Appraisal Institute Publishes Green Building Appraisal Standards

When valuing green buildings, real estate appraisers’ analysis must be supported by market data on the subject property that helps explain why it stands out from its conventional peers, according to guidance issued by the Appraisal Institute and the Institute for Market Transformation. Seeking to assist owners who retrofit an existing building or build a new one with energy-efficient features, the two organizations issued “Green Building and Property Value A Primer For Building Owners and Developers.”

“As owners and developers enhance buildings with energy-efficient features, appraisers can help make the case for green appraisal value,” said Appraisal Institute President Ken P. Wilson, MAI, SRA.

According to the organizations’ guidance, because these buildings with energy-efficient features are different from traditional ones, owners have had to change not only how they design, build and market, but also how they approach financing and construction processes. Otherwise, owners may pay for green — with certifications, capital improvements and marketing — and not fully realize the expected market benefits.

Moving beyond the value that accrues to owners from rents, operational savings and market recognition at sale, the guide helps building owners and developers understand the appraisal process and how green, high performance characteristics and data can be used by appraisers to help fully maximize valuation.