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How the Cap & Trade Energy Bill Will Affect Home Sellers
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An Energy Rater conducts an air leakage test by blowing air through the house
Consider many of the homes in Pasadena, built in the early 1900’s with no insulation, original windows and probably the original knob and tube wiring running through the attic, which every home inspector will tell you not to cover with insulation.
Are you beginning to understand the increased costs you could incur when selling your home?
From Congressman John Boehner’s website:
“Home Sellers Beware. Having a hard time selling your home? Here’s one more hurdle to jump: all homes sales are conditioned upon an energy audit and a new energy rating assessment and energy labeling program for your home that’s outlined in the Democrats’ bill. And if you thought you could improve your property with a fresh coat of paint and some granite counters? Think again! Now your home will be subjected to a new energy rating assessment and energy labeling program that will penalize you for older windows, original fixtures, and dated appliances. So the Democrats’ bill would bring down the value of your home”!
Deja Vu All Over Again
It was just a little over one year ago in May 2008, when the California Assembly narrowly passed AB 2768, a similar bill that would also mandate energy audits for California home owners at point of sale. The California Association of Realtors projected it could add thousands of dollars to the cost of a home, not to mention the estimated cost of $400 for the inspection. Through the lobbying efforts of the Realtor organization the bill failed in the senate.
Additional costs and regulations. Not exactly the cure for energizing the real estate market.
Tags: HOw does an energy audit affect the sale of your home, The cost of an energy audit, What is an energy audit?
July 1st, 2009 at 8:46 am
I have been planning to have my home reroofed this summer. That would provide jobs to people in the contruction industry. Now, however, I am wondering whether I should proceed. I am concerned that new regulations regarding roofing color might force me to redo any job that I complete before the new regulations.
July 1st, 2009 at 1:46 pm
Looks like just another reason to let your house go back to the bank, eh? “Screwing” goes both ways.
July 1st, 2009 at 2:47 pm
Have they lost their minds ??? C & T will kill the
economy and all that’s in it ! ! !
July 1st, 2009 at 9:27 pm
I think a lot of people will have no choice but to let the bank foreclose on their home if they have to shell out a lot more money to sell it.
Are the politicians nuts. Housing is the cause of this bad economy and they want to make it worse. Can’t wait until 2010 and 2012, assuming we will still have the right to vote.
July 2nd, 2009 at 11:39 am
Marsha,
I like that comment “assuming we stil have the right to vote”
July 2nd, 2009 at 6:35 pm
You never point out however that the home BUYERS will get a better house of course and that this bill holds sellers to a new higher standard which should be expounded even more. I am a home owner, in fact this is the second house my husband and I have purchased, (my current home is 80 + years old in fact) but still I see this as just a good consumer law for home buyers as I much as anything. I will be held accountable to sell a house that passes but then so will the next home I buy. It all works out in the end. It’s all good.
July 3rd, 2009 at 1:25 pm
This could get so bad so quickly we might start hearing the “I” word – Impeachment.
Lori – you need a nap and then think this over again.
July 3rd, 2009 at 5:14 pm
Ah, the rumor mill…a lot of people comment–but they’re generally commenting on comments, not on the actual language. The American Clean Energy and Security Act language is at http://thomas.loc.gov/cgi-bin/query/D?c111:3:./temp/~c111bXxc4s::
There is NO requirement to audit or label existing homes.
The bill actually states explicitly “PREVENTION OF DISRUPTION OF SALES TRANSACTIONS.—No State shall implement a new labeling program pursuant to this section in a manner that requires the labeling of a building to occur after a contract has been executed for the sale of that building and before the sales transaction is completed.”
July 4th, 2009 at 9:01 pm
Mike,
The link didnt work, but my reading of the wording that you included in your post simply says that contracts already executed cannot be held up by this legislation. It doesnt mean that future contracts won’t be effected by it.
July 5th, 2009 at 10:04 am
Mike, the operative words are “AFTER a contract has been executed for the sale”. In other words, if the sale is in the works (contract signed), the government cannot do the environmental inspection. When the law is implemented, all potential sales will be subject to assessment.
July 5th, 2009 at 8:59 pm
Doug,
Excellent idea, except the timing is bad. They need to keep this provision handy so that when the real estate market recovers one of these days then they can enact it and get things straightened out.
July 6th, 2009 at 12:02 pm
Lori dear, you need to see this bill for what it is. It’s a power grab. I have a 80 year old house too, and I’m in the building industry so I know exactly what I’m talking about. Old houses don’t retrofit easily. They’re built larger and more generously, and besides, retrofits ruin them! I’m adding in my head what it will cost to bring my home in compliance with this code and already I’m up to 40-50k just for windows, doors and insulation. It’s not a big house but on my salary, it will ruin me financially. I can’t imagine what it will do to many of my poor minority neighbors!
