Bringing Transparency to Real Estate Transactions

April 22, 2015 | Leonard Kolstad

Suppose you’re a first-time homebuyer interested in purchasing a quality home that won’t saddle you with high utility costs. Or perhaps you’re an experienced buyer who’s passionate about the environment and wants a home that uses small amounts of energy and water. Where should you turn to make an informed home purchase?

Buyers need a centralized location where they can shop for homes and examine a range of attributes from efficiency characteristics to details on square footage and cosmetic amenities. Historically the Multiple Listing Service (MLS) has been that place, and as interest in green homes rises, it is of growing importance to market a home’s sustainable features in MLS listings. Here in the District of Columbia, we are taking steps to green the MLS. Supported by a grant from the District Department of the Environment (DDOE), IMT has partnered with Elevate Energy and Metropolitan Regional Information Systems (MRIS)—the local MLS serving the District—to increase the transparency of real estate transactions and ensure that the green attributes of homes are displayed.

We have just published a report, Greening the MLS: Bringing High-Performance Homes to Light in the District of Columbia, based on our 2014 findings from real estate market research on the supply and demand for high-performance or green homes, and we are excited to share some interesting results. Among the key findings:

  • Homes for sale with populated green fields in MRIS have consistently outperformed homes without listed high-performance features.
  • High-performance homes exist in each of the District’s 21 zip codes, and in 2013 they accounted for 18 percent of total residential homes sales. What’s more, six District neighborhoods—Cathedral Heights, Georgetown, Howard, Brookland, Brentwood, and Capitol Hill—were identified as “hot spots” due to their relatively high concentrations of high-performance homes.
  • Record-low inventories of homes for sale in the District may be limiting the volume of high-performance home sales, as well as Realtors’ interest and engagement with existing green fields in MRIS.
  • Between 2008 and 2013, only 14.8 percent of expected high-performance home units were listed on MRIS using third-party verified green fields. Nevertheless, this percentage is significantly higher than the industry benchmark of 3-5 percent.

So what now? The report makes a few recommendations for next steps to catalyze the market for high-performance homes in the District. One critical need is to standardize the frequency and manner in which third-party programs such as LEED and ENERGY STAR report high-performance home statistics to MRIS. It is also important to incentivize builders, perhaps through rewards in the building code or permitting process, to share documentation of third-party certifications in an MLS-friendly format.

Outreach and education are also vital next steps. DDOE and MRIS should engage organizations including the DC Sustainable Energy Utility, Greater Capital Area Association of REALTORs, U.S. Green Building Council, and National Association of Home Builders, and then jointly develop an educational campaign on high-performance homes, first targeted at the six District “hot spots.”

The first public-private partnership of its kind, our report is only a baseline assessment of the District market for high-performance homes, but we will continue to analyze and hopefully catalyze this market. Here are our goals for the remainder of 2015:

  • Continue researching high-performance home sales in the District, as well as the use of location efficiency and energy efficiency fields in MRIS
  • Develop a plan to facilitate the process of uploading home energy cost data from a local utility into MRIS listings
  • Organize roundtables of stakeholders to discuss the District’s high-performance home inventory, reporting high-performance home data to MRIS, and green field usage
  • Develop a sustainable market engagement model for high-performance homes in the District

The District is a very accommodating environment for high-performance homes, and especially for retrofits of existing homes. Consumer demand for high-performance homes exists throughout the city. In addition, MRIS is a national leader in bringing transparency to MLS listings and has recently added a new batch of green fields to its database.

On a larger scale, a national movement is underway to green the MLS. The National Association of Realtors, in partnership with the U.S. Green Building Council and other leading organizations, has created the Green MLS Tool Kit, a project designed to make green home information and performance more visible in the marketplace. Other cities looking to expand their inventory of high-performance homes should consult this valuable resource while also keeping an eye on the groundbreaking activities occurring in DC.

Meet the Author

Leonard Kolstad

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