Green Building Industry. If you have further questions, you can contact her here.