Home Sellers Must Prove Energy Efficiency

State and local governments look to homes and builders in their bid to decarbonize.

Home for SaleAs we reported in last week’s blog post, “Five Promising Developments for Decarbonization,” a growing number of state and local governments are targeting building emissions to reduce their carbon footprint. This push for decarbonization will only accelerate. In the move toward decarbonization, targeting buildings – both commercial and residential – is low-hanging fruit. It’s not just new construction, but existing construction as well, with home sellers in one jurisdiction now required to measure their home’s energy efficiency before putting it on the market.

Selling Your Home? Great, Prove It’s Efficient

New high-performance homes, including Energy Star, Net Zero, and HERS-rated homes, come with a numerical score or certification documenting that the home is energy-efficient, but most existing homes won’t. It can be difficult to know the energy performance of an existing home unless it undergoes an energy audit. And if your jurisdiction aims to tackle carbon emissions, a good place to start is with existing builds, which is why requiring existing homes to document energy-efficiency data makes sense.

Effective January 15, all homeowners of one- and two-family homes in the city of Minneapolis are required to collect energy efficiency data before they can list their homes for sale as part of the city’s broader effort to cut greenhouse gas emissions. Homeowners can either choose to have an inspector collect the data during the mandatory pre-listing evaluation or get an energy audit to document the home’s performance. The ordinance doesn’t require that homeowners or homebuyers make any infrastructure upgrades, but the hope is that having the information will inspire the sellers to make the needed upgrades.

How Extensive an Audit?

The inspector will evaluate the home’s windows, heating system, attic, and wall insulation. Inspectors must drill a two-inch hole in a wall of the home to measure the wall insulation levels unless it was built after 1980. The inspector will then compile the data into an energy score ranging from zero to 100, with more efficient homes getting a higher score. Homeowners will also have to pay for the audit, which could cost $170 – $250, with no-cost evaluations available to those with incomes below the median income of roughly $63,500.

According to the city’s 2013 Climate Action Plan, residential properties are responsible for 20 percent of emissions. Much of the city’s housing stock was built before 1960, and about 70 percent of homes do not have adequate insulation.

Why It Matters

As more jurisdictions look to cut carbon emissions, buildings will be at the top of the list for emissions-reduction, and the best way to reduce building emissions is improving energy efficiency. Making energy efficiency upgrades improves the performance of the homes and also increases their value. In requiring homeowners to document energy efficiency, Minneapolis is elevating the importance of efficiency in reducing carbon emissions and will likely inspire many homeowners to make much-needed energy efficiency upgrades before selling their existing homes.

Buyers looking for a property that is already energy-efficient may prioritize new construction over existing construction, especially if the existing homeowners choose not to make the needed improvements. Moreover, other jurisdictions may model their own energy retrofit efforts after the city’s, which could inspire a boost in energy retrofit activity and ultimately get them closer to their overall goal of cutting greenhouse gas emissions.

While it remains to be seen what impact the requirement will have on the market, any effort to inspire energy efficiency and reduce carbon emissions is a laudable one.

Stacy Fitzgerald-Redd is the Director of Communications for North American Insulation Manufacturers Association (NAIMA).