March 11, 2013

Two weeks ago I attended the annual Residential Energy Services Network (RESNET) Conference in Austin, TX.  In addition to attending lectures by some of the brightest minds in building science and checking out a late night James McMurtry concert at the Continental Club, I got to learn first-hand about “Austin’s Energy Conservation Audit and Disclosure Ordinance”--the first of its kind in the U.S.

About the Ordinance

The Ordinance requires a person selling a single family home (or an apartment building with fewer than 4 units) to get an energy audit and provide a copy of the report to all prospective purchasers. Homes built within the last 10 years are exempt. On the other hand, owners of large apartment buildings have to get an audit, irrespective of intent to sell, and post the report within the building to alert renters and prospective tenants of the building’s energy use.

The primary goal behind the Ordinance is to give home buyers and renters complete information, so they can purchase (or rent) the best possible house (i.e. one that is efficient, comfortable and healthy).  On the community level, though, the Ordinance is important as it gets the market thinking about ongoing energy use as part of a property’s value.  

Opposition by Real Estate Agents

Such disclosure ordinances have been widely opposed by real estate agents, as they make it more difficult to sell older, less efficient homes.  Decreasing the pool of “attractive” homes leaves fewer opportunities for agents to turn a quick profit.

Opposition by real estate agents, though, is insignificant when compared with the importance of protecting buyers from getting into homes they can’t afford to carry from month to month. Just as price and school districts are often guiding requirements in a home buyer’s search, so to should the ability to heat and cool the home throughout the year. Before making appointments to view homes, buyers should know the energy efficiency of the home compared to its price, since they may be required to do a retrofit or pay significant utility bills. Early notice would allow buyers to pass on all homes at the top of their price range that are energy hogs, which would sink their monthly budgets.  

Notions of Fairness

But is it unfair to require a seller to pay for the audit when it’s the buyer who will benefit? Why not treat the audit like a home inspection?  In the absence of an audit subsidy by a state or utility-sponsored program, the seller is best positioned to shoulder the cost of the audit. Typically running $300 to $500, the price of an audit is fairly insignificant compared to the total sale price of the home. But to a prospective buyer using energy efficiency as a guiding criterion for their home search, it would be too expensive to purchase an audit for each home they want visit. Thus, the seller is best positioned to pay for the audit.

Another Arrow for Your Quiver

The key point to take away from this post is that disclosure ordinances are yet another tool that communities can use to reduce energy consumption. They should be considered alongside other mechanisms including:

  • Rebates for Efficiency Upgrades
  • Subsidized Audits
  • Tax Incentives
  • Building Codes
  • Contractor Training
  • Public Education and Outreach

For more information, check out www.imt.org, which is a great resource for disclosure ordinances.