Austin Forces Home Sellers to Pay for Energy Audits

June 10, 2009— -- Susan Sklar just put her Austin, Texas home on the market.

She knows it's not the best economy to be selling her house. And she knows that a fresh coat of paint and a clean yard will help attract offers.

But what she and plenty of other home sellers in Austin are learning is that they now are required to also hire somebody to audit their home's energy consumption and efficiency.

"I was like: oh my God you're kidding. One more hoop to jump through here," Sklar told ABC News. "It's hard enough to sell a house in this market. And now thanks to the City of Austin, they've added one more thing to do to make it more difficult to sell your house."

Starting last week, anybody selling a house that's older than 10 years in the city is now required to get an energy audit and disclose the results to prospective buyers.

Sklar spent $269 for the audit -- city officials estimate the cost at $200 to $300 for a typical home -- and is now worried about how potential buyers are going to interpret and use her audit.

"I'm afraid people are going to try to negotiate my price down even though my audit was ostensibly a pretty good one," Sklar said. "I'm all about being energy efficient but gee-whiz. I spent thousands of dollars already, trying to get that house ready to sell. I just don't have any more money to put into it. And I had a good energy audit. So God forbid if you have a bad one."

But Mayor Will Wynn sees it differently.

Austin's population is growing quickly and he doesn't want to have to upgrade its power plant or have the growth make a bigger impact on the environment than necessary.

"We have this responsibility to be a leading city when it comes to energy," Wynn said. "We are the capitol city of the most-polluting state in the country."

The city has passed what he calls "one of the most progressive, some say aggressive, energy building codes" in the country.

But those codes don't apply to existing homes, which make up the vast majority of sales.

Wynn said the idea behind the ordinance was to encourage homeowners to upgrade their homes with more-efficient air conditioners, better windows and insulation. The original idea was just to require sellers to disclose their electric bills, but then he realized that some people are more wasteful in their habits than others. Hence, the home inspections.

In Austin, where air conditioners are often running 12 months a year, a few upgrades can mean big savings. Wynn, who also sits on the board of the city-owned public utility, said homeowners can save an average of $80 a month. With low-interest loans from the utility and various rebate programs, he said most upgrades don't cost homeowners anything out of pocket.

By requiring the audits at the closing, Wynn hopes to encourage homeowners now to make the upgrades. And yes, he knows there's recession under way.

He points out that in the last five years 23,800 residential customers have taken advantage of the utility's assistance program. They have saved a combined $3 million in electricity costs and helped the utility avoid a rate increase since 1994.

"We're in the business of trying to encourage people not to buy our product," Wynn said.

(The ordinance also forces owners of commercial properties and multi-family units to have the audit within two years, regardless of plans to sell. The biggest energy hogs need to make upgrades.)

Nate Kredich, is vice president of residential market development at the U.S. Green Building Council, calls Austin's program groundbreaking and predicts many others across the country.

"We all have a great idea what the miles-per-gallon our cars get. We have no idea what the efficiency of our homes are," Kredich said.

Berkley, Calif., and San Francisco have required a similar type of review for years, but those cities don't have the mass of single family homes that Austin does.

"Sometimes things happen in the Bay Area that people just chalk up to the Bay Area. This is more mainstream, any-town USA," Kredich said.

The median home in Austin's single-family stock was built in the early- to mid-1970s, according to city officials.

"There's been such an improvement in construction techniques, building codes that if you measure the efficiency of that home against one built today, typically that home is between 40 and 100 percent less efficient," he said. "This is a return on investment that people can really sink their teeth into."

He said that Austi has been a leader in the sustainability movement. As for how this will impact home sales during the recession, "it's a wait and see attitude," Kredich said.

This is a particularly opportune time, Kredich noted, because the federal government is offering $3.2 billion in energy efficiency block grants to municipalities.

"I think a lot of people are going to be sitting back and watching what happens," he added.

While homeowners might swap lots of information, they usually don't talk about their heating and cooling bills.

"In most states, you are required to get a termite inspection. That's an easy thing to get your head around. If you're going to pass title to somebody else, you want to make sure that the house is not on shaky foundation," Kredich said. "What Austin is doing is taking it to the next step."

Ranae Pettijohn is a real estate agent in Austin who thinks the audit will become "a great source of information for both buyers and sellers."

"It's fairly new so we're just kind of still in the let's-see-how-this-is-going-to-pan-out mode," she said. "We're not seeing any big negotiations from a buyer's perspective and from a seller's perspective -- the ones that I have been involved with -- I'm not seeing them having to do any remedy work."

Right now, she said, buyers are not actively seeking the audits. It's just not at the top of their lists.

"I think there was a lot of apprehension. The Realtor community did not support the ordinance," Pettijohn said. "I think quite honestly, we should have had access to this information before...I think it's going to be good for homeowners. It's not becoming a negotiating tool, which was what our apprehension and fear was. Of course, it's still real new."