Anybody Else Frustrated By Solar Electric

[Lawrence R.]

I was hoping that you guys and gals would have a better grasp on the value. I have two documented sources for valuation of solar and other energy efficency improvements, but I was wondering how you all approach.

The bottom line is that with a Home Energy Rating Report in hand you can adjust the value based on the annual utility savings of the home as compared to other homes of a like nature that do not have the energy improvements.


Here are the sources:
http://www.ongrid.net/AppraisalJournalPVValue10.99.pdf

http://www.resnet.us/standards/mortgage/RESNET_Mortgage_Industry_National_HERS_Standards.pdf
303.3.3.3 The Energy Value for the Rated home (e.g., present value of the energy cost savings) shall be calculated as follows:

303.3.3.3.1 For Fannie Mae energy efficient mortgages the present value factor shall be calculated as:

pvf = [1- (1 + r)-n] / r
where:
pvf = present value factor
r = prevailing mortgage rate (i.e., Assumed Rate)
n = weighted life of the measures (23 years)
To determine the Energy Value for the Rated home, the present value factor (pvf) shall be multiplied by the annual energy cost savings.

303.3.3.3.2 For Fannie Mae energy efficient mortgage products, the prevailing mortgage rate (i.e., Assumed Rate) shall be provided by RESNET annually from the information provided by Fannie Mae.

303.3.3.3.3 A weighted lifetime of 23 years shall be used in determining the present value factor for the energy cost savings.

Blank blank economics....anyone? anyone? Bueler?

That is a great way to value energy savings, but savings vs cost and then whether or not the MARKET buys into that is another idea altogether.

Thanks for the input and the condescension, but I will stick to appraising the way I was taught.

That probably tops me for worst first post ever.

I wish I had 2 more hands....I would give this 4 thumbs down.

 

[c w d]

I was hoping that you guys and gals would have a better grasp on the value.

*sigh* And we would hope that a mortgage professional would have a better grasp of appraisal practice. Market reaction is not equivalent to the results of a simple mathematical formula.

The formula you presented if applied in different markets with the same prevailing mortgage rates and the same weighted life of the measures would produce the same results each time it is applied. That is not what we do. We attempt to measure the reaction within the specific market area to such improvements. It's a little more complex than 1+1=2. And to be frank, is a typical response from a mortgage professional who clearly is ignorant of exactly what is an appraiser's function.

I know...I know. You're a mortgage professional. You feel we don't know what we're talking about or are doing. Perhaps your dealings with appraisers through your job has left you with a sense of superiority because when you ask an appraiser over the phone to quickly tell you how much a property is worth for a potential loan deal we are unable to give you a quick clear defined value. You probably consider that a sign of ignorance, inept training, lack of education, etc, etc. But, you fail to realize what you ask is more complex than you're clearly able to grasp. It is interesting that you chose your first posting to step into a discussion in which you are clearly not prepared to participant. My advice: sit back, relax, lurk for a while, read some of the posts and discussions here. Sorry, there are no bottom lines on page 2 here. It's more like the addendum most mortgage professionals fail to read until the appraiser points out that is where the questions being asked about an appraisal are already answered.

 

[Couch Potato]

Too small to see.

Actually, (although even I was not around then) I bet indoor plumbing and bathrooms, electric lighting and appliances..........were not recognized in the market when they first came out. It will take time. My nephew is a solar contractor. He cannot keep up with work it is so busy. People resist change and saving on electricity cost is not in the minds of people when they are shopping for a new home. A sophisticated solar system is not an aesthetic feature that can be pointed out to your friends. It is not a status symbol....YET.

It won't be too long before the average electric bill will be in the $500 per month range. THEN, homes will be discounted if they DO NOT have a solar electric generating system. Just my prediction.

That is exactly what it will take. Currently energy bills are just too small to have a significant impact on prices. My peak energy bill over the past twelve months was under $100. Even if you do calculate the value of a savings of say 20% for some 'green' technology, it is not a high enough figure to differentiate from typical market fluctuations. Without a significant number of sales to examine, impacts on price of less than 5% are very tough to observe.

 

[Lawrence R.]

Is it just me.

Or does it seem like markets are trying to purposely raise the cost of energy to force us to use the alternatives?

How sick is that?

 

[Metamorphic]

Or does it seem like markets are trying to purposely raise the cost of energy to force us to use the alternatives?

How sick is that?

Many politicians and political activists have said as much.

 

[Doug in NC]

Yes, I'm frustrated. I would love to drop off the grid, but I figured out the estimated cost per "Solar Living Source Book", and it amounted to over $81,000. That's a long payback period - even with anticipating an increasing cost of electricity. Book also states that the average 30kwh house would cost $105,000 to install. This disregards any tax credits associated, but it still sounds like we are a long way off from being competitive using a solar system.

I hope we will ramp up production and lower costs. I fear for the future of our country if we don't wien ourselves off of foreign fuel sources and soon.

 

[c w d]

Yes, I'm frustrated. I would love to drop off the grid, but I figured out the estimated cost per "Solar Living Source Book", and it amounted to over $81,000. That's a long payback period - even with anticipating an increasing cost of electricity. Book also states that the average 30kwh house would cost $105,000 to install. This disregards any tax credits associated, but it still sounds like we are a long way off from being competitive using a solar system.

I hope we will ramp up production and lower costs. I fear for the future of our country if we don't wien ourselves off of foreign fuel sources and soon.

I'm glad someone else finally quoted a huge price for PV solar systems. I keep watching posts here from people in California and other states quoting $29,000 or there about for PV systems. I don't know what's going on in those states, tax credits or what not. But, I know that everything I keep researching indicates, even for the most modest of homes, these systems are outrageously expensive, prohibitively so. Nice to see someone else seeing the information I am even if it's depressing.