New solar installation

Discussion in 'Urgent - Help Needed' started by AppraizinAZ, Apr 17, 2012.

Thread Status:
Not open for further replies.
  1. SteveO

    SteveO New Member

    0
    Apr 20, 2012
    Professional Status:
    Licensed Appraiser
    State:
    California
  2. Sarge

    Sarge New Member

    0
    Sep 10, 2009
    Professional Status:
    Certified Residential Appraiser
    State:
    Texas
    I actually had a property like this in the Dallas metroplex (solar panel systems not at all typical). The owner was a CPA and had copies of his electric bills for two years prior to the installation of the system and the current 19 months after the installation of the system. I contacted eight different appraisers and they had not appraised anything similar to the system of the subject. I ended up making the adjustment of the monthly savings of 10 years discounted at 10% over the holding period. I informed the lender of the situation (that I had not appraised a property with a solar power system and the reasoning of the adjustment) and they concurred with my assessment. I ended up calling the state board prior to sending the appraisal because I was a bit concerned about this and the fact I was unable to find any appraiser in the area that had appraised a property with a similar system. They said that with the lack of available paired sales the basis for the adjustment would seem reasonable. PM me if you would like the exact statement I sent in the appraisal.
     
  3. SteveO

    SteveO New Member

    0
    Apr 20, 2012
    Professional Status:
    Licensed Appraiser
    State:
    California
    Without paired sales analysis the value of solar electric system is involved. With the solar system electrical output, the utility cost of electricity now and anticipated cost in the future, plus knowledge of occupant behavior, we should be able to give a reasonable attempt. Did they pay cash for the system, finance it with the home or a Power Purchase Agreement (PPA). Most homes in the central valley of CA have been going with a PPA. That is they didn’t buy the equipment, they are just purchasing the electricity from the solar equipment each month, which reduces the electricity they need from the utility. It would be helpful to see the purchase agreement; A PPA is usually an 18 to 20 year contract. A PPA contract spells out what the homeowner will pay per KWh for electricity delivered to the home. In many areas, residential electricity is purchased from the local utility in a tiered pricing system. For example your first 300 KWh from the utility may be charged at around 10 cents a KWh, but the more you use electricity the more you would crawl into their higher tiers. Tier 5 can be around 40 cents a kWh or even more in some utilities. A family that runs their ac all summer or has a hot tub may purchase allot of electricity in tier 5. The same floor plan with no pool and different occupants that are willing to live in a hot home during the summer may never get past tier 3 pricing from the utility. So for the occupants with the ac running and a hot tub, a solar system sized to replace tier 5 electricity from the utility (which may be high as 40 cents a KWh) with maybe 20 cent kWh electricity from solar has a desirable return on their investment and payback. For the family that lives in a hot house with no hot tub, the solar electricity may be replacing tier 3 utility power (around 29 cents a KWh) and may have only a break even situation or worse.
     
  4. Lobo Fan

    Lobo Fan Elite Member

    0
    Nov 28, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    New Mexico
  5. SteveO

    SteveO New Member

    0
    Apr 20, 2012
    Professional Status:
    Licensed Appraiser
    State:
    California
    Good Tool. Thanks for sharing it.
     
  6. AppraizinAZ

    AppraizinAZ Junior Member

    0
    Dec 31, 2006
    Professional Status:
    Certified Residential Appraiser
    State:
    Arizona
    Great info! I am so glad I asked!! Thanks all!
     
  7. Doug Wegener

    Doug Wegener Senior Member

    0
    Apr 14, 2005
    Professional Status:
    Licensed Appraiser
    State:
    California
    Having read many of the posts regarding solar I am now confused on a very high level, but of several things I am certain. 1) Appraisers cannot agree solar systems add value 2) If they do, they can't agree on the methodology one should use to measure the value
     
  8. Terrel L. Shields

    Terrel L. Shields Elite Member

    43
    May 2, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Arkansas
    That's because many appraisers are lone wolf operators brainwashed by Fannie mae to believe that there is only one way of making adjustments. It is called "Paired sales"... no pairs, no adjustment. Taken to the extreme, they interpret it as no sales = no value. A 100# gold bar could be cemented in the doorstep and they'd ignore it because they cannot find another house with a 100# gold bar and thus would assume the buyer would also ignore it...after all we know that buyers walk around with a list of features that they "paired" with other properties they looked at and adjusted their value estimates accordingly. Right?

    Not once have they ever tried to pick up a common ordinary TEXT BOOK on the subject of sales comparison and looked at it. That's all "Theory"...we know the truth... Paired sales rule. All that other mamby pamby stuff in textbooks is a waste of time. Don't do the income approach. Don't do the cost approach. Don't even think about esimating the land value and subtracting that out before you do a senitivity analysis...if they've even heard of that... Paired sales, nothing more. It's the Fannie way.
     
  9. PropertyEconomics

    PropertyEconomics Elite Member

    0
    Jun 19, 2007
    Professional Status:
    Certified General Appraiser
    State:
    New Mexico
    A friend of mine here just told me for the first time he had matched pairs of existing home sales (not new construction) which suggested a contributory value of something like $19,000 - $29,000 for a PV solar system ... he and I estimated the savings and the income analysis attributed to the PV system savings suggested a contributory value of around $23,000 .... finally there is some evidence, at least in that market there is a positive contribution to solar.
     
    Last edited: May 5, 2012
  10. Doug Wegener

    Doug Wegener Senior Member

    0
    Apr 14, 2005
    Professional Status:
    Licensed Appraiser
    State:
    California
    Paired sales

    That is good to know, and make sense. Did you use a GRM or DCF for the income analysis?

    I am thinking that the contribution of solar will be dependent on the market segment also.

    Did you have cost numbers for solar system involved?

    I think the data exists to make some general conclusions if appraisers do the work necessary.
     
Thread Status:
Not open for further replies.

Share This Page