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Home Energy Audit May Be Coming Soon—and Why Your Home May Not Measure Up

Car buyers worried about their gas bill can check out a vehicle’s estimated fuel efficiency on a sticker posted on the window. Those in the market for major household appliances can compare energy costs on the accompanying yellow tags.

So shouldn’t home buyers be able to assess a home’s energy efficiency—or inefficiency—when browsing property listings?

Massachusetts could soon become the first state in the nation to turn this scenario into reality. Gov. Charlie Baker wants to require a home energy audit and scorecard as part of the traditional home-selling process. Environmentalists hope the state legislature will approve it by the end of July. Similar ideas are already being tested in a handful of cities around the country, including Austin, TX; Berkeley, CA; and, most recently, Portland, OR. And more cities and states could soon be getting on board.

The Baker administration hopes to prod more folks to invest in costly energy-saving improvements such as a high-efficiency furnace or new windows. This could potentially raise the value of their homes, save them some money on their energy bills, and reduce their carbon emissions.

The ratings would be coupled with recommendations for the improvements that would most effectively boost the score.

Many times, folks are hesitant to invest in a major energy-saving measure because they’re not sure they will pay it off before they sell their homes, says Antonio Barletta, director of government affairs for the state’s Department of Energy Resources.

However, the state will offer some incentive and rebate programs to help homeowners offset the costs of the upgrades.

Some homeowners are surprised by their score

In January, the city of Portland began requiring all home sellers to obtain an energy scorecard and disclose it when their home goes on the market. The rating can be uploaded directly into local multiple listing services.

So far, the new system hasn’t affected the pace of sales or the home prices, says Jane Leo, director of governmental affairs for the Portland Metropolitan Association of Realtors®. (The group had opposed the idea.) But that may be because the housing market is booming. Properties sell within a few days of listing, regardless of their energy rating, she says. And there are enough certified energy assessors to go around.

Many sellers, however, aren’t keen on the new requirement. Some have resisted getting the audit, which costs $100 to $250, while others have complained about the results and questioned the methodology behind it. There are stories of those who have sunk big sums of cash into energy-efficiency updates, only to receive a lousy score.

The average rating in Portland so far is a 4 out of a 10-point scale. That may seem low, but isn’t entirely surprising, given that much of the city’s housing stock dates to the early 1900s, says Andria Jacobs, a senior manager at the city’s Bureau of Planning and Sustainability.

Meanwhile, the city of Austin has required a home energy audit since 2009. (Houses less than 10 years old are exempt.) Instead of giving homes an overall score, Austin’s audit analyzes the efficiency of windows, attics, ductwork, and HVAC systems, and lays out what rebate programs are available to help with the cost of recommended improvements.

In focus groups conducted by Austin Energy, the city-owned utility that runs the program, home sellers have said they liked showing off the report to buyers and highlighting the improvements they’ve made, says Tim Kisner, an Austin Energy project manager. As for buyers, many are using the report “as a punch list” as they go about doing work to their new homes, he says.

The downside of a home energy audit: potential delays and higher costs

The Massachusetts Association of Realtors® argues that a separate energy audit on top of a home inspection could slow down the selling process by a few weeks as homeowners wait to have them performed. It may also drive up seller costs, as the audit is estimated to cost $150 to $200 a pop in the New England state. Buyers could be forced to bear the brunt of these charges.

Home energy assessments are already available free of charge through Mass Save, a utility-run program funded through a small assessment on ratepayer bills. The assessment advises homeowners on how to green their abodes and provides them with free LED lightbulbs and water-conserving shower heads. About 80,000 to 90,000 state property owners voluntarily take advantage of the program annually.

There is also the potential that these energy ratings could stigmatize homes that perform poorly—leading sellers to undertake costly improvements or lower the price.

But that hasn’t happened in the European Union countries that have implemented these ratings.

“The scorecards have not produced any negative or black mark on the value of a home with a low energy score,” says Massachusetts Department of Energy Resources’ Barletta.

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