14% Premium for Green Marketing

Redfin fan, Sterling Hamilton of Hamilton Investments, has written another report for Built Green looking at the effect of green real estate practices.

The last report was on how Built Green Homes on the Rise and Hold Value Better. This April 22nd, 2009 study, Green Building Marketing Analysis – Five County Region Western Washington [pdf], looks at the differences in marketing of green homes.

Sterling concludes that green-certified homes sell for more when their marketing remarks mention sustainable features and/or certification. THis isn’t all that surprising. But it is surprising 77% of green-certified homes don’t mention that they’re green certified!

Throughout the five county region, certified homes which were marketed as green achieved an average sales price of $534,000 and homes which were not marketed achieved an average sales price of $458,000. In all of the homes analyzed, a roughly 14 percent premium is associated with the marketing of green features. This study includes 1,470 certified homes sold between 2007 and April, 2009 and built between the year 2005 and 2009.

Here’s a chart showing the premium by county. (Y indicates certified homes marketed as green, N indicates certified homes not marketed):

Average prices for certified homes sold by county

Of course, it’s hard to control for other factors which may have contributed to a premium in the pricing:

While the findings of the study support the hypothesis that marketing comments are a good method for analyzing the effects of marketing on sales prices for certified homes, each sale referenced in this document cannot account for every agent’s knowledge and intentions regarding the sustainable features of each home sold. However, without at least some explanation or denotation of environmental certification within a listing’s marketing comments, the stage seems to be set for less than optimal transfer of information for both clients and agents who are uninvolved in the listing process.

If you’re selling your home and has Built Green or LEED certification sounds like you should definitely mention that and some of the green features in the marketing remarks.