Pearl and the Appraisal Process
Pearl Certification provides information appraisers need
Pearl Certification is a nationally recognized firm that third-party certifies high-performing homes across the country. Pearl’s certification makes “value visible” in homes with upgraded renewable and energy efficient features, and it includes verified information captured in the Appraisal Institute’s Residential Green and Energy Efficient Addendum.
- Pearl’s certification system is approved for use in the U.S. Department of Energy’s ENERGY STAR program for existing homes.
- Pearl is a member of the National Association of REALTORS Sustainability Advisory Committee.
- Pearl is licensed by the Appraisal Institute to complete their special addendum as a third party.
What is the Residential Green and Energy Efficient Addendum?
(and why you need to know how to use it)
The Residential Green and Energy Efficient Addendum describes “green” features in a way that the lender, underwriter, appraiser, buyer or agent can use. It specifically helps appraisers assign value for energy efficient and other green features like solar or water efficiency.
Appraisers are required by Fannie to include information from the Appraisal Addendum in their opinion of value:
“Special energy-saving items must be recognized in the appraisal process and noted on the appraisal report form. For example, when completing the appraisal report (Form 1004), special energy-efficient items are to be addressed in the Improvements section in the Additional features field.”
Fannie Mae Selling Guide Section B4-1.3-05 specifies that “special energy-saving items must be recognized in the appraisal process and noted on the appraisal report form.” More specific guidance is provided on Fannie Mae’s webpage.
Fannie Mae Selling Guide Section B2-3-04: provides guidance on owned and leased solar panels.
Don’t allow the O-part of your E&O insurance to become unnecessarily impacted by omitting information that should be part of the appraisal.
If you are appraising a Pearl Certified home, then you should also have been provided with a completed Appraisal Addendum. This information is also publically available on Pearl’s Registry webpage by inputting the address of the home.
See a sample Pearl Certification Report that includes a completed Appraisal Addendum.
Independent appraiser study shows Pearl Certified homes sell for more
New data fields created by the Real Estate Standards Organization to display energy efficient features and home certifications have been adopted by the majority of MLSs.
Pearl’s 3rd party certification verifies homes’ high-performing features to educate buyers on their benefits and to provide appraisers with critical information they need to assign contributory value. An independent, peer-reviewed appraiser study showed Pearl Certified homes sell for 5% more when marketed properly.
Resources for Appraisers
- Interested in learning more about the Appraisal Institute’s Addendum and how to appraise high-performing homes?
- Read the Appraisal Institute’s Quick Start Guide for direction on how to use the Residential Green and Energy Efficient Addendum.
- Listen to this “Residential Green and Energy Efficient Addendum” webinar on the Appraisal Institute’s website to learn how lenders, underwriters, appraisers, buyers and agents can use it.
- The Appraisal Institute’s website also has information on classes and professional certifications that will help you meet the challenge of appraising high-performing homes.
Pearls of Wisdom from the Experts
Pearl’s CEO, Cynthia Adams recently interviewed Sandra Adomatis, SRA, LEED Green Associate, GREEN a nationally known appraiser, speaker, trainer, and author of Residential Green Valuation Tools. They discuss the importance of why Pearl provides the Appraisal Institute’s “Residential Green Appraisal Addendum” on every Pearl certified home to help homes appraise correctly the first time.