Want to Sell Your Home? New Mandatory Fee. Portland, 2018.

This could be the biggest news of the decade for the Portland Real Estate market.

Portland is in the process of adopting new rules about home energy scores (already approved, already passed) which will go into effect January 1, 2018. After that date, the vast majority of homes being sold on the Portland real estate market (if their home falls within the City of Portland boundaries) will be required to receive a Home Energy Score, separate from a home inspection, which gives a rating for how well the home performs in energy efficiency. The seller will have to pay for this before they can sell their home (or even advertise it for sale), a mandatory fee, whether or not the seller wants to sell it for sale by owner or use a Portland real estate agent.

There are some concerns about the policy, but let’s start by looking at what the policy is, and how it could benefit home buyers, sellers and real estate agents.

What does the Home Energy Score policy require?

Put simply, before a seller can list their home, they’ll have to call a contractor who is certified in performing home energy performance scores.
The score will cost between $150-$200 (as of now), and like a home inspection, take 2-3 hours to complete. The assessor will look at windows, insulation, appliances, heating and cooling systems, and the source of the home’s energy. The final Energy Score, between 1 and 10, is based on the home’s energy efficiency, or how much energy is used to perform the desired functions of the home (heating, cooling, lighting, etc). The average score for a Portland home is 5.

The report will also include an estimate of the home’s carbon footprint, measured in tons of carbon emitted per year.

The second part of the policy is then to share those results. Rules are still being developed, but it is fairly certain that a home’s Energy Score will be included in the city’s database of home and real estate information publicly accessible at portlandmaps.com. The score will also have to be part of the advertising of the home for sale.

The seller will also be required to provide the information directly to potential home buyers. The listing real estate agent will provide buyer’s agent with a copy of the home energy score along with the regular packet of listing disclosures.

Benefits of Home Energy Scores

According to the City of Portland, information about a home’s energy performance is currently difficult to find and when it is available, there is no consistent way to compare homes.

A limited number of homeowners currently participate in the voluntary Energy Trust of Oregon audits. With the costs already involved in putting up your home for sale and moving, most sellers simply aren’t going to want to pay the extra money to have an additional home energy score. (So the city is going to force them to.)

By mandating these home energy scores, Portland city managers are hoping to give home buyers a reliable, easy-to-understand measure of what kind of energy costs a home will generate, and what its carbon emissions are.

In the fight against global climate change, residential carbon emissions, specifically the carbon generated in coal-fired power plants that provide energy to cities like Portland, are a major battleground. Several U.S. cities have created similar home energy use disclosure policies for their housing markets, including Austin, Berkeley, Santa Fe, and Boulder.

For sellers, the home energy score could be an opportunity to learn about areas for home improvement as they go through the process of preparing their home to be listed on the market. A better energy score just might be the key to swaying buyers to their favor, and sometimes simple upgrades can make the difference between, say, a 4 and a 5.

For buyers, the advantage of knowing a home’s energy score is to know how much they might be paying for energy bills if they buy a particular home. A home energy score is more accurate than looking at power bills from the current owner because it accounts for differences in personal habits (maybe the current owner cranks the heat in the winter and never turns off the lights, or maybe the reserve is true.)

Concerns About Home Energy Scores

Although the City of Portland has stated that it is learning from other cities’ challenges with home energy audits, there are still some issues that should be addressed to minimize the impact on home sellers.

Timeliness

The biggest impact will be on homeowners who need to sell right away. As a real estate agent, I see it all of the time — someone gets a job offer, or is relocated with their job, or has a catastrophic life event that prevents them from making mortgage payments. Under the current system, we are able to get their home listed on the MLS within a few days after the homeowners call a real estate agent.

Adding a home energy score to be performed before the home is advertised for sale might put a significant delay in the process. There are hundreds of home sales in Portland every month. Are there enough trained contractors to provide the home scores in a timely manner? Will a homeowner have to wait weeks or months before someone is available to give them their score? How much stress is this going to put on a home owner that is already distressed?

Want to see what I did about this? (2018 update!)

The rules for the home energy score program do exclude foreclosures and short sales. There may also be exceptions for certain homeowners who can demonstrate hardship.

Advertising Restrictions

Under the current rules, an energy score must be completed before a home can be listed on the Portland real estate market. This includes “Coming Soon” listings!

This is an impact on sellers because “building steam” before a home is officially listed on the MLS is one of the ways that real estate agents create additional value for their clients. We can list a home as “coming soon” without pictures, a listing date or even a listing price, but now we have to wait on the energy score before the home can be listed as “coming soon” anywhere online.

Looking for more information? Read our more recent article, Home Energy Score Portland 2018 – Must Know Guide.