July 6th, 2009 at 4:12 pm
[...] http://www.up2daterealestate.com/2009/06/30/how-the-cap-trade-energy-bill-will-affect-home-sellers/ [...]
July 6th, 2009 at 8:42 pm
Please post the actual links to the actual parts of the bill that will require energy audits and/or retrofits of existing homes before they can be sold.
July 8th, 2009 at 6:13 am
I will be posting an update to this story later today, hopefully putting some of the misinformation to rest.
July 9th, 2009 at 12:45 pm
http://www.housingwire.com/2009/06/30/home-energy-audits-optional-in-cap-and-trade-bill/
July 9th, 2009 at 10:44 pm
Leave it to the democrats to do the American people wrong again! I think they should be forced to live on our incomes and with our real life problems (and no aids).
July 10th, 2009 at 3:46 am
Yes, this will raise the cost of preparing a home for sale by many thousands of dollars. Yes, it will make it even more difficult to sell the glut of houses now in foreclosure–not only will it raise the price of a house that can now find no buyers, but people in foreclosure, obviously strapped for cash, will be unable to afford the upgrades, and the banks, having no money to lend, will be unable to afford the investment. The houses will be converted to rentals and the neighborhoods degraded. This will, however, provide a better class of houses for drug dealers to take over in new neighborhoods, thus expanding their markets.
One aspect that I have not heard is that many older homes,”fixer-uppers,” are the starting homes for many younger and/or poorer people to enter the housing market. They buy an old junker for next to nothing (as I did) and fix it up with money that would go to mortgage payments on a more modern, more expensive home. I guess these people will remain renters for the extended availability of homes in foreclosure.
July 12th, 2009 at 12:06 pm
Let’s say this passes and you have to make $5,000 in upgrades to your home to make it “Green.” You will get that money back right away 2 to 3 fold. It’s just like renovating a bathroom or a kitchen – spend $15k and it gets you $25k back when you sell it.
If 2 houses are side by side, and one costs 40% less in utilities and provides a healthier environment for the family who lives in it, then that house will sell much quicker. So instead of your house sitting on the market for 12 months, it will only sit there for 3 months, saving you 9 months in mortgage payments – netting you more money. The government isn’t trying to kill peoples wallets. This will help everyone in the long run and make green retrofits cheaper. It’s very simple.
If this is done to foreclosed homes, then they will sell faster, getting them off banks books. And people who buy foreclosed homes – “flippers” or everyday you and me’s – will get the homes so cheap, that the retro-fitting will be pocket change, netting in a bigger profit in the end.
Why does so few people not see the benefit in this?
YOU GET YOUR MONEY (and a bigger profit) BACK IN THE END AND A TAX REDUCTION!
July 12th, 2009 at 10:13 pm
Edward,
Not to be rude, but your argument is completely flawed.
First renovation returns average no more than 100%. A simple check of the a Real Estate Association website article (such as the one at NVAR) will tell you that. In the heat of the housing bubble, it was alittle more, but that is long over. Thus, you don’t make “money back right away 2 to 3 fold.” In fact you will be very, very luck to break even.
Secondly, if this ill admendment passes, both the houses in your scenario will have to comply. One house will not be more efficient than the other. One house will not “sell faster”. There is not a 9 months savings in mortgage payments.
You will NOT get your money back in the end. You will NOT get a bigger profit.
I wish people would check the facts before making ill-informed declarations.
July 13th, 2009 at 5:24 pm
Exactly Richard, you will not get your money back. I keep thinking of the poor souls in manufacturing regions, many of whom will have to relocate to find jobs. They may already be broke because they are jobless. Then they’re leaving a poor housing market already, but to sell their houses, they have to out lay a huge amount of cash for these “ivory-tower” decrees. None of which will improve the environment. Think of the tons of windows, doors, appliances, and roofing added to landfills! And how many cash strapped unemployed will be tempted to leave their houses to the banks, who already have too many foreclosed props on their books.
In reference to the update on another page, I don’t know where the NAR is coming from. As I read it, Section 304 of this bill requires states to label ALL buildings and have a certain quota in compliance to receive billions in federal funds. Suggestions are made for states to require these inspections and compliance for building permits, recording a sale for taxes, and switching utilities to another name, etc. The bill itself may not explicitly require compliance, but it forces the states to do the strong arming.
Thanks by the way for the forum to discuss this issue!
July 14th, 2009 at 9:48 pm
[...] [...]
July 15th, 2009 at 7:28 am
[...] money to create new classes and certifications so these auditor inspectors can get certified. How the Cap & Trade Energy Bill Will Affect Home Sellers | Pasadena CA Homes | Pasadena Real Est… snippet: "This new provision would take place at “point of sale”, meaning before [...]
