Capturing the Value of High-Performance Homes Through Better Appraisals
In today’s home-building environment, one of the toughest challenges is securing appraisal values that reflect the true performance and efficiency of high-performance homes. Although builders are investing in superior insulation, systems, and envelope quality, the market has frequently failed to reward those efforts. That is changing—and this 2025 Summit session recap explains how.
Building the Case for Value
When builders deliver homes that offer better comfort, lower utility bills, and longer durability, the expectation is that value follows. However, the appraisal and lending system has historically lagged behind.
In a recent panel discussion, this issue was addressed head-on:
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Builders often report that even after constructing homes with excellent efficiency (for example, a home with a HERS score of –17), the appraisal came in significantly under the construction cost or expected value.
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The root of the problem: appraisers and lenders were not trained to quantify the difference in annual utility savings or performance improvements and translate that into higher value.
What’s Changed?
Three major components have aligned, creating an opportunity for builders to be rewarded for performance:
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Lender Policies Recognizing Performance
Freddie Mac’s selling guide now recognizes HERS scores and allows adjustments reflective of energy savings. That means conventional loans—no special green-mortgage product required—can reflect value improvements from high-performance homes.
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Appraisers Equipped to Quantify Efficiency Gains
Thanks to efforts by companies such as Accelerated Appraisal Management Company and the establishment of the Homebuilding Energy Efficiency Academy, appraisers nationwide are being trained in the methodology to convert documented annual utility savings into measurable appraisal adjustments.
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Builders Claiming Their Value
Builders who secure third-party HERS scores, model the savings, and work with lenders/appraisers up front are seeing appraisal values anywhere from 2.5% to 4% higher than standard homes—simply because the adjustment for utility cost savings is included.
How It Really Works
Here’s a brief overview of the process:
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The home is rated using a HERS score or similar performance metric.
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Annual utility cost savings are estimated.
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This savings figure is divided by the interest rate and annualized over the term of the loan, yielding a monetary adjustment.
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The appraiser includes a line item adjustment in the appraisal, raising the value of the subject property relative to comparables that lack the same efficiency.
One builder shared an example: a home valued at $494,990 had an adjustment that brought the appraised value $5,100 above contract price—thanks only to the documented energy savings.
Builder Perspective: Minimum Friction, Maximum Impact
One of the standout messages from the panel: the process is not onerous when the foundations are in place. Builders shared:
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If you already produce buildings with HERS scores, ordering a “green appraisal” is simply checking a box.
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The lender and appraisal management company handled the mechanics—once the HERS documentation was in place.
What This Means for Homebuyers
When appraisal values reflect performance:
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Buyers walk in with instant equity—thanks to the appraised value acknowledging efficiency improvements.
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Lower operating costs free up household cash flow and improve affordability.
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While interest rates may fluctuate, better value and stronger underwriting bolster refinance and resale options.
Key Takeaways for Builders
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Obtain a HERS rating (or equivalent) early and document annual energy savings.
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Collaborate with your preferred lender and appraisal firm to ensure they can support the adjustment.
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Communicate performance benefits to buyers—not just in energy terms, but comfort, durability, indoor quality, and future value.
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Ensure appraiser training and process readiness at the AMC or appraisal firm you work with.
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The adjustment opportunity is already available—you don’t need a niche “green loan” structure to capture it.
The Path Forward
What once felt like a niche conversation about “green building” is now emerging as a standard practice for better-built homes. With lender guidelines updated, appraisers trained, and builders delivering, this alignment may become the new baseline.
High-performance homes are no longer just “extra cost.” They are demonstrably better homes, and the market is starting to recognize them as such.