Sam's Home Buying Tips

How to Avoid the 10 Biggest Mistakes Buying a New Home

Mistake No. 6 – Not Checking Performance:

How’s This Baby Going to Run?

If you have not heard of home performance, you are in good company. It is a new concept being promoted to home owners nationwide. It is a common mistake to ignore this important attribute because it can have a significant impact on how well we enjoy living in our homes.

A high performance car is valued for many driving factors including ability to hold the road, take tight turns, provide power on demand, and protect passengers. Similarly, a wide range of energy efficiency features can improve a home’s performance. Specifically, a home that performs well is comfortable in extreme weather conditions as well as evenly across all rooms, free of drafts during windy weather, quiet with minimal noise from both external and internal sources, healthy to live in, and affordable due to low energy bills.

Many important energy efficiency measures contribute to high performance homes including tightly sealed construction assemblies and duct systems, effective levels of insulation properly installed, high-efficiency equipment, lighting and appliances, and properly sized heating and cooling equipment. Brand new homes and recently constructed homes that have earned ENERGY STAR label typically include all of these measures verified with third-party inspections in accordance with strict guidelines for energy efficiency established by the U.S. Environmental Protection Agency.

For older and newer homes without the ENERGY STAR label, a Home Performance Checklist is provided to help evaluate each home's energy efficiency measures. This will require inspection of attics and basements as well as asking for information where energy features cannot be readily observed. Note that the recommended specifications included on the checklist assume significant heating and cooling loads. You should use your own judgment or solicit expert advice to adjust these recommendations for very mild or extreme climates. Note, where it can be verified that a home is ENERGY STAR qualified, the top line allows you to indicate this with a check. In this case, it would not be necessary to complete the remaining checklist since the ENERGY STAR label provides assurance that the home meets most if not all of the desired levels for energy efficiency measures.

When looking at resale homes, you can get a quick indication of home performance by first reviewing prior year utility bills. Be sure to ask for them where not provided. Excessively high bills of course raise questions. However, utility bills alone don’t account for many behavioral factors that can contribute to high or low monthly energy costs such as how comfortable inside temperatures were maintained; how much wood heating was used; how many people lived in the home; and how much traveling and work kept occupants away.

If you have concerns about high energy bills, or the quality and condition of the energy efficiency features, consider contacting a professional Home Energy Rating System (HERS) rater for a more detailed assessment. Certified HERS raters follow national guidelines for auditing homes and making recommendations for cost-effective energy efficiency improvements (see Mistake No. 9 for more information).

Note that the cost of adding energy efficiency upgrades after purchase can be added to a mortgage with no extra down payment using an Energy Improvement Mortgage (EIM). The result can be could a substantial increase in monthly cash-flow where the small monthly increase in mortgage for energy efficiency upgrades is significantly exceeded by the savings in the monthly utility bill. For instance, if energy efficiency improvements result in $40 per month savings on utility bills, but only add $15 to the monthly mortgage, you pocket $25 every month or $300 per year. And your home is likely to be more comfortable, durable, and healthier. If interested in financing energy efficiency improvements, consult your mortgage broker for more information about EiMs and note that a HERS rating is typically required. Since many brokers are not familiar with EIMs, be persistent because this is the only way to include the cost of adding cost-effective energy efficiency upgrades in a new home mortgage.

Information is also provided in this section on more advanced performance concepts on a table called ‘Home Performance: Other Factors to Consider’. For instance, homes perform best when most windows face south. This is because south-facing windows capture more desirable winter sunlight, can be easily shaded from the high summer sun, and are much preferred to west and east facing windows that allow annoying glare and intense heat gain in the summer (the morning and afternoon sun are extremely low in the sky, and therefore, difficult to control).

Evaluating home performance is very important, often neglected, but worth the effort.