As I type away today, the sound of construction continues to ring in my ears. But this is not actual “home construction” as one would expect. Instead this is the installation of a solar panel grid atop the Badger Realty building consisting of 48 solar panels. (I know!) This fancy new system is expected to produce on average over 15,000 kWh (kilowatt-hours) of clean electricity each year for the next 40+ years. Needless to say, we’re pretty excited.
It just so happens that there is a Senate bill being reintroduced that is going to have a direct impact on the borrowing capacity of home buyers based on the energy efficiency of their new prospective home. If you ask me (which you didn’t) this sort of thing is long overdue.
The theory behind the bill, is that a home’s energy efficiency translates into direct savings to the home owner. That savings, in turn, would put more money in the pocket of said home owner and therefore allow them to afford more “home”. Now, before anybody freaks out and starts throwing “yeah-buts” my way, we all know that there is more to mortgage affordability than the electric bill. But let’s review some of the meat of this story.
The bill would give lenders the flexibility to calculate the projected energy savings derived from the energy-efficient features or upgrades in the home. The lenders would, as usual, measure the borrower’s income against expenses and the value of the home. This additional “factor” would not only give borrowers the capacity for a larger mortgage, but would potentially lower their interest rates! Ahh, I have your attention now. (Did someone say “money-savings”?)
There are already some programs in place for “energy-efficient” mortgages under a HUD program (Department of Housing and Urban Development), but this new legislation would require the lenders to take the “projected savings” into account whenever they were presented with a qualified energy report. This program would be farther reaching and offer this benefit to a whole new group of buyers.
The bill was originally introduced back in 2011, but didn’t get the legs to make it very far. This time they have removed the penalties for older, less efficient homes and are making deeper appeals to the real estate industry. (Smart move.) Our very own Democratic Senator, Jeanne Shaheen is introducing a more comprehensive energy bill intended to lessen energy use, lower greenhouse gas emissions and bolster the market for conservation upgrades. If this mortgage bill can ride along on those coat-tails, it actually has a good chance of passing.
According to Senator Michael Bennett, a Democrat from Colorado and co-author of this bill, the average household’s energy costs typically total around $70,000 over the life of a 30-year loan. That is more than real estate taxes (usually) and insurance payments that are already taken into account during the origination and underwriting of the loan. It stands to reason that we should be taking a closer look at those factors that actually SAVE the homeowner money.
When a homeowner installs better windows, doors, insulation and other energy-reducing upgrades, the average reduction in energy costs are around 30%. A few weeks ago we talked about what today’s buyers want when shopping for a home, and an energy-efficient home is at the top of the list. The National Association of Realtors reported that 4 of the top ranked home features wanted by buyers were related to energy savings. 94% of buyers stated they wanted energy-star rated appliances, 91% wanted the whole structure to be energy-star rated and 89% wanted (at least) energy-star rated windows.
The key has been convincing buyers to actually PAY for those upgrades. Proponents of this bill are hoping it will help bridge that gap between “wanting” an energy-efficient home and “buying” one. They are expecting this bill will not only promote energy conservation and provide a boost to the construction industry, but also generate over $1 billion a year in consumer savings by 2021.
To put this in perspective, the average borrower could expect to gain about 5% more borrowing power. Clearly this is not going to get you that 3-car garage you were hoping for. But, of the $2 trillion in mortgage loans originated every year, this will have a significant impact. “Considering there are disclosures for termites and radon and that you have an inspector check out your entire home for structural defects, this significant factor has been living in a proverbial blind spot for too long,” noted Badger Realty agent Lee Phillips.
I’m encouraged by this bill. Not just for the financial benefit to potential buyers or even for the indirect benefit to home owners who have made the effort and incorporated these upgrades into their homes already. I’m mostly encouraged that there is legislation in progress that is rewarding energy conservation. I’ll admit, I tend to be a bit of a tree-hugger, but the overall benefit is global, not local. We’re excited about our new solar panel installation and are looking forward to seeing more of this type of upgrade throughout the Valley.
