Maureen Megowan's Blog

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Just how Complicated can we make things???

Just how Complicated can we make things???

There is a new bill in Congress, titled the SAVE (Sensible Accounting to Value Energy) Act, being considered that would require appraisers and loan underwriters to assess the economic impact of energy costs in calculating a homes value or underwriting the costs of home ownership when making a loan.

The new rule would be effective for any new loan made by the Federal National Mortgage Assoc. ( Fannie Mae ), The Federal Home Loan Mortgage Corporation ( Fredie Mac ) or the Government National Mortgage Association ( GNMA) .

For houses with significant energy-efficiency improvements already built in and documented with a professional audit such as a home energy rating system study, lenders would instruct appraisers to calculate the net present value of monthly energy savings — i.e., what that stream of future savings is worth today in terms of market price — and adjust the final appraised value accordingly. This higher valuation, in turn, could be used to justify a higher mortgage amount. This is estimated that it could have an affect in increasing a homes value of up to $10,000.

Since appraisals are so subjective in nature anyway, this whole approach seems to me to be a total , and expensive, waste of time . 

For the full article, see http://www.latimes.com/business/realestate/la-fi-harney-20111030,0,6407654.story 

For more information about Palos Verdes and South Bay Real Estate and buying and selling a home on the Palos Verdes Peninsula, visit my website at http://www.maureenmegowan.com . I try to make this the best real estate web blog in the South Bay Los Angeles and the Palos Verdes Peninsula. I would love to hear your comments or suggestions.

Comment balloon 22 commentsMaureen Megowan • October 30 2011 10:12PM

Comments

Maureen, I agree! What a waste!!  I wonder who authored this bill??

Posted by Sonja Patterson, Texas Monthly 5-Star Realtor Recipient for the Hou (Keller Williams - BV) over 7 years ago

I have heard of this as well and about flipped!  Terrible waste of time for an already complex and frustrating process.  If they want to factor in energy costs for purposes of qualification, why not just reduce the maximum qualifying ratios slightly instead?  For example, if the housing ratio can only be 29% max currently, just make it 28%.

Posted by Ed Gillespie over 7 years ago

This is clearly an example of people in charge who don't understand what they are doing and have power and a different agenda than the one they purport to have. My father would have said: "They just don't understand the problem!"

Posted by Craig Cooper, Creating-Preserving-Growing Wealth in Real Estate (Chase International Real Estate) over 7 years ago

What does Congress know about the housing market, or real estate? That's what I want to know.

Posted by Pamela Seley, Residential Real Estate Agent serving SW RivCo CA (West Coast Realty Division) over 7 years ago

The more that congress steps in, the more in messes things up.  Plain and simple.

Posted by Steve Warrene, Pittsburgh Real Estate Investment Specialists (Your Town Realty) over 7 years ago

@#1 probably someone that paid a good lobbyist , a big campaign donation and got a congressman on their side

Posted by Fernando Herboso - Broker for Maxus Realty Group, 301-246-0001 Serving Maryland, DC and Northern VA (Maxus Realty Group - Broker 301-246-0001) over 7 years ago

Seriously!!?  What a waste.  More burden on the appraisers, more cost for the consumer and more time waiting for loan committment.  Real estate moves the economy.  The powers that be need to aquire some common sense and stop creating roadblocks to our recovery.

Posted by Barbara Tattersall, GRI (Keller Williams Realty Metropolitan (Keene,NH)) over 7 years ago

The housing market is a hot topic & we're coming up on an election year...strap on your seat belt because all kinds of useless legislation initiatives will be proposed by those looking to get re-elected in order to get media face-time.

Posted by Charlie Dresen, Steamboat Springs, CO e-Pro (Steamboat Sotheby's International Realty) over 7 years ago

I read a similar story in the Washington Post Real Estate section the other day, along with a bunch more ignorant advice about real estate. Appraisers would have to review energy bills, etc, and it's all guess work. The amount of energy a househols uses varies on what the weather is outside. They have so many more important issues to work on, yet they spend time trying to fabricate excuses about why they thing we need this bs.

Posted by Jeff Pearl, Full Service Full Time Realtor (RE/MAX Distinctive / LIC in VA) over 7 years ago

All I can say is getting rid of all acronyms in government would probably SAVE lots of money!

