I often read articles stating that solar panels or “green items” will increase your home value. What about wind mills and other form of “green” ideas. Here's my take on these types of things such as insulated walls, wind mills, solar panels and anything else that is considered “green.”

Nothing and I mean nothing will increase home value unless the market is willing to pay for it.

You see, all of these studies that show solar panels or wind mills will increase your home value by 3% or 5% are taken from some text book or a study in some other part of the country. Real estate is local and can not be moved and there are lots of moving parts in a real estate transaction that is much more important in determining the value than “green” homes.

The appraiser must look at the most important data to determine market value and they must be able to find homes with similar items to compare. Until the MLS system offers line by line items for such improvements and there are enough homes in the market to use for comparable homes, “green homes” will never be given much value.

Here's the issue with using this type of material or any type of “green” items to build your home. First, there is not sufficient market acceptable of these types of specialized construction methods. They will usually cost you more money to install. When an appraiser goes looking for real comparable sales to support these improvements, there will not be enough data in the market to support an increase of price or an adjustment in most cases because of the sheer lack of data.

The real reason to install “green” items in the home is to save energy in the long run, not to increase your home value.

When an appraiser looks at all of the comparable sales in the area, let's say they find 15 similar homes in your area. And when I mean similar, this is in reference to location, lot size, square footage, bedroom count other important amenities that Appraiser and Realtors can study. By pure luck, one of the Realtors talks about the ICF walls or the solar panels and you are able to search and find this home in the area. What are the opportunities that the home will offer some sort of similar square footage, design and lot size? Let me help you with the answer, slim to none.

So, here are some solutions to this problem

Create an entire development of “green” homes and make sure it is larger enough to really make an impact in the community. And when I mean “green” I mean, ICF walls, solar panels on all of the roofs, wind turbines around the entire development and in everyone's yard, homes built to with the correct windows for passive and active collection of energy. This will allow Realtors and appraisers to look at homes from these types of developments and really determine if they will increase value or if there is any real impact and if the market will pay for these improvements.

Make sure every MLS system in the entire country is correctly identifying the “green” items and putting them in the MLS so that Realtors and Appraisers can use this data to determine if the market is willing to pay for these types of things.

Until this happens across the country or in your home town, there is a slim chance that green items will have a big impact in increasing your home value.