Green Real Estate Certifications Explained

In this article

Welcome to the world of green certifications.

This is a post I have been putting off writing for over a year. Why?  Well, while I don’t put much stock into the different certifications, there IS some value to them.  By gaining certain certifications you automatically open yourself up to different grant and funding opportunities, etc. Certain programs are known to the general public but the jury is still out on whether that transfers to higher sales process, etc.  Either way, as a real estate investor you should at least know the basics of the different programs.

With that in mind, below is everything you need to know about the different programs as well as my opinion/comments on each.

THE 800 POUND GORILLA: LEED
Leadership in Energy and Environmental Design (LEED) is an internationally recognized green building certification program designed to provide guidelines for implementing practical green building solutions. Created and ran by the U.S. Green Building Council (USGBC) and the Green Building Certification Institute (GBCI), LEED consists of nine rating systems for the design, construction, and operation of buildings, homes, and neighborhoods. The major ones include:

• LEED for New Construction and Major Renovations
• LEED for Schools
• LEED for Retail New Construction
• LEED for Existing Buildings: Operations & Maintenance
• LEED for Homes

Each of these systems operates though a point system to gain Certified (40–49 points), Silver (50–59 points), Gold (60-79 points), or Platinum Certification (80+ points). Points are based on water efficiency, sustainable sites, materials and resources, indoor environment, energy and atmosphere, and regional priority. The certification relies on documentation as opposed to on-site testing, and lasts forever (except Operations & Maintenance).
In theory LEED should be a great program.  However it is cumbersome, covered in red tape and expensive.  It’s great for celebrities, billionaires with cash to burn or government agencies who are getting grants to pursue it.

THE ROCK STAR: ENERGY STAR
This program is primarily focused on energy use; setting standards that are recognized internationally for energy efficient consumer products. Ran by the U.S. Environmental Protection Agency in conjunction with the U.S. Department of Energy, Energy Star compares homes to certify those that are at least 15% more energy efficient than homes built to the 2004 International Residential Code (IRC) and include additional energy saving features to be 20-30% more efficient than standard homes. Energy Star also provides an energy performance rating system applied to buildings, and recognizes top performing ones with the ENERGY STAR. This certification lasts one year, and not all building types are eligible.
My favorite program because it is free, easy to understand and actually saves money and energy. If your property performs better than your competitors, you get the certification. You cannot buy it, you have to earn it.

THE EDWARD NORTON (ACTOR): GREEN GLOBES
This certification program follows an online assessment, rating system, and outline for green building design, operation, and management. Adopted from a Canadian protocol, Green Globes operates in the US by the Green Building Initiative. This program is unique in the fact that it is both easy to use and affordable, while being comprehensive in the following seven categories:

• Energy
• Indoor Environment
• Site
• Water
• Resources
• Emissions
• Project Management

Green Globes relies on certified assessors to verify compliance, and introduces uses to the idea of incorporating Life Cycle Assessment tools into material and resource selection. It is available for new construction, existing buildings, and residential homes.
Like the actor, doesn’t get the acclaim it should and isn’t mainstream but should be. Good program, might be ahead of it’s time but very worthwhile.

THE VANILLA SHAKE: NATIONAL GREEN BUILDING STANDARD
This certification, developed and administered by the National Association of Home Builders (NAHB), establishes green building, construction practices, and performance levels for residential areas.  It covers both new construction and renovations of all residential types; including single-family homes, multi-family complexes, and mixed-use buildings.  Homes with this certification must incorporate the following six categories:

• Lot Design
• Resources Efficiency
• Energy Efficiency
• Water Efficiency
• Indoor Environmental Quality
• Operations/ Maintenance/ Education

There are four levels of certification available including Bronze, Silver, Gold, and Emerald. The standard can also be applied to land developments in the form of One, Two, Three, or Four Stars. Certified assessors are required to verify compliance.
Very similar to LEED (point system, use of different levels-bronze-emerald), just a different flavor.  Builders are cautiously optimistic about it. My only complaint is using ‘Emerald’ as the top level.  Was the word ‘Diamond’ not available?

THE OXYGEN BAR: GREENGUARD
This certification program focuses greatly on indoor air quality, promoting low-emitting building materials, paints and finishes, cleaning products, furnishings, electronics, and other consumer products. Developed and ran by the Greenguard Environmental Institute, certification is available for new commercial and residential buildings as well as major renovations. There are four programs available, including:

• GREENGUARD Indoor Air Quality Certified
• GREENGUARD Children & Schools Certified
• GREENGUARD Premier Certified
• GREENGUARD Building Construction Certified

To obtain this certification, products and buildings must meet strict requirements on managing moisture intrusion, mold prevention, and product selection. Annual re-certification and quarterly quality monitoring are required to ensure ongoing compliance.
Very solid program, like Green Globes, not widely used but should be.  As it focuses more on air quality than energy efficiency it’s popularity will continue to increase as consumer knowledge of indoor pollutants continues to grow. Clearly ahead of it’s time.

Sincere thanks to our intern, Lily Geisler for researching and compiling the data used in this post.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.