Home Energy Score, Home Inspection, Home Appraisal: What’s the difference?

home energy score inspection

When you sell a home in Portland, you’re going to have that home looked at in a number of different ways, by a number of different people. The system may seem redundant, but it’s really designed to help the buyer make an informed decision, and to ease the transition between home seller and buyer. While the Home Energy Assessor, Home Appraiser, and Home Inspector are all there for different reasons, their reports might overlap in some areas. What you, the seller, do with that information depends on who is giving it to you. 

Home Energy Score Assessment: Portland home seller’s responsibility

The key difference between the appraisal and inspection process and the Home Energy Score Assessment and is that first two are ordered and prepared for the home buyer and/or their lender, but the Home Energy Score is the seller’s responsibility. The information in the Score Report is provided to both the seller and potential home buyers.

When is it performed? Before the home is listed on the market. According to the City of Portland, “if you list or advertise your home publicly for sale WITHOUT including the Home Energy Score, you will be out of compliance with the requirement and subject to penalties.” Once a Home Energy Score Assessment is performed, it is valid for eight years as long as no improvements are done on the home that affect its energy efficiency. If, for example, the square footage of the home changes, or upgrades are made to the mechanical systems of the home, a new Assessment must be performed.  

Who does it? A licensed Home Energy Score Assessor selected by you, the seller. 

What do I do with the information? There’s no requirement for home sellers to make any of the suggested improvements on the Home Energy Score report. However, if there are relatively inexpensive improvements that might increase the Score, you might consider doing them before going ahead with the home listing. Of course, then you’ll need to get a new Home Energy Score report. To see our list of most common Home Energy Score improvements, and how to get them taken care of before you pay for the assessment, check out our blog post.

Will it affect my home value? Real estate agents are starting to notice that buyers are comparing home energy scores. The program has been around for long enough that it does have an impact on Portland home sales.

Are there exceptions? Under the current law, all single-family homes in Portland must be scored except for condos that do not have their own roof (high-rises). There are also exemptions for certain homes, including publicly listed foreclosures, short sales, and auction-sold homes. Finally, low-income sellers may qualify for an exemption, but only by submitting a request 10 days before listing the home for sale.

Home Appraisal: It’s all about the market 

To “appraise” is to “evaluate the worth, significance, or status of,” according to Merriam-Webster, and that’s exactly what a home appraiser does for a house.

The interesting thing about home appraisals is that, because they are establishing value for the mortgage lender, they are just as focused on the home itself as on the market conditions. What do we mean? A two-bedroom, 2000-square-foot home is going to be worth more in central Portland than in central Oregon. An appraiser takes in the basic physical parameters of the house — year built, overall condition, size and amenities — and figures out what similar homes in that neighborhood are selling for. That gives the lender an idea of whether they’ll get their money back should the buyer default on their loan. 

When is it performed?  After the buyer makes an offer. Lenders will not close on the loan until the appraisal is done.

Who does it? A licensed home appraiser selected by the lender. 

What do I do with the information? Home sellers typically don’t need to do anything about the home appraisal. If the appraised value comes in at or above what the buyers’ offer was, everything can proceed smoothly. If the appraisal comes in for less than the offer, all bets are off, the buyer can bring in cash, the seller can reduce the price, or a combination of the two.

Will it affect my home value? In very fast-moving markets, where bidding wars are quickly increasing the value of homes, an appraisal may come in low because all comparable homes have sold for less than what the buyer is willing to pay. However, in Portland right now, the market is fairly balanced and the appraisal should be pretty close to the offer.

Are there exceptions? No, unless the buyer is paying in cash and doesn’t think an appraisal is necessary. 

Home Inspection: The Nitty Gritty

While the Home Energy Score Assessor just looks at the systems that affect energy performance of a home — air flow, insulation, etc. — a home inspector looks at every system and physical aspect of the home. Their job is not to place a value on any of it, just to inform the buyer about potential repairs they’ll need to get done on the home. 

When is it performed? After the buyer makes an offer. Often, the offer will be “contingent on inspection”, meaning they can back out of the offer if the inspection turns up costly repairs. 

Who does it? A licensed home inspector selected by the buyer.

What do I do with the information? Disclosure laws require the seller to reveal known issues with the home from the outset, so often times, an inspection won’t turn up anything surprising to either party. If information was revealed that you didn’t know about before — such as mold or radon, two hazards that homeowners are often unaware of — you and the buyer can renegotiate the offer. You might ask for a second opinion, and this is where having a good real estate agent comes in handy. 

Will it affect my home value? Sometimes, the buyer will ask you to fix problems that come up in the home inspection yourself. Other times, they will take the estimated cost of the repairs out of the price they’re willing to pay for the home. 

Are there exceptions? No; it’s rarely advised for a buyer to waive the inspection. 

Ready to take the first step and order your Home Energy Score Assessment today? We make it easy with our online scheduler.