Green Energy Money (GEM)
Financial Solutions to Value & Power a Sustainable Future
When you are looking at building a custom high performance home the loan process is different than a typical mortgage loan. The appraiser needs to be able to quantify the value of the systems in a NATiVE home (rainwater, solar PV, etc.) and know how to properly value and apply a “green premium” that recognizes the value of high-performance systems on the appraisal. They also have to adhere to current appraisal and underwriting guidelines. We have found that engaging with a trusted lender early in the process, who is qualified to evaluate these homes and has competent, trained and certified appraisers on their team has proven to greatly benefit our clients. To clear the air, NATiVE has no financial benefit to the lender our customers choose to use. We’re suggesting that the lender needs to be a part of the Integrated Design team and involved early in the process to help you ensure that all of the planning and loan structuring of the home is financially viable and the quantified green appraisal facilitated by a qualified, certified appraiser is a major component to achieving the best loan terms and approval. The benefit is greater when working with a lender who is well versed and experienced in high-performance building as well as green lending!
How is GEM able to get funding and appraisals for green features on homes that other lenders overlook? First of all, you have to realize that green homes are typically a high-quality asset; often these homes are saving as much energy as they are using. You have to be able to think outside the box and you must have a certain level of understanding and education to accomplish this; which takes time, experience and a willingness and commitment to go beyond conventional lending criteria. Many owners and industry professionals do not understand that this process cannot be quantified by cost, but is dictated by how much you save on energy reduction. The only way to accomplish this is to utilize third-party energy building science experts that verify and quantify (scientifically) how much energy the building will save annually. Through this process we can quantify value and send data to appraisers that they can verify to make their case for a premium green value.
How do you recognize value in solar, rainwater and high efficiency measures? We require certified, competent, appraisers to facilitate our high-performance projects that are skilled in the art of green building and construction. This factor is overlooked by many lenders; often they try to compare apples to oranges. This is called a paired sales analysis. It’s not necessary, and often not possible, to find exact matches or comparable green properties in a neighborhood that have the same upgrades, i.e., solar, geothermal, rainwater, etc. The major differential here is how well the home is performing and how much energy they are saving compared to the properties that are similar to the subject property. Another important consideration is the comparison of custom homes vs. production built homes, that may be older and often high-energy consumption. This is often due to the lack of comparable sales for custom homes since they aren’t typically sold and recorded on the MLS (multiple listing service;) the owner has purchased the land and built a green home, but there is no records for these types of homes. Education is paramount in green lending and so many lenders and appraisers aren’t educated or competent and believe they are. This is simply because they truly don’t understand the principle of how these buildings are saving and generating energy; and how high-performance homes are a lower risk than conventional homes due to durability and lower operating expenses and deferred maintenance. Both appraisers and underwriters need to be able to have access to the right data and be able to interpret this information correctly.
What are some of the challenges we face in a market slow to recognize the value of solar, rainwater etc? The good news is the consumer market and exceptional builders like Native are adapting quickly and demand is growing for high efficiency, net zero homes. Especially in the Austin region. We are finding more comparable properties in the MLS daily and proving every day that green building is cost efficient, and these homes sell faster and for a higher premium. This is making it easier for properties to appraise. The other news and the biggest challenge we face is educating lenders and appraisers and teaching them how to properly quantify and value these transactions. Green Energy Money (GEM) is rolling out a lender platform this year and already has an education program for appraisers in place.
GEM’s Lender Network’s rates are competitive. All of the GEM Network lenders we work with offer competitive loan programs and we strive to place clients with the right lender and best rate available in the market. Sometimes we find the lowest rate isn’t the best fit for some borrowers if the lender can not approve the loan due to qualifying challenges. Our team and strategic alliances all strive to offer the best terms available. Saving people money is something we are passionate about; which is what high-performance building accomplishes.
GEM’s process is simple. We have created a seamless process that simplifies the green appraisal valuation and loan structure process. We find that it’s helpful to be included in the very beginning of the process during design phase. Many times architects and owners want a certain type of building envelope, like earth berm, etc., which can be a challenge for appraisals. It’s useful to know how you are going to structure the loan and project in the first place. Often, we have to find solutions for design challenges or certain property tax exemptions which can be problematic.
Native gains nothing from GEM other than being able to have a smooth process to funding a project. Native, like most builders, needs trusted partners to support their clients with end-to-end, market-based solutions. You need a team that has one main goal and vision that affords clients an outstanding experience and product. We go the extra mile because we love what we do and are passionate about making a difference. We believe high-performance building offers the best economic and environmental solutions for our clients and the planet. We are grateful and excited to be able to work with trusted builders like Native who consistently build an exceptional high-performance product!