"Greening the TMLS:" Seeking Value for Energy Upgrades in NC's Existing Homes
Julie Caracino, HPC's Director of Research & Standards and Joe Cullen, HPC's Director of Policy & State Outreach talked with Ryan Miller of North Carolina Building Performance Association (NCBPA) on his work with the Triangle Multiple Listing Services to facilitate the accurate valuation of energy efficient homes in North Carolina. Learn what Ryan had to say about these standards, his involvement with NCBPA, and other southeastern states' future involvement.
1. Tell us a little about yourself, NCBPA and your work in North Carolina.
I’m Ryan Miller with North Carolina Building Performance Association, a 501(c)(6) not-for-profit trade association that I founded just over three years ago to represent North Carolina’s home and building performance contractors, builders and developers, product and service providers, and industry supporters. Our association represents more than 330 companies and close to 1,000 industry professionals across the state. Simply put, our work improves the market for our member businesses and supports lasting careers for our industry workers.
Since we launched NCBPA in 2014, we’ve supported the start-up of sister associations in Georgia and South Carolina and work closely with other state-based organizations in the Efficiency First chapter network. Each of these associations offer valuable services to contractors by representing their best interests and educating homeowners, building and property owners, and other stakeholders on how and why they should participate in building performance.
2. How will adopting improvements to the Triangle MLS (TMLS) benefit energy consumers and home buyers?
By the end of the year we anticipate the Triangle MLS – based in Raleigh’s booming residential construction market – will have incorporated dozens of new “green” fields that increase the visibility of home performance, energy efficiency, renewable energy and other high performance features of homes in the area. Additionally, TMLS would also be the first MLS in the country to accept auto-populated “green” data sourced from local, state and national third party certification and verification programs including HERS Ratings, Home Energy Score, ENERGY STAR®, NGBS and many of the others active in North Carolina.
These new MLS features will resolve a major barrier our industry faces in educating energy consumers, home buyers, realtors, appraisers and lenders about the value of our industry’s work. Instead of training each of these parties on what energy efficient homes are and how to value them, we’re placing our industry data into the one place that each stakeholder goes to evaluate these features in the real estate process. With address-level data and appropriate usage permissions in place, our first import will data on up to 56,000 homes in the TMLS territory. As a result, stakeholders will be able to make more informed buying, selling and valuation decisions using verified industry data.
3. How will adopting improvements to the Triangle MLS (TMLS) help create jobs in North Carolina?
Workforce development and job creation is one of our association’s four strategic objectives for 2017 and 2018. We believe this work will create jobs by establishing a mass data-driven comparables market that clearly demonstrates the increased appraised value and sales prices for high performance homes versus others. Creating more demand for home performance improvements will result in leads to our members from realtors, home inspectors and others. Homeowners and realtors will also be able to see that, in some cases, the home they’re trying to sell is energy inefficient and will now have more reason to hire an energy auditor or home performance contractor to make improvements to it. Without this comparables data, there isn’t any real visibility into the added market value of high performance homes. We’ve been hearing this specifically from appraisers and realtors for years now; they don’t need more training, they need comparables data.
4. What role do data standards, like HPXML and RESO, play in facilitating the accurate valuation of energy efficient homes?
Following the establishment of comparables data, the second most important task in this work is to make sure the data can be communicated accurately, and that comes through following uniform data standards. This is, after all, a data project as much as it is a real estate project.
HPXML is the most widely recognized and supported data standard in the existing home space, and is supported by a number of in-home energy audit software tools for utility-sponsored retrofit and weatherization programs. Because of this, we intend to leverage the HPXML standard as one method for aggregating energy efficiency program certification and audit data for eventual distribution to real estate end-points.
But, in most markets across the country there’s a higher quantity and quality of home data in new construction programs focusing on utility rebates and incentives, third party certifications and more. And, since a new home becomes an existing home the day it is first sold (like a new car leaving the lot), this data is a much larger source for our efforts. Because of this, we’re working with our software vendor Pivotal Energy Solutions to carve out a role for HPXML in the residential new construction space. That way, it can be used as a data transfer standard for energy rating software engines like REM/Rate, Ekotrope, Energy Plus and others. No such standard currently exists in that space and the industry could benefit from adoption of a standard data transfer protocol like HPXML.
For those unfamiliar, the RESO standard is the real estate industry’s data standard and includes a “data dictionary” of field names, data types and much more that must be used to translate data from one system to another. In our case, we’re sending home performance data (ratings, insulation levels, etc.) into the real estate market’s databases and therefore need to connect and translate HPXML and RESO standards together. That data connection is essentially the bridge that makes the two industry data sets talk to one another, ultimately placing our home performance industry data into MLS directories accurately across the country.
5. How will you leverage existing initiatives to auto-populate the green MLS fields, like Build It Green's "Green Registry" and NEEP's HELIX, to advance your work in NC?
I’ve been keeping up with efforts to “green” MLS directories across the country for about four years now and it’s taken NCBPA 2.5 years to get to the point where, in the first ten minutes of my initial pitch meeting with the Triangle MLS, they agreed to the full scope of work we outlined. How? Like many stakeholders in the home performance industry, TMLS sees more value in placing available and accurate data in the right place (the MLS) for realtors, appraisers and others to use, as opposed to sending them all to four-day training workshops on how to properly value and sell “green” homes. Those initiatives flat out have not worked in our market and many others across the country. Also, our scope of data sources is wide. We’re not focusing on just Home Energy Score or HERS alone, but instead are looking at all available programs and ratings that demonstrate added market value to homes. Solar PV capacity, energy storage installations, electric vehicle charging stations and other feature data are included in our scope.
The best part about our work, however, is that our local efforts will make these MLS enhancements available to many market across the country. Our efforts to “green” TMLS will result in software enhancements to the national software platform they use – Black Knight’s Paragon MLS – which represents more than 160 MLS systems across the country (20% of the total MLS market). That means that organizations like ours across the country can go to their local MLS system and encourage their “turning on” of these new features. And, as the data we’re sourcing for our efforts here in Raleigh is national data, yes, you really do just have to turn these features on to have that data flow into the MLS locally.
6. What value will the information in the green TMLS have for lenders and appraisers?
The most meaningful pivot point in this process is the appraiser. To gain proper recognition of the greater appraised and market value of high performance homes, we have to have a comparables market. Without this data, appraisers have no way to compare a high performance home to the one next door that isn’t. Our industry – both on the new construction and retrofit side – has had this data for years but hasn’t effectively placed it into the one place that it’s most needed to resolve our industry’s greatest challenge: the MLS.
With appraisers now having access to comparables data, they’ll begin to recognize the added value of air sealing, insulation, mini-split HVAC systems and other home performance upgrades that lenders recognize as contributing to lower mortgage default risk, as one example. For new construction financing and existing home performance improvement loans, providing lenders with real data on the better performance, lower monthly utility bills and lower insurance risks will more readily allow lenders to offer lower interest rates and credits that right now, they can’t validate with real market data.