Demand for green features amongst prospective home buyers has steadily increased over the last few years. This year, demand took a major leap forward. According to a March 2022 report released by the National Association of Realtors, half of real estate agents and brokers “helped a client buy or sell a property with green features during the past 12 months.” This represents “a notable jump compared to 32% in 2021.” More than half of all realtors and brokers who participated in the survey “found that their clients were somewhat or very interested in sustainability.” A whopping 63% said that “energy efficiency promotion in listings was very or somewhat valuable.” Another recent study found that “89% of prospective buyers want sustainable homes that are kind to the planet.” Respondents cite concerns about climate change and human health. As the market cools off, finding ways to attract potential buyers will become more important for sellers. The sellers who once benefitted from bidding wars and offers far above asking will compete for buyers. Clearly, green features like energy efficient appliances, tankless water heaters and solar panels attract buyers. In this post, we identify ten green updates that could boost your home’s resale value. Not only could these improvements increase your home’s resale value, they could also save money in the meantime. Follow below to learn more!
10 Energy Efficient Improvements That Could Boost Your Home’s Value
#1 Replacing Your Garage Door
First on our list of green home improvements that could increase your home’s resale value is replacing your garage door. Replacing your garage door with a more energy-efficient version often features on lists of the highest ROI (return on investment) home improvements. In their article “What Upgrades Increase Home Value? 25 High-ROI Improvements Buyers Love” for Homelight, Valerie Kalfrin and Caroline Feeney explain. According to Kalfrin and Feeney, “a new garage door costs an average $1,200 but adds an average $2,797 in resale value for a 133% ROI.”
Not only will a brand-new garage door add to your home’s curb appeal. The right garage door will also make your home more energy efficient by optimizing its building envelope. This could lessen your carbon footprint and lower your energy bill. With proper insulation, appropriate windows and effective seals, your new garage door will prevent heat loss during the winter and air conditioning loss during the summer.
Follow Jennifer Tuohy’s advice in her article “How to Choose an Energy-Efficient Garage Door” for Earth911 to ensure you pick eco-friendly materials and styles. Tuohy recommends wood or composite wood over steel or aluminum – both of which are poor insulators. When choosing windows for your garage door, “opt for double- or tripled-glazed windows and low-emissivity coatings to prevent heat transference.” Your garage door opener could also consume a lot of energy, so try to buy “a model with a low-power standby mode.”
#2 Adding Energy Star Rated Appliances
Next, property owners hoping to create energy efficient homes that appeal to savvy buyers might consider adding energy star rated appliances. Appliances are responsible for a significant portion of a house’s energy consumption – typically between 15 and 20%. Investing in energy star appliances will not only save you money by lowering your electricity bill whenever you do laundry or wash dishes in your home. Efficient appliances could also increase its resale value. In some cases, new appliances could qualify you for a tax credit too!
In his article “How Energy-Efficient Upgrades Can Increase Your Home’s Value” for NerdWallet, Michael Burge notes that efficient appliances have become a major selling point. Burge writes that “there’s a growing trend in the real estate industry to make energy upgrades visible.” In fact, “energy disclosures are now a common practice” in certain cities. Mentioning upgraded appliances on your home’s MLS listing could attract buyers.
According to the MyHome by Freddie Mac resource “Do Energy-Efficient Improvements Increase Resale Value?,” more than three quarters of prospective home buyers want these features. Referencing data from the National Association of Home Builders, the Freddie Mac resource notes that “81% of buyers desire Energy Star-rated appliances” [and] 79% want “an Energy Star rating for the entire home.”
#3 Upgrading to Energy Efficient Windows
Third on our list of green upgrades that lower utility bills and boost resale value is trading traditional windows for energy efficient versions. As mentioned above, optimizing your home’s building envelope can boost its resale value by making the whole house more energy efficient. Windows and doors are a huge part of this, which is why buyers value double or triple glazed windows that block winter winds and summer heat. According to a resource from MyHome by Freddie Mac, 83% of prospective buyers want Energy Star certified windows and 80% want energy-efficient lighting like smart LED bulbs.
New windows will also improve the exterior and interior appearance of your home, which could attract buyers as well. Of course, replacing old windows with well-insulated versions will help maintain a stable temperature in your home, saving you money before you even list the property for sale! Don’t forget to include the cost of new windows and their installation when filing your taxes. Homeowners who install new Energy Star windows could qualify for federal residential energy property tax credits. Be sure to check for state incentives as well.
