The decision to offer homes that are high-performance, energy-efficient, non-toxic, sustainable--whatever the preferred term--involves many considerations and builders must weigh expenses and impediments against potential benefits. Of course, green building techniques and products reduce a home’s environmental impact as well as owners’ operational costs, but what do they do for a builder’s bottom line? In this special package, BUILDER presents a cost versus benefit analysis exploring the economics of green home building.

Despite surveys that attest to Americans’ growing interest in sustainable and energy-efficient living, many builders insist that buyers are not interested in green homes. “They think that unless home buyers are specifically asking for a green home there’s not a need,” says Michelle Desiderio of Home Innovation Research Labs. 

Builders might need to rework their approach, says researcher Suzanne Shelton, keeping in mind that most home buyers are not motivated to consider green features until basic needs such as location, price, square footage, and style are met. 

The Payoff: Buyers Will Pay More for Green

One of the first questions builders have when considering high-performance construction is: Will I make more money? The key is figuring out which types of green features buyers are interested in and will pay more for. The NAHB’s “What Buyers Want” survey sheds some light on this topic. It lists Energy Star–rated appliances, windows, and whole-house certifications among buyers’ primary must-haves. Those surveyed also said they want healthy homes with nontoxic materials and premium indoor air quality.
Other recent studies show that buyers not only prioritize such features, but they will pay more for them. One found that Energy Star–labeled homes fetch a 14.5 percent price premium while a Lawrence Berkeley National Laboratory report showed that homes with 3.1 kW PV systems sell for an average $24,705 more than homes without solar power. Another study declares that green ratings boost sales prices: Houses certified by third parties sell for 9 percent more than comparable uncertified houses in California. 

In his marketing efforts, South Carolina green builder Todd Usher plays up the durability of Addison’s green homes, which include a superior insulation package including OSB and XPS foam. This approach has led to lower utility bills, quieter houses, and a decrease in drywall repairs because temperature differences across studs are minimized, cutting back on pesky nail pops and drywall cracks. “Keeping moisture out and creating a good, robust shell is really important,” he says, and something that he educates his customers about.

“If I need a certain price or number of bedrooms, I’m not going to give that up for the tightest building shell ever made and solar panels,” she says. “I want to get those basic things met first, then I will start thinking about other features.”

But, Shelton adds, consumer desire for green features is rising, and Americans are becoming interested in them more than traditional luxury features like granite countertops, in-ground pools, or home theaters. 

Savvy builders know that a green home means different things to different customers. “Maybe customers are asking for green in different ways, such as a mom of a young son with asthma asking about healthy building materials,” Desiderio says. 

In addition to healthy indoor air, playing up green homes’ energy savings as well as lower maintenance costs can win over many perspective buyers, veteran green builders say. Instead of relying on buzzwords like ‘green’ or ‘sustainable,’ Todd Usher of Greer, S.C.-based Addison Homes asks customers if they are interested in a better-built house. “I think that ‘green’ has very little meaning to people anymore. It’s been so overused that they don’t really know what it means, so we latch on to other more tangible concepts like better indoor air quality, energy efficiency, and quality,” he says. 

Usher urges buyers who are reluctant to go all out on sustainability to consider adding in a few cost-efficient green features such as wireless thermostats, high-efficiency air filtration, or weather-based irrigation systems. “These are things that are going to help them be more comfortable in their home and have some economic payback, too,” he says.

Builders who offer high-performance features agree that they are not top of mind for most buyers. Scott Laurie, CEO of the Olson Co., confirms that his clients “are not paying a premium because of LEED, it’s just part of our branding.” He adds that it is important to the cities where they build, however, and the company gets tax benefits from those cities. 

And Utah builder Bryson Garbett admits that clients asking for sustainability or even energy efficiency are in the minority in his market. But in terms of beating the competition, showing buyers that his houses will save them money and be more comfortable frequently wins the sale.

“If you meet the clients’ desire for design, location, and price—plus you have the energy efficiency—then they chose you every time,” he asserts.