July 15th, 2009 at 9:18 am
we should all become sterilized for the good of cap and trade because as human s we are emittiing enough carbons to destroy the earth according toal gore
August 6th, 2009 at 3:26 pm
Yep… I agree with all the angry people here… no one should have to do anything to their home… buyer beware! that is my motto… if my neighbor has the same motto, then it is all good. goody two shoes people trying to lessen the scare of such a huge investment. If you want to know the air quality or any other thing, then do it yourself after you buy the house.
By the way, an energy audit in North Carolina is only $250. Guess that is too much when selling a $150,000 home. Greedy son of a guns.
August 10th, 2009 at 3:06 pm
What is the problem here. People wake up this is essentially like using CARFAX when you buy a used car. The point is to have informed consumers. Let the new home buyers know how there home functions and how efficient it is. Complaining about this is like saying you are going to go and buy a car without a test drive. Give me a break, the only people complaining about this are the people who are looking to go and take advantage of other people.
September 10th, 2009 at 10:47 pm
Duuuuh! Carfax? The only you can associate Carfax is if you made Carfax a bureaucracy. Then when you want to sell your car for a fair price of, Oh, lets say $15,000.
But then before you can sell it, Carfax charges you $1,000 to inspect it and tell you you MUST put another $2,000 into it to it to bring it up to their sandards.
Now you are allowed to sell it for the $15,000.
No Thanks
September 13th, 2009 at 2:19 am
For those who think this is a great idea.. After this passes if it passes.. you should sell your house. And when you sink 15 grand into it, to sell it for fair market value, then the buyers back out because they don’t like the way you updated the house or got tired of waiting for the repairs to be done. after all who says I want to buy this house and waits 8 months to get it, well for a house thats already built…. then find out 2 houses on your block went into forecloser because they rather not spend the money they didn’t have.. now your house is worth 10 grand less.. yoru out the money you just spent to sell your house and you still haven’t sold it.. then in order to sale it 6 months later you have to have it inspected agian and it turns out they missed 5 grand worth of updates you need in order to sell and you already came down 15 grand to get these people to buy it. And it turns out you spend that nest egg on the repairs you already did. So you lost your nest egg had to come down 15 grand to get a buyer the second time and still need 5 grand worth of repairs.. And the new buyers want you to fix the landscape or what ever they find in the Home Inspection. Then you lose your job….
September 25th, 2009 at 11:48 am
More government bureacrats interfering in the free market is not a good idea. You already have city, county, and state building inspectors involved in the construction and sale of real estate. Why do we need to add the federal government to the mix?
This bill will kill the market for people who want to buy an old, beat up home and turn it into a modern home to either sell or live in. Some people have the patience, craftsmen skills, and vision to turn a beat up home into something really nice.
My brother recently bought an abandoned home on a city lot in an online auction for $600. He sold the property to the next-door neighbor for $4000; it would have cost him thousands to turn this place into an energy-efficient home that complies with the cap and trade bill. The buyer wanted to demolish the home and give his family a bigger yard/garden/driveway by buying the lot next door. This was a win-win situation for both buyer and seller; my brother made $3K, and the buyer now has a bigger yard for his family. Would this new law allow a transaction like this to take place?
November 18th, 2009 at 6:24 pm
Well, I own an antique / historical home in orange county, California, which is 100 years old now. Luckily the home had not bee remuddled when we bought it in 1984. We have strived to keep it entirely original, inside and out, with the exception of the replacement of some kitchen cabinets which were remuddled in the 1950’s. It still has the original windows which are in perfect shape. Many have the original glass panes with that wavy look (this is expensive to obtain). We have had telemarketers call about installing new wimdows in the home. We tell them that that wold not be desirable from a historical preservation point of view and it would lower the value of the home to replace the original windows with whatever these are. They finally got the hint and stopped calling. Of course, if these double glazed energy efficient window glass can be placed into the original wooden window frames, I would consider that.
I doubt that there is any insulation in the exterior walls. I have never checked. I will not have that installed unless it can be done without drilling holes in the 100 year old redwood milled siding or through the wainscoat panneling or lath and plaster wallpapered walls on the inside. It would be difficult to replace that, if at all possible. Plus, matching the paint would be silly and difficult.
I could not bring myself to ruin this 100 year old home just to satisfy some idiot democrat. The buyer, if I ever sell it, would have to ruin this home himself.
The previous owners did have the home rewired, replumed and put insulation in the attic above the ceilings. But, that insulation can easily be removed to bring at least that part of the home back to original, i.e., with no insulation. The electrical wiring and plumbing will have to remain as un-original.
We are now retired and living on a pension and social security. We cannot afford to have this sort of thing done to the home while living in it. But, when we do sell it, if ever, the buyer will be responsible to accomplish this task else the price of the home will go up substantially to cover this crap.
January 8th, 2010 at 2:13 pm
[...] a California Real Estate site: This new provision would take place at “point of sale”, meaning before your home transaction [...]