If you were paying attention a couple weeks ago, we talked about some strategies for making a successful offer on a 
Having a professional evaluate the home is also important with inspections as well. Unless you are a professional contractor or builder, having an inspection contingency just makes good sense. On most purchase and sales agreements, the inspection contingencies are standard. It is simply up to you to make sure the correct boxes are checked.
As I mentioned above, there has to be a balance in this whole process. As a buyer, I want to be sure that I’m covered and I’m protecting myself throughout this process. Can I get insurance? Can I get financing? Is that hole in the roof fixed? But from the seller’s perspective, they are going to take the simplest and least complex offer that comes their way. The seller is going to be looking for the contract that is least likely to fall apart. This typically means having the fewest contingencies. The trick is to find the appropriate balance so both sides of the deal are content.
Sure, location is a critical piece in selecting and buying a piece of 
If you are unsure about your future plans because of job instability, actually liking the area or even just because you are thinking of seeing different parts of the country or world, buying a home might not be right for you. At least not right now. There are lots of great rentals out there and there are still going to be a few overall “rules” for real estate that will apply to both renters and buyers. In fact, if you are purchasing a home for the purpose of renting it, these factors will apply regardless of who is calling this house their home.
As much as I hate to admit it, simply because I tend to think the best of everyone, a visit to the local police station is always a good idea. If you have traveled to a few different cities in your days, you know that crime rates are not always obvious right away. An area that looks neat, clean and safe could simply have more savvy criminals. If you can have a few conversations with the locals, you might find out that they don’t lock their doors or their cars. This is certainly more typical in smaller towns, but without asking you wouldn’t know. You can also get crime-rate information about most towns right online.
One of the more frustrating experiences, as a real estate agent, is having a deal fall apart. This can be compounded only if one of the sides of the deal is being unreasonable and making the whole process a challenge for everyone. But personalities aside, appraisals have been a thorn in the side of 
The fewer “extras” you include in your contract, the more attractive it will be. Putting yourself in the shoes of the seller makes this rather obvious. If you had the choice between 2 contracts, but one of them included a full-page addendum to hold all of the contingencies, which one would you be more inclined to accept? Don’t include those tiny repairs or other items that, in the grand scheme of things, don’t impact your out-of-pocket expenses a great deal. The goal here is to make it easy for the sellers to say “yes”.
One of the old stand-by techniques in real estate (actually in sales overall) is the hand-written thank-you note. In this digital world of e-cards, e-mails and online status updates, this personal gesture gets great mileage with anyone over the age of 20. When it comes to presenting your offer, I always encourage the in-person delivery. Granted, here at Badger Realty, we tend to deal with lots of vacation homes and long-distance buyers. That aside, the personal touch of a hand-delivered offer is quite powerful.
If you and I are walking through the woods and we get chased by an angry bear, I don’t have to outrun the bear. I just need to outrun YOU! I learned, long ago, that in order to be successful in most any business, you don’t necessarily have to be the absolute “best” at what you are offering. You just need to be a smidge better than your competition. When you are considering making an offer this spring, take the extra time to put yourself in the seller’s shoes and craft an offer that you yourself would accept. Chances are you’ll escape the angry bear and get the deal.
If you have ever had the experience of returning to an old “stomping ground” after a significant time away, you can appreciate the experience I had this past week. After spending considerable time away from where I used to call “home”, I returned for a visit. While I’m content and excited about my new location, the familiar surroundings and faces that met me on this last visit were a very welcome sight. While new friends, new clients, new scenery and even new mountains are exciting and filled with new potential adventures, it is always nice to come “home”.
I’ll leave you today with two thoughts. First of all, be sure and appreciate those around you. The next time you see a familiar face in the market or on the street, make the extra effort to walk over and say hello. I promise you they will be excited to see you (unless they owe you money!) and you both will feel better for the rest of the day. The feeling of connectedness we share with friends and family simply cannot be replaced.