#4 Switching to a Smart HVAC System
Demand for smart home tech has risen in tandem with demand for energy efficient features. Oftentimes, smart home systems and energy efficient systems are one and the same. Smart home systems allow homeowners to save money and be more energy efficient without spending too much time micromanaging household appliances. This makes smart HVAC systems appealing for prospective buyers.
In her article “The eco features that add value to a home – the environment-friendly additions that buyers will love” for Homes & Gardens, Anna Cottrell explains. Quoting Jason Legat of Model Remodel, Cottrell writes that “‘there’s a couple home heating features that are not only luxurious to live with, but are also big selling points.’” These include “‘smart thermostats, heated floors and radiant heating panels,’” all of which “‘add comfort and value'” while using less energy.
Holly D. Johnson supports this claim, elaborating in her article “8 ways to increase your home’s value” for Bankrate. According to Johnson, “‘the right smart thermostat will allow a homeowner to control their home’s climate from anywhere, giving them the power to manage energy costs regardless of whether they are sitting on the couch or away on vacation.’” This combination of energy efficiency, comfort and convenience is a huge selling point for house hunters interested in green homes.
#5 Adding a Tankless Water Heater and Electric Heat Pump
Part of upgrading your home’s heating and cooling system might include adding a tankless water heater and/or electric heat pump. Both are more efficient and eco-friendly, which is why some states like California have mandated inclusion of tankless hot water heaters and electric heat pumps for future builds. Offering buyers a home that already has a tankless hot water heater and/or electric heat pump could help you sell quickly and for more money. Plus, you will save a sizeable amount of money while living in your home.
In her article “Is It Really Worth Replacing an Insulated Water Heater with a Tankless Water Heater?” for SF Gate, Emily Beach explains. Beach writes that “families who use less than 41 gallons of water per day would use 24 to 34 percent less energy by switching to a tankless system.” Families who use as much or more than 86 gallons each day “could improve efficiency by 8 to 14 percent.” In general, “tankless water heaters cut energy use by 30 percent over gas storage heaters and 40 percent over electric storage heaters.” Tankless water heaters usually last longer than gas models.
An electric heat pump could also be a good investment. According to the National Association of Realtors, “the heat pump is the most recommended method of heating for providing consistent heat and energy savings.” Compared to other methods of heating, “an electric heat pump is 50 percent more efficient.” Electric heat pumps are also more attractive from a human health standpoint. They produce less indoor air pollution, improving the IAQ of your home. Following the devastation of the COVID-19 pandemic, homeowners are more interested in improving indoor air quality than ever before.
#6 Landscaping with Native Plants
Landscaping with local plants is yet another way to improve your home’s curb appeal and reduce its energy and water usage. Depending on which plants you choose, native landscaping could also protect your property from erosion and flooding. According to Farm Bureau Financial Services, native plants can boost home value “because they often require less maintenance…and are less expensive to care for.” Referencing data from an Ecological Services study, the FBFS resource notes that it costs just “$3,000 to maintain an acre of native plants over 20 years,” but it takes a whopping “$20,000 for non-native plants” over the same period of time.
Because of their natural beauty and low cost care, local plants are slowly replacing the manicured lawns that once populated front yards across America. Today, a growing number of potential buyers are interested in native landscaping. In his article “Redefining Curb Appeal” for The National Wildlife Federation, Tom Oder explains. Referencing data collected by NAR, Oder writes that “planting native species can improve the curb appeal of a home, boost its resale value and decrease its time on the market.”
#7 A Fresh Coat of Non VOC Paint
As mentioned above, the COVID-19 pandemic caused many Americans to reconsider the health of their homes. Antonia Zimmermann explains in a January 2022 article for Politico. Zimmerman writes that “because COVID-19 is an airborne disease that spreads more easily in poorly ventilated rooms, people are increasingly conscious of indoor air quality.” Because of the way our homes are built, furnished and used on a daily basis, “indoor air can [be] up to five times as polluted as the air outside.” Zimmerman attributes much of our indoor air pollution to consumer products, “toxic substances emitted by building materials (asbestos, for example)…[and] human activity like cooking, cleaning, smoking, burning candles or using printers and photocopying machines.”
One way to reduce indoor air pollution is to choose low or non VOC paint, which will not off gas volatile organic compounds in the way traditional paints do. A natural byproduct of this is that low and non VOC paints do not produce an offensive odor. They are also safer for small children, infants, the elderly and people with respiratory illnesses. Plus, refreshing your home’s interior with a new coat of paint before listing is often recommended by realtors.
