Green Industry Articles

Taking a Lead Role in Green Real Estate

"Embrace Green or Face Disaster," read part of a headline describing a speech given by Thomas Friedman at the American Institute of Architects 2011 convention.

George Goldstein's shout to the real estate industry is similar.

Rather than being short-order cooks, Goldstein, GREEN, LEED Green Associate, CEO and founder of WMG/Green, Newport Beach, Calif., thinks real estate practitioners need to become master chefs.

Right now he sees too many short-order cooks.

Some of what's missing, believes Goldstein, is practitioners' ability to apply new green science and simple metrics to analyze buildings' potential and to leverage energy efficient mortgages and Federal and state incentives when they're ferrying clients through the buying and selling processes.

"You need the ability to analyze and pick the buildings that will achieve the greatest results from retrofitting and re-commissioning through very simple means," he says.

He's developed a method of identifying and analyzing buildings with potential for green upgrades and believes he's found the system to revamp buildings in ways that help them sell more quickly and appraise for more money.

Moreover, he thinks that green has the power to transform the market and that true green practitioners can do deals in a slumping market, make money, and satisfy the needs of buyers, sellers, appraisers and banks.

Here are 4 key steps you can take:

1. Education: Encourage education. Yes, it's an old saw. But he laments the eco-chic companies that hawk just green fairy; dust--say, bamboo floors from China--and lack true knowledge and understanding of environmental principles. Everyone involved in a real estate transaction, he believes, needs in-depth education.

After all just one weak link can muck up the process, he notes.

In a report on a house he was marketing, the home inspector noted that wiring was missing for the outdoor lighting system. An inspector knowledgeable about green principles would have known that the lights lacked wiring because they were solar powered.

2. Language matters: Average consumers have too many negative associations with the word 'green'. Some, for instance, associate it with the Birkenstock and granola crowd.

"People automatically think expensive," observes Goldstein. "I remove the word 'green' and call it 'high-performance' real estate."

3. Do a test house: A Laguna Niguel, Calif., property he sold serves as something of a test case for Goldstein. For his test house he spent about $700 for materials and labor to install some green upgrades, including dual-flush toilets, water-saving fixtures, CFLs, and solar-powered outdoor lighting. It was a way for him to prove a few key points, including that minor upgrades can help a property to appraise for more than its competitors, and sell more quickly than other similar properties. "I wanted an example to
show everyone how easy it was," he says.

He also speaks of lessened carrying costs--the dollars dedicated to servicing the mortgage, taxes, and property operations and maintenance--that result from shorter market times. The faster a property sells, the quicker homeowners, who may no longer be
living in the house because of a job transfer, for instance, can free themselves of such obligations.

In such situations, a shorter sales timeframe is especially beneficial, and incorporating green features may contribute to reducing the time a house sits on the market.

4. In-house specialty: Real estate companies can quickly incorporate a green niche into their businesses by hiring a trained, in-house specialist. His argument is that real estate companies have short-sale specialists, so why not have a green expert too?
"We're the escorts--the ones who usher buyers and sellers from point A to B--and we need to know how to do this to be in business.

Practitioners need to mean something and bring something to banks, appraisers, and clients," Goldstein comments. If they don't know how to do this, ten years from now, they won't be doing this business."

Source: Green REsource Council Newsletter, May 2011