BY SHANNON SEVERSON
Summer electricity bills can leave homeowners feeling helpless. And proposed rate hikes in utilities could soon add upward of $240 to the average household’s annual total. While there are plenty of small changes people can make to save energy and money, many owners are turning to large renovations and home improvements — often with the thought that these practical upgrades will bring about solid returns on investment if or when they put their house on the market.
“Everyone wants to save energy,” says Jan Green, a Scottsdale-based real estate agent with multiple green certifications who has been active in the sustainability space since 2008. “I’ve been into sustainability so long that sometimes I forget how much I know.”
Green shares knowledge about home energy savings on her website’s blog. And she also instructs fellow agents in marketing and selling high-performance homes, as well as hosts green appraiser courses. She speaks from personal experience, having converted her own 1979 Phoenix home from an energy vampire into a net zero dream — earning Arizona’s first Pearl Gold-certified designation.
Pearl is an independent standards and ratings organization and Certified B Corp. that provides third-party verification that a home is energy efficient, comfortable, safe, and high performing. It offers four certification tiers: Asset, Silver, Gold, and Platinum. Other increasingly popular green building standards that convert environmentally friendly and energy-saving improvements into tangible property value assets include HERS (Home Energy Rating Score) and LEED (Leadership in Energy and Environmental Design). LEED for Homes uses HERS ratings to measure energy performance.
When you’re ready to begin making changes and upgrades, “start with an energy audit through your utility provider,” Green says. “That report will show you the ROI on each item that needs improvement. Start with the least expensive ones first.
“There are many simple changes that don’t cost money and can be particularly helpful for those with low or fixed incomes,” she points out. “You don’t have to buy solar panels. You can really see significant savings through changes in your daily habits.” (See “Small Changes, Big Savings,” Page 23.)
The state of Arizona, as well as several counties and cities, offer low-income residents weatherization assistance programs that may further reduce costs. Homeowners should keep detailed records and, when it’s time to sell, find a realtor well versed in the value of energy-efficient upgrades.
“Create a list of every feature you’ve added, the date you’ve added it, and how much you spent. Your realtor should pair it with listing documents. An appraiser can’t assign value without knowing what you spent.”
This is especially important now, as property appraisal form changes coming in November that document energy-efficiency measures will affect property values, lending, and the appeal to potential homebuyers.
Starting on Nov. 2, all appraisal reports must include the Universal Appraisal Dataset (UAD) 3.6, which details features such as insulation quality, window performance, and solar panels or renewable systems. This will help buyers and investors better assess long-term property value and sustainability.
Aaron Chonka is a licensed appraiser and instructor who specializes in green and solar appraisals. He suggests using the Appraisal Institute’s “find a green appraiser” directory to locate an appraiser who has been educated in the valuation of high-performance and energy-efficient residential properties. He says the new UAD 3.6 energy valuation section on appraisal reports will benefit conscientious upgrades.
“The onus is on the appraiser to be up to speed on how to properly identify property upgrades and determine how they contribute to value,” he says.
Proper vetting from the lender should ensure appraisers know the methodology to make market-supported adjustments in the new report structure, which standardizes how these items are cited.
“Green features will be more prominent and identifiable,” Chonka explains. “There’s room to note energy-efficient components of the property like solar panels, the ownership status of panels, building certifications like Pearl, or energy-efficiency ratings like LEED or HERS. Previously, an appraiser could miss some of these or dismiss them based on presumption. Now they must address it directly.”
PENNIES TO POUNDS: GREENING YOUR HOME FOR MAXIMUM RETURN
Both Green and Chonka agree that homeowners should start small when making energy efficient changes. Low-cost upgrades can make a big difference. Chonka suggests regular maintenance of energy-efficient appliances and HVAC units.
Additional inexpensive, easy-to-do changes include:
Switch to LED light bulbs. These use 75% to 90% less electricity and can last up to 25 times longer than incandescent bulbs. They also emit less heat than halogen or incandescent bulbs. A standard 60-watt LED bulb costs about $5 to $8.
Install window sun screens or solar screens. Mesh screens reduce solar heat gain, lower indoor temperatures by upward of 8 degrees to 15 degrees, and reduce the need for air conditioning. This can lower cooling costs by up to 25%, according to the Department of Energy. Prices range from $20 to $50 for DIY versions to between $80 and $280 per window for professional fabrication and installation.
Swap out manual or nonprogrammable thermostats with smart models. You may be able to get one free from your utility provider. Connect it for more efficient run schedules. Estimated cost savings of 3% to 5% can yield up to $300 in annual savings.
For those willing and able to spend a more substantial amount on upgrades, Green and Chonka suggest these top energy-saving investments:
Attic air sealing: Close gaps, cracks, and holes that allow air leaks. Use acrylic latex or silicone caulk for small gaps and expanding spray foam insulation for larger openings. This process may reduce heating and cooling costs by 15% to 25% according to DOE estimates. The average cost for professional installation is $500 to $1,500 with an ROI of two to eight years.
Air duct sealing: Just like closing gaps in your attic does, fixing leaks in your heating and cooling system can help regulate room temperature and lower utility bills. Professional methods include Aeroseal, which fills leaks from the inside with a nontoxic expanding aerosol sealant, and closed-cell spray polyurethane foam (ccSPF). DIYers can use mastic sealant or UL 181-rated aluminum foil tape. Green used Aeroseal, which she recommends, and says she saw immediate savings on her electric bill. Costs range from $100 for a DIY fix to $2,250 for professional installation, with an ROI of two-and-a-half to five years for Aeroseal.
