Moving the Market: Energy Cost Disclosure in Residential Real Estate Listings

Homeowners who invest in energy efficiency hope to recoup at least some of the expense through savings on their utility bills and a higher home sales price when they move. Home buyers are increasingly savvy about understanding the total cost of homeownership, including operational costs such as electricity and natural gas. Sellers and buyers cannot make informed decisions about the value of energy efficiency investments in a real estate transaction if energy costs are not available. “Energy cost disclosure” – adding historical energy cost information to a real estate listing – fills the data gap between buyers and sellers. It also has the potential to create a “virtuous cycle” that increases market demand for energy efficient homes. In 2013, Chicago became the first municipality to enable listing agents to disclose residential energy costs (gas and electric) when a single-family home goes up for sale on a multiple listing service. Preliminary analysis shows that homes that disclosed energy costs sold at a higher percentage of the asking price than those that did not disclose energy costs at the time of listing. The keys to an effective energy cost disclosure process is to involve all stakeholders, disclose the information in an MLS at the point of listing so it can be factored into decision making, disclose energy cost and usage data, and to employ a data intermediary to ensure data flows smoothly from utility to MLS.