Portland Area Real Estate Appraisal Discussion

November 8th, 2017 5:45 PM

Portland Home Energy Score

Due to a new City ordinance, on January 1st, 2018 most homes listed for sale in the City of Portland are required to first obtain a Home Energy Score.  Our sister company, A Quality Measurement now offers this service.  Portland’s policy is unique in that sellers are required to obtain the energy score prior to listing the home for sale.  This can be a burden to sellers, but it is a benefit to buyers who want to purchase a home that uses less energy.  The question that always comes up is, “If I get a low score, will my home sell for less?”  I have two thoughts on this.

1.  The Home Energy Score is like the miles per gallon (MPG) rating of a car.  We all know that a car with a lower MPG rating is not necessarily less valuable than one with a high rating.  For example, a luxury SUV may have a very low MPG in relation to a compact car.  However, it is also likely that the luxury SUV will sell for more money.  A low score does not necessarily equate to a low value.

2.  On the other hand, a home with a lower energy score might sell for less.  If two homes are equal except that one uses less energy, we can expect that a well-informed buyer will pay more for the more energy-efficient home.  A long history of scientific (and unscientific) studies link a buyer’s willingness to pay more for a home that uses less energy.  However, most such studies involve new homes where buyers are more likely to have information about estimated energy consumption.  Now buyers of used homes in Portland will have the information and scientists, appraisers, and real estate agents will be watching to see what happens.  Here is a link to a blog post where I go into more detail about existing studies.

Did I leave anything out or do you want to join in the conversation?  Let me know in the comments below.

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Thanks for reading,

Gary F. Kristensen, SRA, IFA, AGA


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