Much misinformation has been spreading around the internet regarding H.R. 2454, the “American Clean Energy and Security Act” that was approved last year by the U.S. House of Representatives.   After doing a little research, culling from various resources, here’s what I understand to be true about the bill:

No mandadory retrofit requirements

This bill does NOT create a federal energy audit requirement for real property.  Retrofits are incentivized through financial programs but are not mandatory.  Because these programs are subsidized with taxpayer money, should a homeowner choose to do a retrofit and take advantage of the taxpayer subsidized program, then they would have to do an inspection before and after the improvement to ensure the taxpayers are getting their money’s worth.  Again, this is optional and is not mandatory.

For new properties ONLY

The labeling program is for NEW properties only.  All existing properties are exempt from having energy efficiency information labels.

Incentives for green choices and improvements

The bill provides property owners with significant financial incentives, matching grants and tools to make property improvements and reduce their energy bills.  It also establishes green building incentives for HUD housing,
including a loan program for renewable energy, block grants and credit for upgrades in mortgage underwriting.

California’s stringent code requirements

The bill leaves the decision to states as to whether to require energy audits, disclosures, etc.  For us in CA, it is interesting to note that the national building code requirement is weaker than what is already in California, and in fact the bill allows other states to adopt California’s building code to be in compliance with the new national standard.

“Cap & Trade” unrelated to real estate

The term “Cap & Trade” in fact has absolutely nothing to do with real estate and is in reference to the section of the bill that deals with industrial emissions.

What’s Next?

The Senate must still pass its version of an energy and climate bill. If this occurs a House–Senate conference committee will be held to reconcile differences between the House and Senate bills.

“Strategic” vs “ambitious” pricing

Most people don’t realize how critical it is to price your home correctly from the moment it hits the market.  Starting off with an ambitiously high price usually leads to a situation where you are “chasing the market down”.  You’ll end up sitting on the market a long time and netting less than had you priced it correctly from the start.

What is “the correct price”?

Especially in this market, buyers are not interested in a purchasing a property unless it is perceived as a deal.   Does that mean you have to give it away? NO!  But you DO need to price it generate traffic, LOTS of traffic, because no traffic means no offers.  No offers, no sale!

The first days on the market

When your property first hits the market, you will notice a huge wave of activity.  These potential buyers are generally experienced buyers.  Chances are they have already defined what they want, they have seen everything in that niche (e.g. 3-4 bedroom homes in the 92014 zip code, within $800-$1m) and are ready to write an offer.  When they see your home, they’ll compare it to everything they’ve already seen.  They’ll either like it enough to write an offer – or they won’t… 

The waning of activity

After the first couple of days, you’ll notice a steep drop off in showings.  Why? Because those who were really interested in seeing your home and truly ready to buy, already saw it.  You may have a few potential buyers come on the third or fourth day who were unable to see it in the first day or two, but for the most part, showings will slow to a trickle. Those viewing your home at this point are typically not very familiar with the market – maybe they only recently started looking or exploring your area.  Even if they love your home, they usually don’t feel comfortable or educated enough to make a move.

Capture the wave!

The fact is, if an offer isn’t generated from that initial wave of buyers, the market is “speaking to you”.  It’s telling you your home is overpriced.  Price it slightly under the competition, generate some excitement, maybe even a multiple offer situation, and net top dollar.  Our most recent listing got 3 offers, sold in 4 days at full price.  For a consultation on why your home isn’t selling, give us a call 760-815-1318.