Where's the cred?

A short follow-up to the Climate Action Plan post (OK it started short and took on a life of it's own). Of course the local real estate community is concerned about the possibility (very likely) that point of sale provisions will be a part of the CAP implementation.

The faithful state and national association members will continue to protest point of sale with conviction. After all, it's been a part of THAT party's political doctrine for decades. The problem that arises with CAPs is that they MUST identify MEASURABLE and VERIFIABLE savings in GHG emissions. Any sort of, yet to be created, incentive programs might accomplish significant energy saving, but measuring how many property owners might indeed take advantage of which incentives at what benefit level is difficult.

It's comparatively easy to chart the number of residential properties sold in the past, present (pending to become sold) and future (projections of sales). Then it's just calculating how much energy could be saved if every one of those properties was retrofitted in a certain way to comply with whatever point of sale requirement emerges. The real world savings won't be as great as the calculations suggest, but getting to the numbers are easy. Easy is good when you're in the public sector--and the graphs are very impressive.

If the "no point of sale" crowd wants to achieve any traction they need to offer an alternative that is similarly easy and has a strong chance of delivering the needed results. Just saying NO, because state and national trade associations told them to, isn't going to get anywhere in the CAP environment. These municipalities want to stay eligible for funds and they'll do about anything to do that.

The secondary effect of the state and national association's anti point of sale doctrine is a lack of robust alternative efforts to green the nations housing stock. Some of this is understandable. Most every energy saving effort has some point of sale connection deeming it inappropriate.

I mentioned in an earlier blog a personal experience in this regard. I had an idea in 2007 that agents could voluntarily install CFLs in all the houses listed for sale. CFLs were very cheap back then thanks to subsidies from utility companies. A program was developed at our local association, but the idea never went over at state and national level because the activity of replacing light bulbs was associated with point of sale--ie the listing of the property. It was voluntary, but because of the point of sale issue, it was feared that CFLs might BECOME a point of sale issue. Obviously if all the houses listed with members of the national association in the last 4 years had been fitted with CFLs (wherever reasonable), a great deal of energy would have been saved. That didn't happen because saving energy is secondary to sustaining the no point of sale doctrine at all costs.

So what has organized real estate done to green housing and the purchase process? The state association HAD a green task force for a mere 2 years--largely because a particular state association president was a supporter of green matters. It was discontinued in San Jose 2 years ago. The reason offered was that the members could get all that green information somewhere else. In truth there are green pages in the websites of both national and state associations, but there is little real traction out there in the real world.

This is a long way around to reach my point (and the title). How much credibility does the organized real estate have when they seek to limit adoption of point of sale provisions? Their track record in seeking to reduce GHG emissions is pretty lackluster. I sincerely doubt the leadership believe in climate change.

Talk of incentives and voluntary measures is tossed about, but there's little walking the walk. The national association can raise and additional $40,000,000 for political lobbying, but funding pilot incentive programs to improve energy efficiency is someone else's responsibility.

The no point of sale doctrine is openly suppressing important information about the cost of ownership and resulting in some Buyers missing their best opportunity to buy the RIGHT HOUSE. As I've written many times before the state and national associations are focused on ALL the houses selling for the highest possible prices. Matching RIGHT BUYER with RIGHT HOUSE is not their priority. The trade associations don't have a fiduciary duty to Buyers and Sellers. This focus on withholding information until after the purchase decision is made tells individuals who achieve extraordinary energy efficiency that they won't enjoy full return on their investment--and that's OK.

There's a least common denominator mentality in the real estate industry that fails to fully reward those who seek to extend the plant's future health. At present there's no way for Buyers to readily compare energy efficiency and the industry likes it that way. Energy ratings, like HERS II, are available, have been available for several years but are almost unheard of. Energy use is an attribute of housing--like ocean views, size, age, style and landscaping. What's different is that energy efficiency has a direct impact on cost of ownership and is very difficult to predict without a professional energy rating. The state and national association policy on point of sale is suppressing the availability of information regarding energy efficiency. This runs counter to the best interests of the Buyers, the Sellers and, in turn, the agents that represent them.

It's true that some Sellers receive a higher price for their homes than they would if a HERS II rating was available to show that, although charming, the place is an energy HOG. HOW is that good for the long term health of the real estate industry? It sounds like another version of the familiar "pass the problem off to the new owner and evade incurring as much liability as possible for the Listing Agent and the Seller".

Thanks to the no point of sale strategy energy efficiency is caught in a time warp--remember the days before the TDS, back before home inspections were common? Buyer beware was the key. The short sales and REOs have brought back that mentality and made in more acceptable to gush gloriously about granite counters, copper sinks and paver tiles, but remain silent concerning energy efficiency. It doesn't end there. After the Buyer moves into the place the upgrades may not deliver the best bang for the buck if there's not a HERS II energy rating pointing out where the most effective upgrades lie.

Buy a car, a water heater, a refrigerator and there's information---that BUYERS consider in their decision to purchase. Buy a house and you're on your own!

Here are the major talking points from the state association--do they make sense? Not so much.

Point of sale takes too long. Doing nothing takes longer. Point of sale isn't immediate, but over a 5 or 10 year period a fairly large proportion of houses change ownership. Look at plumbing retrofits at point of sale. Many local communities imposed them in the 90's and it's hard to find a house that has not been retrofitted now. Yes, there were some incentive programs and contractors had to retrofit x number of houses to obtain a building permit in some communities, but most of the retrofitting occurred at point of sale.

It increase the cost of homes. Does it? Sure, but the lower utility bills the new owners pay covers that expense, not to mention the energy saved in processing and distributing the energy, water and gas. Despite the state associations efforts to the contrary, there is a societal benefit from extending the life of the planet. It's not always OK to fool with mother nature,just because the cost of increasing energy efficiency may not always be recaptured during the life of the upgrade. It's a classic problem of the commons that organized real estate chooses to ignore.

Housing affordability is not JUST about purchase price. The cost of ownership factors into the picture. Of course by the time the utility bills start arriving the agent, broker and state association have garnered their share of the commission check, leaving the Buyers to discover just how affordable the house actually is in the real world.

Housing account for 40% of energy use-even more if you factor in transportation costs that are influenced by where the housing is built. House should be the FOCAL POINT of any strategy to improve energy efficiency. Organized real estate wants a pass! The smooth flow of commission checks with minimal complications is the kind of efficiency that tops their priority list.

The public has, thus far, given organized real estate a pass. The public may not know any better, but mother earth does and, in the end, she makes all the decisions.