Published by Martha Danly under Energy Efficiency, Green Building, LEED, Sustainable Design

We all have something that gets our goat. Something that’s just not right and needs to be fixed. For David Gottfried, owner of the greenest home in America, the property appraisal system is broken and needs overhauling now. Because so many people have a vested interest in home values—real estate brokers, mortgage companies, insurers, tax assessors, home buyers and sellers—appraisals that are more tuned to green features would go a long way toward bringing much-needed transparency to valuations, making it easier to be green.

Gottfried’s view is not the rant of a person who was burned in a real estate deal, but the considered opinion of one of the most powerful thought leaders in the field of sustainable living. He’s the founder of both the U.S. and World Green Building Councils; he also leads Regenerative Ventures, a consultancy that advises and funds greentech startups. To top it off, his home in Oakland, California, was recently rated the country’s greenest, based on its LEED Platinum points and GreenPoint Rating.

So what’s the problem? Essentially, according to Gottfried, we are using the wrong criteria to assign value to homes. The appraisal process treats houses as commodities, focusing on attributes that are easy to measure and compare, such as square footage or the number of bedrooms and bathrooms. The standard appraisal template doesn’t get at many of the important things that determine quality of life.

“We treat car value more intelligently than we do homes. You’d never see cars priced by how many doors they have or by how much they weigh. Why would we handle houses that way?” Gottfried asks.

Gottfried views a home more as a work of art than a uniform article that can be traded based on size. He notes that homes have intrinsic value and qualities that can’t be measured with a yardstick. “We don’t sell art by the square foot, do we?” he says.

It’s understandable how the appraisal system evolved the way it did. Based on its simple arithmetic logic, it’s easy to use and defensible by those who use it. And in the case of nearly duplicate homes that are produced cookie-cutter fashion, it may roughly apply when they’re fresh from the oven. But that doesn’t make it right.

The Gottfried family of four live in a 1,460 square foot home, every cubic inch of whose space was thought through before last year’s remodeling. And every bit of it is actively used today. When Gottfried gave me a tour, the space didn’t feel at all crowded; yet the 365 square feet per person is considerably less than the norm of 900 square feet in today’s average home.

Think of the Gottfried’s LEED Platinum home as a fine-tuned Ferrari or, better yet, a Tesla Roadster. It follows the Less Is More philosophy of Fritz Schumacher and the Not So Big House thinking of Sarah Susanka.

Interestingly, the National Association of Home builders reports that the average size of homes started in the third quarter of 2008 was down to 2,438 square feet from 2,629 the quarter previous. Their January 2009 survey of builders shows that 89% are building or planning to build smaller homes. Most of the declining home size may simply be owing to affordability of the initial home price, but Kermit Baker, chief economist for the American Institute of Architects, sees energy costs as another factor creeping into the purchase decision. Smaller, better-crafted homes are gaining interest. The green mindset is beginning to take hold with mainstream consumers.

That said, the appraisal system is still built for speed, not comfort. Its overly simplistic logic rates quantity over quality. There’s no place on the appraisal form to include energy or water consumption, so homeowners are not rewarded for their energy- and water-saving measures. The prospective buyer can’t assess the lifetime cost, which is the only valid way to comparison shop for housing.

The Gottfried house would encounter other problems with current appraisal methods. The stand-alone office in the back garden, a 120 square foot LifePod, is valued significantly less than market rate because it’s detached from the house. The 5,500 square foot lot was valued at $2 per foot by a broker, when—based on its location close to shops, public transportation, plus siting for solar and flatness for gardening—it would easily fetch $500,000 on the market today, more than 20 times the estimate. The house has a downstairs playroom with a walkout to the garden. I walked through the room and would gladly hang out with my kids there, invite my houseguests to sleep there, and do all my laundry there. Yet on account of its substandard 7′10″ ceiling, this space isn’t even counted in a traditional appraisal.

LEED certification attempts to address the home-size issue by rewarding small homes (plus 10 points) and penalizing large homes (minus 10 points). But, you might ask, should a 5,000 square foot home even qualify for LEED Platinum status? Do inessential green features — what amounts to energy and environmental gew-gaws — really compensate for the megahouse mentality we’re trying to change?

Gottfried wants to see shifts in the appraisal template, with the addition of new metrics that tell us how green a given house actually is—and ultimately, how much we’ll save in energy and healthcare cost, and gain in happiness, freedom, and connection to the natural world by virtue of that green assessment.

It should answer questions such as these: Are the appliances rated Energy Star? What’s the energy bill? What’s the R-value of the walls, roof, and windows? What’s the water consumption?

A new, greener approach to appraisals would have a significant impact on the one thing that everyone pays attention to: what’s my house worth?  Now, that’s some kind of leverage for a change agent like David Gottfried.