Home Buying

Are buyers willing to pay more for green features?

There is one feature that home shoppers want. Some homes have it. Others don’t and probably never will.

By Jim Morrison -- Boston.com Correspondent

June 12, 2024

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In a March 2024 survey by the National Association of Realtors, 45 percent of the agent respondents said their clients were “at least somewhat interested in sustainability.”

But agents in Greater Boston find buyers here aren’t willing to pay more for homes with “green” features. Many buyers appreciate the environmental and financial benefits, but it’s not among buyers’ top concerns, they told the Globe.

Joselin Malkhasian of Lamacchia Realty is one of those realtors, but she is witnessing a change in mind-set toward green features.

Photovoltaic solar panels on a roof used to be a turnoff, she said, but buyers as a whole are more neutral about them now.

“I’m not sure if that’s due to the lack of inventory, because buyers don’t have as many choices and would consider a home with solar panels whereas before they wouldn’t,” she said. “Buyers also prefer to own the panels, as opposed to leasing them. The biggest hurdle is that people don’t want a solar panel company to have the rights to their roof.”

She shared a portion of a text from a seller client that read, “I’m def not getting solar on my next house. You save a lot of money per month, but it’s a headache trying to get rid of the contract unless you buy outright.”

Ezra Stillman, a senior sales agent at Hammond Real Estate, has been involved in a lot of renovations over his 30-year career. He agreed that buyers’ attitudes toward green features are changing, but they still don’t play a significant role in the purchase process.

About 10 years ago, one of his clients built a house filled with cutting-edge green features, many of which are common today. “By and large, the customers really didn’t care about the green features,” Stillman said. “They thought it was interesting. Some of them thought it was very nice, but they were more focused on the features of the kitchen. I’m not convinced that he got $1 more for that house because of the green features he put in.”

Since that time, he said, the state Building Code has been updated to require many of the green features his client built into his house. Building or significantly renovating a home today requires incorporating many energy-efficient features, so when you buy a new or renovated home, you also get a greener home.

“The people who are buying new homes and recently renovated homes are aware of the green features that new homes come with,” he said, “so those features aren’t entirely unappreciated; they might be a secondary factor. Buyers pay a lot for new construction, but what has not been proven yet is how much buyers will pay in addition for green features.”

One green feature that has more to do with location definitely has buyers paying a premium.

“Walkability is very important to many of the buyers with whom I work,” he said. “For sellers, they will command a higher price for a house where one can walk to a commercial center.”

Craig Foley is the founder of Sustainable Real Estate Consulting Services and chief sustainability officer for LAER Realty Partners. He founded the REthink39 Group to reduce the 39 percent of energy consumption attributed to the built environment in the United States. He said many buyers have no idea which green features a prospective home has because many listing agents don’t recognize or advertise them.

“Agents need to be trained,” he said. “They’ve got to get their National Association of Realtors Green designation. That shows they’ve got some skin in the game. They’ve spent time and energy and money to learn about these issues to help serve their clients better.”

If the current homeowners can prove that they have experienced significantly lower utility costs, and the information is certified by a third party, “that‘s something that everybody gets 100 percent,” he said.

Foley said certain features do attract particular kinds of buyers.

“When we list a LEED-certified home, we’re definitely going to see families that have a kid with respiratory issues like asthma,” he said. “And they know more about air quality and healthy homes than their buyer’s agent does 9 times out of 10.”

Leadership in Energy and Environmental Design “is the world’s most widely used green building rating system. LEED certification provides a framework for healthy, highly efficient, and cost-saving green buildings, which offer environmental, social and governance benefits,” according to the US Green Building Council.

Foley said growing interest in green buildings is evident on websites like the Green Building Registry, where prospective home buyers and renters can see which energy-efficient features a property has before committing to live there. Tax incentives in the Inflation Reduction Act also are driving interest.

While a desire for green features may not always factor into the purchase process, it is something Foley said people pay more attention to once they’re living in their homes.

For agents who understand green features, this is an opportunity to demonstrate their value to clients by offering them advice when they make improvements after the sale.

“Agents should understand the things that are behind the walls, advances in technology,” Foley said. “They should understand climate risk. That is a pathway for agents that are competent in this in terms of a value proposition that’s special and unique. And it serves our clients.”

Jim Morrison can be reached at [email protected]. Follow him on X @jimmorrison617.