Montgomery County REALTORS have just been handed a new addendum to the Contract of Sale. It's the Utility Cost and Usage History Disclosure Form and sellers now have to disclose, by law, in writing what their utility bills were for each of the last 12 months. That includes kwh's used, gallons of water, and amount of heating oil.
It's a pretty interesting concept that you now have to disclose how much energy you use. And, the amount of energy you use could affect the value of your home, assuming that you leave lights on and keep the heat or A/C going. This addendum serves to inform the buyer of how much they are really going to need to budget for utility bills, also it lets the buyer know if the home is energy efficient. If it's not, that will definitely affect it's value.
A good rule of thumb is that every thousand dollars financed at 6% is roughly $6.00 per month. Let's say that two houses are priced at $300k, but homeowner A discloses that he spent $100.00 a month more on average utility bills than homeowner B. $100 per month translates to an additional $16k mortgage. So, you could say that if you buy home A, you will be paying for a home that costs $16k more. So if the homes are equal in features and condition otherwise, home A is $16k overpriced.
I know there is a more to it, but at it's base the numbers are true. Now buyers are going to make offers on your house depending on how much energy you have used for the past 12 months.Operating expenses are now more important than ever. Want top dollar? Use less energy!
Want Top Dollar for Your Home? Use Less Energy?!
Via Meyer Leibovitch, REALTOR Boyds, MD Realtor (RE/MAX Realty Group):
8 comments • Audrey June-Forshey, GRI, Gaithersburg, MD • January 15 2009 09:24AMComments
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I guess that would certainly cause you to be more careful about your energy consumption if you were thinking of selling.
Audrey: That's an interesting addititon to your contracts. Probably won't be long until other states follow suit.
Audrey - Wow, more paperwork - I guess other states will be adopting this addendum. Thanks for sharing.
Audrey,
All I can hope is that the rest of the counties don't follow Montgomery's lead on this issue. A simple contract is already 35 or so pages.
Rich
It's unbelievable that they keep adding more to the contract. I think we have to many lawyers around here. I lend all over the country and the contracts are longer than anyplace I've ever seen. They've gotten so long I'm sure most buyers don't even read the basic and important parts of the contract. I guess that's what we get for living outside Washington where the attorneys try to mimic congress.
Utility bills have been an issue here since Enron was manipulating the energy market back in 2000-2001. Unfettered free markets don't work, as Enron and the current mortgage crisis have proven. There need to be some regulations to keep the greed and crooks at bay.
A great post Audrey. I think this will encourage home owners to become more "Green", but it will add to the paperwork.
Audrey - I think it's a smart idea, I'm sure that disclosure is on it's way to Central Florida too.