Energy Audits: Revealing Your Home's "Second Price Tag"

The province of Ontario is currently considering a bill that makes energy audits a legal prerequisite to the sale of a home. As you might suspect, this is generating some spirited debate. But the argument brings light to a little recognized fact: a house has two price tags. Here's what I mean:

1. There's the price indicated in the traditional settlement transaction that passes the property title from one owner to the next.

2. There's the present value of all inputs that the house will require for proper upkeep. This covers everything from repairs and maintenance to-- you guessed it-- utility consumption. The new owner will be obligated to make these outlays for as long as he or she owns the property.

The idea here is that a proper energy audit is a window on a property's future energy liabilities. Ideally, the report should show how the house's energy consumption compares to structures of similar size, configuration, appliance profile, etc. Such a comparison requires an analysis of the utility bill history for the property; an inventory and diagnosis of heating, ventilation, and air conditioning systems; and an evaluation of leaks in the building shell.

You can't predict future energy prices. But you can use a recent annual utility bill history for comparison to average home data. This is a reasonable way to get a relative measure of the "second price tag" that prospective buyers should consider when purchasing a home.