According to the National Association of REALTORS®, there is a growing demand for eco-friendly housing. Sustainable homes are rising in popularity not only for their positive environmental impacts but also for their ability to keep utility costs down due to their increased energy efficiency.
A home may be certified “green” by the government’s Energy Star program or the US Green Building Council’s LEED program. LEED looks for high efficiency in water, energy, indoor air quality, materials, and the building site itself. Or the home could just have the latest energy-saving, eco-friendly, and water-saving features.
Selling sustainable homes does highlight some unique risks for real estate licensees. From ensuring you accurately represent a property’s sustainable features to navigating disclosures and long-term maintenance requirements, it’s essential that licensees are aware of the risks.
The Importance of Understanding Unique Features of Sustainable Homes
Sustainable features such as solar panels and even battery storage, have been around for some time now. (See: Selling a House with Solar Panels.) However, technology is moving at a rapid pace, and real estate licensees need to make an effort to keep abreast with new sustainable home features. Sustainable homes may include:
Energy-Efficient upgrades
- Double-paned windows, vinyl impact windows, energy-efficient and maintenance free windows
- Tankless water heaters, solar hot water heating systems
- Solar panels
- Compact fluorescent light bulbs, LED lighting
- Home automation/smart home system. The system may allow you to control lighting, track energy use, and optimize energy usage remotely via an app. See: How to Safely List a Home with Smart Technology.
- Energy-efficient and maintenance free siding (vinyl cedar shake siding) and roof (metal roof)
- High-performance insulation
- Energy-efficient appliances
Environmentally-Friendly Features
- EV charging stations
- Non-toxic building materials like paint and carpeting
Water Efficiency
- Rainwater harvesting systems and barrels
- Water-saving fixtures including low-flow sinks and toilets
- Native plantings
Sustainable or Recycled Building Materials
- Reclaimed wood countertops or mantels
- Recycled glass or crushed bathroom porcelain countertops
- Recycled content carpeting
- Recycled metal
The seller is no doubt an important port of call to obtain information about a home’s sustainable features and the benefits they bring to the homeowner. However, having an understanding of modern sustainable features yourself can help to avoid costly marketing mistakes. Imagine:
- If you accidentally said there was a 15kw solar on the roof connected to a battery, but it’s actually a smaller system and the battery isn’t running at full capacity because it’s very old.
- Or if a home is sold based on it having a lot of “green” benefits, but something listed in the agent’s marketing isn’t an accurate representation of the property.
Guidelines and Regulations for “Green” Buildings
While real estate licensees don’t need to be sustainability experts, understanding the guidelines and regulations around new construction in your area can be helpful. Some new developments have specific requirements or incentives for incorporating sustainable features. A general awareness can enable licensees to better market sustainable properties and avoid potential risks upfront if a home doesn’t comply with mandatory green building codes.
Navigating Disclosure Challenges with Green Homes
As with all property sales, there are essential disclosures that need to be made to potential buyers with sustainable homes. If any material defects could affect whether a buyer decides to purchase the property or not, they must be disclosed.
One major issue that could arise when selling sustainable homes is a faulty sustainability ‘feature’ or one that is fast approaching the end of its useful life. For example, a geothermal system in need of major repairs or an older battery storage device that no longer meets current standards.
Licensees need to be diligent in fully understanding the condition and status of all green home technologies in their listed properties. Failing to disclose known issues or misrepresenting a system’s capabilities (even if accidentally) can lead to serious legal ramifications.
Risk Management Tips For Selling Sustainable Properties
There are several things real estate licensees can do to help minimize the risks when selling sustainable properties:
Keep up-to-date with sustainability property features
Seek out training and education, including courses and webinars that can provide you with the latest information on sustainable home features. You may find these are available through your local real estate association or other professional organizations. Industry publications are another good resource for real estate licensees to review.
Develop checklists and procedures
Licensees should also consider developing a sustainable home checklist or procedure to guide them through the unique intricacies of selling a sustainable property. Because let’s face it — the real estate business is busy. Having pre-developed resources and checklists can help you avoid missing something crucial.
Consider your communications carefully
Be careful not to oversell sustainability features to potential sellers. Do not get into detailed discussions about power usage, utility costs, specific energy savings, or other technical aspects that require expert assessment.
If a buyer is genuinely interested in a property and wants further information about a property’s green features and performance, the best approach is to encourage them to do their own due diligence. Encourage them to arrange a sustainability audit from a qualified professional, such as a certified home energy auditor or green building specialist.
Protect Yourself and Your Real Estate Business
From misrepresentation to failure to disclose, there are many reasons real estate licensees could find themselves facing a lawsuit relating to a sustainable home sale. Buyers could sue you for misleading them about the long-term viability of the home’s eco-friendly features or overstating the home’s green capabilities. Real estate licensees need Errors & Omissions insurance to help in your defense if a claim is made against you.
CRES E&O + ClaimPrevent® offers you not only real estate E&O insurance, but also access to experienced real estate attorneys who can provide you with advice whenever you need it — pre-claim! So, if you are selling a sustainable home and have a legal question, you can contact our team for help.
CRES is a Real Estate Errors & Omissions Insurance specialist with more than 25 years of experience. As part of one of the largest insurance brokers in the world, we have access to more E&O options for real estate than just about anyone (especially smaller insurance brokers). Contact our team at 800-880-2747 for a confidential discussion today and we can tailor an insurance policy specifically for you.
