Equipping your home with a geothermal system and solar panels may appear to be a major plus point when it comes time to sell your home, but will it really make a difference to potential buyers?
Most of today’s home buyers like to hear about a property’s LEED certification, solar panels, geothermal systems, and Energy Star rated appliances. Likewise, today’s property developers and sellers like to tell potential buyers about their property’s green features, because of the monetary expense they have invested to upgrade the property. But do these features really affect the way a buyer feels about a property? Will they be willing to pay more money for a property – and can the green features of a home actually make a sale?
Can green features get buyers to part with more cash?
Home buyers spend extra money for features of a property that they can physically feel and show off to impress family and friends, a media entertainment room, spa bathroom suite, chef’s kitchen. Most buyers will probably have reservations about paying extra for a property’s features that are concealed or are not easily appreciated, such as a new boiler, plumbing system, or roof.
The green features of a property are somewhere in between. There is a certain appreciation and cool factor for a property’s solar panels or environmentally friendly smart phone controlled thermostat. If a home’s green features have a cool factor a buyer will be willing to pay extra for the property. However, if a property has green features that fail to excite a buyer, such as a concealed air filtration system, they are not likely to spend more than they would for a similar property that lacks the features.
Money saving green features
A home with green features that fails to excite is unlikely to result in a buyer spending more money to purchase the property. But, if the home is equipped with green features that will save the owner money in the future or in the short term, potential buyers are likely to be more interested.
When it comes to the resale of a property, it is unlikely that the seller will recover the full cost of investment in green features, such as solar panels or environmentally friendly thermostats. Like a redesigned kitchen or upgraded bathroom, the cost is built into the total value of the property. This presents a situation that is very beneficial for buyers, as they can reap the benefits of a green feature and any cool factor at the same time.
New builds: including green features or not
For new builds, the potential buyer needs to make a very detailed cost versus benefit breakdown of including any green features. Developers usually offer a choice of floor plans and custom features to buyers, including geothermal systems for heating and cooling a property. The extra cost of these systems is usually around $50,000; however the federal government offers tax credit that immediately returns $30,000 to the buyer. The initial cost of the system is also usually included with the cost of the mortgage, so the buyer is not required to make any initial investment of cash.
The energy bills of a property with a geothermal system are hundreds of dollars lower than that of a property without the feature, so within 5 years the buyer would recuperate the cost in energy bill savings.
However, the decision to include green features for the extra investment is a personal and financial decision for each individual buyer. If a buyer does not plan to be living in the property for the long term they may feel that they will not benefit from the saving in energy bills, and that future buyers will not be willing to pay extra for the feature, especially in a slow housing market. Buyers that plan to spend a long time in the property, or want to commit to being environmentally friendly with their home, may feel differently about including green features.
A growing market
A growing niche of the housing market is willing to spend extra on green features, and are less concerned with the cool factor or cost saving of the feature. While the cost saving is a bonus, their concern for the environment drives their decision making.
It is ultimately a personal decision that each buyer should consider, the environmental impact and cost saving and how they influence your real estate decisions. One thing you can be sure of is that green features are here to stay and will become increasingly important in the housing market.
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