Posted by Gary L. Waters Broker Associate, Bucci Realty, Fifteen Years Experience in Brevard County (Bucci Realty, Inc.) over 7 years ago

Maureen, I agree! What value does factoring in energy costs have to do with the value of a home.

Posted by Michael Setunsky, Your Commercial Real Estate Link to Northern VA over 7 years ago

Maureen just when you think you have seen it all, something like this appears.  What's next: how close you are to a bus stop to figure transportation costs.

Posted by Shay Campbell, Raleigh, NC (Universal American Mortgage Company) over 7 years ago

The nonsense is what got us into this mess to begin with along with not enforcing the nonsense as well. Whoever comes up with this stuff does not frequent the subject arena is all this proves...definition of insanity at work here...thank you

Posted by Richie Alan Naggar, agent & author (people first...then business Ran Right Realty ) over 7 years ago

Sounds more like big governmant getting in the way of progress, AGAIN.

Posted by Bob Zorechak - ABR, GRI, e-PRO, Sells Homes in Morris/Somerset/Hunterdon Cos., NJ (Keller Williams Realty Metropolitan) over 7 years ago

Perhaps HOW they are going about addressing these issues is the problem.  But I doubt those that believe in "green" living and technology and believe that what they have spent in improving their "green" capacity and improvements within their home would agree that this issue is a waste.  We cannot be for our country saving energy and living more "green" and then not make adjustments to the supposed rewards and reward systems that result.  Again, maybe the actual administration of this topic is suspect.  But I applaud that the topic of energy and energy savings is coming to the forefront ...

Gene

Posted by Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi, 708.921.6331 - 40+ yrs experience (NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656) over 7 years ago

Sorry, I don't agree! Builders and sellers are investing money into energy efficient features and buildings and they need to be confident that these type of investments are being calculated into the appraisals. This has been a big problem for green builders and those that have chosen to spend more money for items in their homes that save money and energy and then don't get the credit because the appraisers are not taking it into account. I applaud the effort to help make energy efficient features value added.

Posted by Christa Ross, Helping you buy and sell Pittsburgh's Best Homes (RE/MAX Select Realty - REALTOR and Green Homes Specialist) over 7 years ago

All part of the green-agenda...that's where we pretend to do everything we can to save the planet. What a joke and a waste.

Posted by Karen Fiddler, Broker/Owner, Orange County & Lake Arrowhead, CA (949)510-2395 (Karen Parsons-Fiddler, Broker 949-510-2395) over 7 years ago

The cost of energy is high and heading higher. Utility bills in many parts of the country are a significant cost to home owners. It's just common sense, not some secret agenda. If your house is highly energy efficient you will have more money available to pay your mortgage. It's pragmatic for appraisers to account for that in their review. I think we would do better by having an energy analysis based on past history with the utility, but an appraiser should be able to assess some basics like whether there are insulated windows, modern HVAC system, etc.  We use MPG ratings on our cars and efficiency ratings when we buy appliances. Why should a house have less information?

Posted by Dave Roberts (Healdsburg Sotheby's International Realty) over 7 years ago

Christa,

I agree that energy efficient improvements to a home are great, especially if they have an economic pay back, but my point is that to require appraisers to go through this complicated net present value analysis of the increase in value of the home due to energy savings is just a waste of time,  and implies that the appraisal value is more accurate than it is.  Energy efficiency should just be another of the subjective adjustments that an appraiser makes in adjusting other sales comps in determining the value of the home.

This is just another example of the government stepping into an area they do not understand.

Posted by Maureen Megowan, Palos Verdes Real Estate Blog (Remax Estate Properties - ) over 7 years ago

Everytime The Federal Gov't gets involved you can bet there will be pain.  I am a big fan of turning over power back to the State gov'ts.  My local gov't knows so much more about my market and the needs of local people than Feds do.

Posted by Maureen Fukumoto, Maureen (Help-U-Sell Realty Pro) over 7 years ago

What a complete and utter wast of time and energy. An appraiser has enought to complete without having to become an energy auditor. I would love to know who sponsored the bill if anyone could email it to me.

Posted by Scott Godzyk, One of Manchester NH's Leading Agents (Godzyk Real Estate Services) over 7 years ago

And how complicated would THAT be? I have an appraiser in the office. It would be a nightmare for her.

Posted by Erica Ramus, MRE, Schuylkill County PA Real Estate (Erica Ramus - Ramus Realty Group - Pottsville, PA ) over 7 years ago

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