Replace aging insulation: This is particularly effective in older homes to increase HVAC efficiency, and owners can see a decrease in cooling costs of as much as 35%. The average price for installation is $2 to $6 per square foot, with an ROI of two to five years
On the flip side, some major upgrades don’t result in the energy savings payoff homeowners expect, Green notes. For example, the benefits of new windows tend to be more aesthetic or comfort-based than energy-saving for a high-ticket item with an ROI of 17 to 20 years. Costly battery walls and special EV charging stations can be listed in but don’t add much value to appraisals. Solar panels also make the overhyped list, particularly if they are leased, which renders them a zero-value item on appraisals.
“Outside of windows, solar is the last thing you should do,” Green says. “Improve the building before you add solar. The free, low, and median cost upgrades I suggest reduced my energy bill by 71% before I installed solar panels.”
While there is an Arizona state tax credit and exemption for solar, the recoup is relatively small for an expenditure of up to $28,000 for a residential system. Consumers can seek out rebates, incentives, and policies through DSIRE (Database of State Incentives for Renewables & Efficiency). Once you’ve found an appraiser such as Chonka who is experienced in evaluating solar systems, it’s crucial to retain and present complete system details — permits, size, certifications, energy ratings, and date of installation — to your realtor or lender.
REVVING UP VALUE
Even when improvements are executed and documented, Chonka says there are still homeowner misconceptions that revolve around the cost of improvements versus what the market is willing to pay. It’s not a dollar-for-dollar situation.
“The value of the home doesn’t increase at the same rate as dollars spent,” he explains. “It varies by price point, demographics, and specific neighborhoods. That said, proper, organized documents, especially accompanied by a one-page summary document showing all the improvements, are helpful.”
But what if you’re the first on your block to make improvements? When comps are mixed or scarce, Chonka says experienced appraisers can utilize similarly energy-efficient or energy-certified homes in a competing neighborhood.
“It’s a matter of expanding your search, and you have that latitude,” he explains. “A few years ago, Pearl hired independent appraisers to study the value associated with the certifications in four different U.S. markets, and Phoenix was one of them. That supporting information can be presented to a lender.”
Chonka points out another important homeowner incentive for amping up energy-saving improvements: Lenders won’t accept an income-only approach for home sale purposes, but upgrades that keep more money in borrowers’ pockets do make a difference.
“Studies demonstrate that owners of high-performing energy-efficient homes have lower mortgage default rates due to lower monthly expenses,” Chonka says. “Lenders know this, and it factors into qualifications as these homeowners are considered stronger borrowers overall.”
Assess, act, and record: With proper documentation and knowledgeable experts, the benefits to homeowners, borrowers, prospective homebuyers, and the environment are numerous. There has never been a better time to green your home at any price point.
Small Changes, Big Savings
9 simple (and cheap) things you can do at home to save energy.
Our houses use a lot of energy. In fact, according to the International Energy Agency’s World Energy Outlook, the amount of energy used to operate homes results in more than a quarter of the world’s planet-heating carbon dioxide pollution. But you don’t need to spend large amounts of money or do major renovations to save dollars and energy. Here are nine easy actions you can take to make your home more energy efficient, according to APS.
Pre-cool your home to use less energy during higher-cost peak hours.
If you’re on a time-of-use plan, pre-cooling is beneficial. APS peak hours are 4-7 p.m., so set your thermostat a few degrees lower for several hours during the day prior to 4 p.m. Then, between 4-7 p.m. on weekdays, set it a few degrees higher. For every one degree you raise your thermostat, you can save 2% to 3% on energy cooling costs.
Use ceiling fans efficiently and switch to counterclockwise rotation.
Ceiling fans help circulate air, making a room feel up to 5 degrees cooler. Fans should be set counterclockwise in warm weather to push air down and create a cooling effect. Also, remember to turn off fans when you leave the room to eliminate unnecessary energy usage.
Replace or clean your air filter.
A dirty filter can make your cooling system work harder than necessary. A clean filter helps improve airflow and system efficiency.
Raise the thermostat a few degrees when you are away.
Setting your thermostat higher when no one is home can help reduce energy use without sacrificing comfort when you return. A smart thermostat makes this easy to manage.
Turn off the lights when you leave the room.
It sounds simple because it is. Turning off lights, ceiling fans, and electronics when they’re not needed helps conserve energy. For additional savings, switch to LED bulbs, which use less energy and last longer than traditional incandescent bulbs.
Use blinds, curtains, and shades strategically.
Keep window coverings closed during the sunniest parts of the day to reduce indoor heat gain.
Check weather stripping and seals around doors and windows.
Small air leaks can let cool air escape and hot air in. Repairing or adding weatherstripping or caulking helps improve comfort while potentially lowering energy use.
Use alternative kitchen appliances for cooking.
Ovens add extra heat to the home, making the air conditioner work harder. Try grilling outside, or use an air fryer, slow cooker, or microwave for a few meals each week.
Schedule an HVAC tune-up.
Have a professional inspect your system annually, ideally in the spring before the temperatures heat up. This not only helps protect against sudden breakdowns, but a clean, well-maintained unit uses less energy.