Geraldine Mills explains in her article “8 Sustainable Upgrades to Maximize Your Property’s Resale Value” for Unsustainable Magazine. Mills notes that “repainting and adding a fresh coat on your walls is a simple way to maximize your property’s resale value,” but doing so can be “harmful to the environment.” Thankfully, “non-VOC paint does the same job as regular paint, but you aren’t releasing toxic fumes.”
#8 HERS or LEED Certification
If you are building a new house with resale value in mind, you might pursue HERS or LEED Certification. Both could markedly increase your home’s resale value – especially in a few years when consumers value energy efficiency and environmental responsibility even more highly. In her article “What Are the Benefits of LEED Certification?” for The Balance Small Business, Rachel Burger explains. To start, Berger writes that “attaining LEED certification demonstrates environmentally responsible building practices [which] can be a big boost for the image” of a designer, contractor and/or homeowner. According to the U.S. Green Building Council (US GBC), LEED-certified buildings also “retain higher property values” and offer homeowners “lower insurance premiums.”
Recent studies lend credibility to the claim that LEED-certified buildings retain higher property values than those without similar certifications. Heather Benjamin identifies these studies in her article “The value of investing in a LEED-certified home” for Green Home Guide. One 2018 study surveying homes in the Francisco Bay Area found that “green homes bring a higher price than conventional homes.” A second 2017 study found that ”LEED-certified homes in the Austin-Round Rock area showed an 8 percent boost in value.”
A low HERS score could also boost home value. The lower a home’s HERS score, the closer that home is to operating with net zero emissions. Having a lower HERS score communicates to buyers that your home is more energy efficient and less expensive to operate when compared to other properties.
#9 Cutting Solar-Powered Skylights
Depending on where you live, solar-powered or tubular skylights could also be a great investment that pays off when you list your home for sale. Buyers love natural lighting and energy efficiency, which is why solar-powered or tubular skylights could boost home values. According to Jonathan Trout in an article for Consumer Affairs, “adding Energy Star-qualified, no-leak skylights can increase your home’s efficiency and appeal to potential buyers.” If you want fresh air in addition to natural light, Trout recommends solar-powered skylights because they “improve indoor air quality and air flow.” Best of all, “solar-powered skylights…are eligible for a 30 percent federal tax credit.”
Of course, skylights do not suit the preferences of all buyers. Location heavily influences how much your home value could increase with the addition of solar-powered or tubular skylights. Larissa Runkle explains in her article “Do Skylights Increase Home Value? Selling Buyers on These Little Windows to Heaven” for Homelight. Quoting Washington State real estate agent Dawn Rushton, Runkle writes that “‘skylights are a wonderful thing here in the Pacific Northwest where we don’t have a lot of light.’”
In general, skylights are “a good investment [in homes that have] a tendency to be dark” but are not as desirable in hot, sunshiny areas. As Runkle explains, “you might think twice about installing one in a hotter climate where future homeowners are more interested in keeping spaces cool, such as Florida or Arizona.” Keep this in mind when considering solar-powered or tubular skylights in your home.
#10 Installing Solar Panels
Last on our list of green home improvements that could increase its resale value is installing solar panels. Installing solar panels on your home could make your home more independent of your state’s energy grid, reduce your energy costs and increase the value of your home. In her article “Solar power can boost your home’s value — especially in these 10 states” for CNBC, Valentina Sanchez explains.
Sanchez writes that installing solar panels could “increase the home’s value by up to 4.1% more than comparable homes with no solar panels.” On average, this amounts to a premium of $9,274 for homes sold in the U.S. Another study referenced by Karsten Neumeister in his article “Do Solar Panels Increase Home Value?” for EcoWatch, “confirmed that solar installations increase a home’s resale value by up to $5,911 for each kilowatt of solar panels installed.”
Solar panels also help homes sell more quickly than those without the money-saving upgrade. According to Neumeister, “homes with solar panels sell 20% faster and for 17% more than those without.” Plus, there are tax credits and deductions – local, state and federal – for homeowners who add solar panels to their properties. In some states, you could get a 100% property tax exemption too.
Which Energy Efficient Upgrades Qualify for Tax Credits?
If you are considering any of the upgrades listed above, head over to our post “Which Home Improvements Qualify for an Energy Tax Credit?” In that post, we explain how homeowners can take advantage of the Residential Energy Efficient Property Credit, the Nonbusiness Energy Property Credit and the Solar Investment Tax Credit. Find out which credits could save you money on new appliances and installation.