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Free Home Energy Upgrade | |||||||||||||||||
How can a homeowner selling their home perform $10,000 in energy upgrades to their home without cash out of pocket and risk of not getting their money back when they sell. Current homeowner cannot afford $10,000 and won't invest in a house he is selling. New homeowner looking to buy "green" home but won't pay any more for energy efficient upgrades because of marketing competition. Here in Ontario, Canada, 50% of homes are sold within 5 years. I guess we do this to take out the increased value for various reasons.Average cost to sell a house with Real Estate Agent is 5%, or $10,000 on a $200,000 house. What are the keys to how might we do this?1. Switch to fixed price listing agent for $400 flat fee instead of 5% commission. 2. Homeowner does all upgrades in month before moving, contractor invoice is due in 30 days. Company accepts letter of direction filed with selling lawyer to direct payment from sale of proceeds to Contractor. 3. Home is marketed online without expensive agent but using a real estate lawyer to manage the offers/terms and conditions. Lawyer charges $250/hr and spends 2 hours doing this.4. Home can now be marketed even faster with all upgrades complete for same price as other $200,000 homes. 5. Homeowner completes EcoAction energy audit and then does all upgrades for $10,000. 6. Ecoenergy grant money (max $12,500)provides offsetting income greater than loss of using Full Commissioned R.E. Agent.7. Homeowner repeats this when they sell again in five years. Before long, all houses are upgraded to R100/Passivhaus standard savings tonnes of energy and tonnes of greenhouse gases causing global warming. What are the weak points in this idea and how would you solve them?
DaveZ, Aug 01 2009
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You've obviously thought about this alot and know more about this industry than I do. It, however, seems to me that you've totally devalued the work a real-estate agent does to sell homes. You want to pay a listing agent $400 for weeks of work to sell a house, then pay a lawyer $250 for two hours--$500--to stamp a paper that says energy work was done?
Also who pays for the energy upgrade (to the contractor) if no-one ever buys the home? Typically, you take a older home in an established neighborhood and there is a certain price it will expect to bring. Add $10,000 of energy upgrades and it will sit head-above the rest of the homes in the neighborhood price-wise. No one will want it.
My electricity bill for July was $150. If I did $10,000 upgrades to the home, I doubt my bill could be under $100, so the payback on this in summer would be $50/month in the hottest part of summer and $80/month in the coldest winter. Pretty hard to get to $10,000.
The "work" of a selling R.E. agent in my area involves:
1. Reviewing listing contract2. Measuring room sizes3. Entering data on MLS system4. Putting key in lock box
Maybe this takes 2 - 4 hours?
After the MLS listing is posted the same day, a home is toured by the buying agent and their prospects. It is usually sold with a firm offer in about 2 days. Reviewing offers may take another 2 - 4 hours.
So for a total of 8 hrs work, a selling R.E. agent pockets half of the commission of $10,000 or $5000. That works out to $625/hr.
For a flat fee of $400, the same 8 hrs of work is now $50/hr. I don't think I am devaluing the work of the R.E. agent. The work described above seems fairly priced.