less is more?

Here's an interesting question. Houses account for between 20-30% (OR MORE) of the energy use in the US (buildings in general account for over HALF). The range is pretty broad for houses because climate has a huge influence, i.e. North Dakota winters and Arizona summers, as opposed to the central left coast where heating and air pretty much aren't really needed. Given that striking share of energy use, is the real estate brokerage industry doing all it can to reduce energy consumption in those houses (and other structures)? Absolutely not, and the industry is proud of it, at least to read the press releases from the state and national trade organizations.

Every time a piece of legislation even hints at any requirement for retrofits or home energy ratings at point of sale, the trade organizations go wacko, then crow like big birds when the recipients of their PAC monies either vote the whole package down or excise the offensive provisions. If you buy a car or a range or a fridge, or water heater or a light bulb you see an energy rating on it. Houses? No way!

Few people know how much energy their house uses--aside from the utility bills. More importantly, EVEN IF THEY WANTED TO REDUCE ENERGY CONSUMPTION, they wouldn't know where to begin. In fact, some popular upgrades don't actually make sense in terns of pay back time and energy saved when embodied energy of the retrofit/upgrade is factored in.

There are standardized energy rating protocols available to test houses, but they are seldom used in the US, particularly in this coastal area. Many buyers don't even know they exist. Why? Among the many reasons, the real estate industry likes smooth transactions without delays or contentious negotiations or increased Seller expenses at time of sale. Just fast forward to close of escrow and the commission check disbursement part of the process. Buyers can handle the utility bills and if they want to know how much of an energy hog their recent purchase is, they can figure it out after the money changes hands. The trade organizations chalk it up to "private property rights". That's along the lines of apply pie and mom---who's gonna say they want fewer rights or to have the (shudder) government step into the picture and mandate another report or disclosure.

The core of the problem stems from, you guessed it--POLITICS. The trade organizations are aligned with the portion of the political spectrum toward the right. In recent years that right has become ultra conservative. Few of the key political figures even support the idea that human activities are a significant factor in climate change. Some don't even believe in climate change at all. The real estate industry leaders are in a tough position. A substantial percentage of the public (remember them???) believe that climate change is real, is attributable in large part to human activities and that there is an urgency in affecting change in energy use to mitigate what may well be a dire future for today's children and later generations. The real estate trade organizations don't come out and say climate change is a liberal hoax, but you won't see any content painting a bleak future. Being green is represented as good for the environment because a healthy environment enhances property values due to improved aesthetics and it's good for people because it saves them money (which can be used to buy more expensive houses). There's no urgency from the perspective of industry leadership because there's no perceived nexus between energy inefficient houses and climate change. Without urgency it's very difficult to justify doing anything that will adversely impact the health and profitability of the real estate industry. What does planet earth have to say about this philosophy? That doesn't matter. The ultra conservative political faction believes their deity will take care of the climate. The real estate industry leaders believe in the bottom line of gross closed commissions. The planet is just a stage for the pageant of human life to unfold according to the laws of economics and religion (there are some fuzzy boundaries there). The planet is seen as a passive player in the cast.

It's true, the trade organizations have made modest efforts to raise awareness regarding matters green among their members, but there's considerable inertia present anchored by a longstanding political tradition against point of sale.  It's as though, all that energy stuff should be the responsibility of someone else, certainly not the real estate industry! Point of sale is off limits, everything can be done with incentives--just don't ask where they are or how well they work. In fact organized real estate seldom informs Buyers of the incentives that are in place.

Ironically, we already have some quasi point of sale events--pest inspections, septic inspections-perc tests (in areas without sewers), title reports, home inspections, well reports, not to mentions a big heap of statutory disclosures and locally required retrofits.

Have all these complications horribly hindered real estate sales or slashed profitability in the industry? Not really. They do involved extra work, but that work benefits Buyers and Buyers make the real estate business happen--Sellers and agents are nothing without Buyers.

The trade organizations remain biased in favor or Sellers and listing agents--take a look at most contracts. In the long run Buyers interests will win out--follow the money--it all comes from the Buyers.

The Buyers can make home energy rating a part of most transactions--just by asking. If they use the magic words "material fact", they'll get a home energy rating report pronto.

Here are two scenarios to consider.



Scenario Two. Sellers of similar 50's house have also owned it about 30 years. They added insulation, weather seals, energy efficient appliances, double pane windows, attic fan and even did water efficient landscaping.

Sellers in Scenario One are not required to disclose just what an energy hog their vintage house is. State and National Trade organizations like it that way. Smoother transaction, no glitches and house doesn't suffer any up front reduction in value by being labeled as inefficient. The Sellers in scenario two aren't required to have an energy rating report either, BUT THEY SHOULD, to show one of the outstanding attributes of their property. Prospective Buyers can SEE what the house looks like and what the neighborhood's characteristics are, but they can't easily determine energy use. Thinks about buying a car--it looks good, but what mileage does it get and how is it in crash tests? Easy to determine! Houses? Not so much. Do ya think some industry spends lots of money lobbying congress?

Where energy use is concerned real estate agents are still functioning as salespersons performing a very circumscribed set of tasks associated with turning sides--ie selling houses. For many, the possibility that their planet is under attack from an excessive lifestyle of profligate carbon loading is a mildly interesting bit of trivia.

Do many real estate firms aggressively practice energy efficiency and green practices in their own offices? Very few. How much encouragement do the trade organizations provide to create energy efficient offices? Very little.

The positive spin on this major trend is that there are many consumers of real estate services who sincerely care about the planet and the quality of life future generations will enjoy (or suffer through). That creates opportunities for firms to differentiate themselves on the basis of green practices, both in the sales arena and in office operations.

The trade organization are practically mega franchises these days, providing a wide array of products and services that may raise the bar of professionalism (and make a tidy return for the organizations), but offer no local differentiation. Going green is one way to distinguish agents and firms this sea of sameness.