A Fair Market Value Alternative to Energy Codes


Fair Market Value

magnifying glassThe fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts. United States v. Cartwright.

Should Every Home be built the same way?

CookYes, means each home buyer has the same needs and the type of home. Think about a floor plan that involves a garage under part of the home, and a home that does not.

Yes, means each builder using a prescriptive code must do the same things with the same components. All walls have R-13 insulation or R-13 inside and R-5 continuous insulation.

No, means two different home buyers can measure the amount of energy efficiency they want and are willing to pay for. Think about home buyer #1 that moves to town for work, with the probability that there will be a work transfer in 3 – 5 years.  Compare that to home buyer #2 that owns his own business and will live in the home for 10 years or longer. Each could possibly have a different need for energy efficiency.  Both could decide they need the same level of energy efficiency.

DraftingNo, means each builder can choose the approaches and levels that make sense for their business plan.  Builder A may choose to build with special attention to the Thermal Enclosure, and standard efficiency mechanical systems. Builder B may choose to concentrate on high efficiency mechanical systems and not the Thermal Enclosure.  Builder C may choose to do both.  All thee builders could end up with the same HERS Index. Three ways to get the same Index Score.

How does the HERS Index on a Home provide this flexibility?

RESNETFirst, the HERS Index allows both Home Builders and Home Buyers to compare the energy use of different choices made by builders and the needs of the buyers.  It does this without making them become Energy Geeks.  This brings President Reagan’s advice in diplomacy, home to each home buyer.  ‘Trust, but Verify!’

Second, the HERS Index enables the appraiser to properly account for the value of added energy efficient features in a home. The Appraisal Institute’s Green Appraisal Addendum can provide the proper information for the appraiser to find actual comparable homes.

BDThird, the HERS Index reduces sales pitch to a verifiable, and measurable scale for everyone involved in the Real Estate transaction.  There are enough other factors that must be considered.  It is a fair way for both builders and buyers to reduce the stress of the process.

Fourth, the HERS Index is something arranged by the builder and the buyer. It does not require additional government employees or spending to implement.


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