Factoring Efficiency into Property Valuation
Mounting financial, regulatory, and environmental pressures in several markets combined with a growing demand for high-performance buildings and sustainable spaces requires real estate decision makers such as mortgage lenders, appraisers, and investors to expand their knowledge and efforts to properly identify, value, and underwrite buildings with energy-saving and sustainable features.
By adequately factoring building energy performance into evaluation processes, real estate practitioners and investors stand to unleash never-before-seen levels of energy savings and sustainable investments with high levels of return that will lower both financial risks and carbon emissions, strengthen bottom lines, and create a better, more secure future for the built environment.
IMT works to make it easier for building owners and tenants to invest in energy efficiency improvements and distinguish their property assets from conventional peers. With this in mind, we develop and deploy innovative methods and resources to help owners and tenants understand how high-performance characteristics and data can be used in the appraisal and underwriting process to more fully maximize valuation. On the other side of the coin, we educate lenders and appraisers to better arm them with information to more accurately and more widely factor energy performance into property financing and valuation.
What does this look like?
IMT collects and analyzes in-the-field feedback on the financial barriers preventing widespread investment in high-performance buildings, and helps develop and promote investment models and tools to overcome these barriers.
IMT provides credible guidance on navigating the growing options of financing mechanisms, such as internal financing; bank loans; GSE and government mortgages; and tax credits; as well as more alternative financing approaches such as Property Assessed Clean Energy (PACE), energy service agreements, on-bill financing, tax-increment financing, and energy performance contracts.
We seek out strong examples of real buildings that showcase how energy efficiency is attainable, affordable, and profitable, documenting and sharing their lessons learned, and work side-by-side with leading appraisal and financing organizations such as the Appraisal Institute, Appraisal Foundation, Fannie Mae, Lawrence Berkeley National Laboratory, and the U.S. Department of Energy to provide guidance how to best to capture the value of green and high-performance attributes.
“The research that IMT did on default rates of mortgages for energy-efficient homes has been critical in us making the case to our members and other stakeholders as we begin to craft a European energy-efficient mortgage scheme. It is our hope that with the successful implementation of this idea we can bring Europe’s home owners greater affordability, while improving quality of life for all and adding data to the story of how energy efficiency mortgages keep people in homes.”
– Luca Bertalot, Secretary General, European Mortgage Federation on IMT’s groundbreaking research that showed owners of energy-efficient homes are 32 percent less likely to default on their mortgages.
To learn more about our work with lenders, appraisers, and investors, visit our Resource Library to access an array of publications and tools.
In addition, we actively seek case studies, suggestions, and partners in growing the market for energy efficiency finance. Contact us today to connect with an IMT expert.