Cost To Buy Real Estate In VT & NH Versus Cost To Own

As the inventory of available ‘for sale’ housing within the Upper Valley shrinks and general pricing serves to underscore an imbalance between seller needs and buyer expectations, it may be a worthwhile exercise to view housing from a separate financial standpoint; namely, the cost-to-own one’s home.  

It is certainly in the buyer’s interest to understand all post-purchase costs, and their impact on personal finances and peace of mind.  Expenses such as heating, air conditioning and electricity are very important cost considerations. As a seller, energy-efficient features can and should play a role in pricing; as a buyer, the offer price should reflect both budget consideration and those future “unknowns” driving ownership costs.  Home energy costs, and a potential need to mitigate increasing future costs must factor into the negotiation process. Perhaps this is plainly intuitive. But having recently worked with a builder of net-zero energy homes I have developed a strong appreciation for the positive impact that low-to-no energy expense play on ownership costs, and the highly predictable competitive benefits a future seller may realize in the marketplace.

Is there any question that a home that is less expensive to operate, uses less heat, cooling and electricity will have broad value in the future?  Clearly, if two very similar homes in comparable locations are being marketed at roughly the same price, the seller of the more efficient homes should have a competitive advantage from the start – assuming the features and benefits related to this advantage is effectively showcased.  Perhaps it is more likely that the more efficient home carries a premium asking price, based upon a history of reduced operating costs? Regardless, the rational buyer can easily differentiate one home from the other based on energy-related expenses and determine how controlling such cost may be in their best interest.  The real estate agent’s ability to highlight potential cost savings to the buyer client undoubtedly will help separate one home from the other, perhaps justifying any notion of an ‘asking price’ premium. The buyer who understands the potential benefits associated with having a greater level of financial control over future energy costs may deem this premium prudent.

Perhaps the bigger goal for both the buyer and seller in today’s market is in helping convince the lending and appraisal communities that energy-efficiency has concrete value and does promote greater financial security (and less risk) for all parties to a real estate transaction?

Next week, we’ll look at a specific example.

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