Wednesday, April 28, 2010

Going Green: Does It Make Cents?

With Earth Day just a week behind us, we've heard a lot of talks on the importance of going green. Washington is even pushing the trend on homeowners through tax credits and incentives. However, homeowners need to understand if it is in their best interest and realtors should advise accordingly.

The issue is pretty simple. Homeowners can save money on the upgrades due to the tax credits and incentives but they can only save a portion of the costs and most of the upgrades savings stop at $2,000. That is a drop in the bucket for a green upgrade. But the real problem is that many appraisers across the country are not on board. The majority of appraisers are not including green upgrades in the value of the home because markets are not looking for them. Unless buyers want these upgrades for the sake of having them, many homeowners won't act unless they can recover the majority of the costs in the sale of their home.

DC has removed the $2,000 cap for "qualified solar expenditures" so markets in which solar panels are worthwhile can take full advantage of the tax incentives. However, there are few markets in which solar panels are worthwhile and socially acceptable. There are even fewer where appraisers are adding value of the panels to the value of the home. In markets such as these (many of which are in California), it would be relevant to urge your clients to upgrade their homes. At the end of the day, as it is with any upgrade, it is important that the upgrade is analyzed from a financial perspective and not simply from a social awareness perspective.

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