Getting a Green Stamp of Approval — Does It Pay?

Discussing LEED certification on a construction site Among other things, green home ratings help you figure out which eco-friendly improvements make sense for you. Image: © Masterfile

Will a green certification improve your home’s value and resale prospects? We think yes—if you live out west. It’s a growing trend, with more buyers seeking a sustainability seal of approval.

The big three ratings are:

  • the National Home Builder’s Association (NHBA) rating, and
  • the LEED for Homes certification from the U.S. Green Building Association.

If you live on the West Coast, these certifications (plus some local ones) will add to the sale value of your home, even in the current sluggish real estate market. In other parts of the country, we think not—or at least not yet.

As with many cultural trends, this one is spreading across the country from the West Coast. Portland, Ore., has led the way, including green certifications in its six-county Northwest MLS listings since 2007. I dug up a report that analyzed three years of that data, finding that green-certified homes in Portland fetched 9% to 10% more per square foot and sold 20% faster than non-certified homes.

Real estate sales in Seattle showed similar advantages, with certified homes selling for 9.1% premium per square foot and selling 24% faster. What’s more, certified homes increased in value while non-certified homes lost value. Not too shabby.

As a former West Coaster, I know there’s plenty of green home interest in San Francisco, Los Angeles, and San Diego, and I expect that many California cities will soon follow the Pacific Northwest’s lead.

But the Remodeling Futures Program at Harvard University’s Joint Center for Housing Studies found no comparable green bonus in other parts of the country. I suspect that green buyer awareness hasn’t yet moved east, and that, along with a weak real estate market and hefty certification fees, makes a quick return on your investment a long shot if you’re not on the West Coast.

How much are the fees? NHBA’s program fees range from $2,000 at the entry level up to about $28,000 for its emerald rating. A LEED entry-level certification starts at $6,400 while the platinum-level rating can cost $38,000.

Resale value aside, green home ratings do offer other benefits:

  • They help you decide which green options make the most sense. (All green home choices involve tradeoffs: What helps a family with teenagers save water differs from what works for empty-nesters.)
  • The changes you make for a certification can trim home operating costs—or at least offset rising costs—especially in the areas of energy and water.

Are buyers in your area interested in certified green homes? Does your MLS listing carry information about sustainability ratings? Are local real estate agents specializing in green homes? Let us hear from you!