Will House Hunters Pay for Green?

Jun 02 - Record, The; Bergen County, N.J.

Solar panels to create electricity. Thermal tubes to heat the water. A rain barrel to collect water for the lawn and vegetable garden.

All these conservation-minded improvements have helped Steve Tesoriero of Ramsey and his family feel more self-sufficient, do their part to save the Earth and cut about $2,000 -- an estimated 45 percent -- off their annual energy bills.

"There aren't that many costs you can control," said Tesoriero, who owns an environmental consulting firm called Renewable Resources. "You can at least get a handle on your energy expenses."

Now the Tesorieros have put their home on the market, raising a question: Will buyers be attracted by -- and pay more for -- these improvements?

It's an issue that goes beyond the Tesorieros' 3,800-square- foot, four-bedroom home on a Ramsey cul-de-sac. Energy-saving measures don't always come cheap, and many homeowners in North Jersey and nationwide wonder whether they'll get their investment back -- or sell more quickly -- when they market their homes.

The Tesorieros' real estate agent says the home's energy efficiency should add $100,000 to its value, which she says is reflected in the listing price of $1.33 million. But other research suggests that while buyers certainly like to save on energy costs, they're not always willing to pay a lot more for an environmentally updated home. In this region, most don't expect or ask for advanced technology like solar power, according to several North Jersey real estate agents.

A survey by the National Association of Home Builders found that in 2012, only 14 percent of home buyers said they'd pay more for a house to reduce its impact on the environment. But if the question is framed in terms of cutting utility bills, buyers told the NAHB survey that they'd pay a median $5,000 more for a house that saved them $1,000 a year.

That fits with the experience of North Jersey agents, who say buyers often ask about utility bills.

"The cost to heat a home is a common question," said John Reilly of Century 21 Van Der Wende in Little Falls.

Extra insulation and energy-efficient windows and appliances can give a house an edge over the competition, agents say.

"In this economy, any improvement that results in lower carrying costs for the buyer most likely will result in a quicker sale," said Jay Shapiro of Prominent Properties Sotheby's International Realty in Tenafly. "Obviously it is not the only factor, but it is significant enough for agents and owners to point out energy- efficient features."

Myron Chassen, a Re/Max agent in Paramus, said that while many buyers are drawn to environmental improvements, first-time buyers often can't afford to pay more for them. That matches the findings of the NAHB survey, which said that "first-time buyers are willing to spend less upfront for lower utility bills."

But more affluent buyers -- those who expected to spend $500,000 or more on a home -- were willing to spend more upfront to cut their utility costs later, according to NAHB.

Other research has found buyers willing to pay significantly more for "green" homes -- at least on the West Coast. One California study found that buyers will pay an average of about $17,000 extra for a home with solar power. Another study, which looked at 1.6 million California home sales from 2007 to 2012, found that buyers will pay an average of about $34,800 more for a home that was certified "green" by an environmental rating program.

The study, by University of California professors in Berkeley and Los Angeles, found that the appetite for green homes varied around the state. In California's hottest areas, homeowners were more willing to pay for energy efficiency, possibly because they have to spend a lot on air conditioning.

And residents in some areas simply seemed more interested in the environment and conservation. The study found that in neighborhoods where there were a lot of hybrid cars registered, buyers are more willing to pay premiums for green-certified houses -- which study authors labeled the Prius effect. However, the study didn't find any correlation between utility rates in different areas of the state and consumers' willingness to pay more for green homes.

Tesoriero and his wife, Doreen, bought their newly constructed house in 2000. In 2008, as the recession took hold, Steve Tesoriero lost his job as a sales executive at Hewlett-Packard. He started his own business as an energy consultant and decided to use his expertise on the family house.

The Tesorieros were lucky enough to have the perfect surface for solar panels -- a roof pitched at 45 degrees and facing due South.

70% of electricity

"A lot of people want solar power, but many can't have it because of the orientation of the house," Tesoriero said. In addition, tall trees in North Jersey often block the sun from roofs, making them unusable for solar panels.

The Tesorieros' solar panels provide about 70 percent of the home's electrical needs. The panels cost $45,000, though that was partly offset by a 30 percent federal tax credit and the sale of Solar Renewable Energy Credits (SRECs), which are purchased by energy suppliers under state regulations meant to encourage solar use.

The Tesorieros also paid $5,000 for rooftop thermal tubes to heat water. The tubes replace about 70 percent of the gas formerly used to heat water. (They still pay for gas to heat the house.)

The family also bought an EnergyStar washer and dryer, added insulation and sealed off air leaks around ducts. Tesoriero points out that while not everyone can use solar panels, most households can take these simpler, cheaper steps.

The Tesorieros are selling because one of their three children is already in college and another is headed there soon. Their agent, Rita Lutzer of Re/Max in Mahwah, hopes the environmental improvements will make it stand out.

"Solar takes it head and shoulders above other houses," she said, although she also said she's never sold a house with solar panels before.

The Tesorieros plan to move to a smaller house and expect to make that house as efficient as possible. In time, Tesoriero said, energy efficiency will be standard.

"I think it's a trend in its infancy," he said.

Originally published by Email: lynn@northjersey.com.

http://www.energycentral.com/functional/news/news_detail.cfm?did=28812069