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Client wants me to say that the owned solar panels (free and clear) were not counted towards subject sale's value.

hossie

Thread Starter
Freshman Member
Joined
Mar 10, 2010
Professional Status
Certified Residential Appraiser
State
California
I have no problem with this. It's the clients prerogative not to include contributory value for solar if that's what they want (as long as I disclose that fact in the report). HOWEVER, they brought this up after submission of the report and after the sale already closed. There was no mention of this in the assignment request or letter of engagement. Would this be a new assignment? Maybe a 2055 drive-by since a new inspection is out of the question) I reviewed the report and found I would have used the same comps regardless with Comp 1 being a model match and the only comp with owned solar. Can I do an addendum with a new signature date stating the changes and subsequent lowering of the value? Finally, why on earth would a lender want free and clear solar panels excluded form value? I am in San Diego where there are a ton of solar homes. This is a strong client for the last 15 years and I want to help, but not by doing something illegal. They have never given me any reason to doubt their ethics, however, this request has me confused.
 

Bert Craytor

Senior Member
Joined
Jun 27, 2017
Professional Status
Certified General Appraiser
State
California
Well, it would be interesting to know exactly why they want the contributory value removed. I would guess what is happening is that many are starting to believe that the price of solar panels will plummet even further downward: https://commercialsolarguy.com/2020...ng-the-price-of-residential-solar-power-down/

So, while solar panels can greatly reduce electric bills, they are getting less expensive to purchase and install. Also newer systems may be more efficient than older systems and it is clear that some buyers would prefer not to be stuck with an older system on the roof when a newer one that would better suit their needs.

Yes, you can calculate a market contributory value. But how good are your calculations? Do they take into consideration the age of the solar panels and detailed technical information?

At this point, sorry to say to the green energy appraisers out there, it is starting to get questionable. Existing solar panels could get in the way of a sale if they are not good enough for the buyer. And with public utility electric power becoming ever less reliable in California, Solar Panels are becoming very important to many homeowners - especially for the ever-increasing population who work from home.
 
Last edited:

USPAP Compliant

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
It may be a question of how energy tax credits credits transfer.
 

GWISC

Junior Member
Joined
Dec 3, 2014
Professional Status
Certified Residential Appraiser
State
Wisconsin
So what if the new-assignment appraisal (sans contributory value of solar panels) comes in less than the sale price of the property they have already closed on? Will they send the borrower a copy of the new report? It could be the market for solar panels fluctuates based on new technology as Ben says. If that is the case, then I would expect the market would reflect the diminished contributory value of solar panels, which I am sure you can calculate as you indicated you already have a comp with solar panels.

Do solar panels on a roof add, subtract or have no affect on the just the curb appeal. Is the functional utility of the solar panels and their contributory value tempered by their curb appeal? I would expect you would have to acknowledge the solar panels either way as they are rather integral to the house.

You may have to make any new appraisal subject to a hypothetical condition regarding the solar panels. After all, they exist and your client is asking you to not include them in the final value estimate. That would be contradictory to reality. I don't envy you in this.
 

Tom D

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Gold Supporting Member
Joined
May 22, 2015
Professional Status
Certified Residential Appraiser
State
Pennsylvania
as long as you state what you are doing, you can change the old appraisal with a new signature date. i don't know solar panels, but like above you need to disclose what/what not the contribution to the value is/is not. if you are ignoring them, do you have to figure out additional the cost to remove them, as if they were not there? i don't know. a very good client, you try to do what you can to help them, assuming it's legal. then, how much time, and work file will you need to do to figure that new condition. we ignore solar panel here, your area you know. personally, to me solar panels are like a fixture, heater, stove, etc which can be replaced. the lender wants the old appraisal changed to go with the loan date, and not a new appraisal. however, a new appraisal could be retrospective to go with the loan date. see which they need post closing.
 

Sid Holderly

Senior Member
Gold Supporting Member
Joined
Jun 16, 2005
Professional Status
Certified Residential Appraiser
State
Indiana
Does the County call them personal property or real estate?
 

KHS445

Member
Joined
Aug 20, 2011
Professional Status
Appraiser Trainee
State
Michigan
What kind of adjustment did you make to your comparable (excluding comp #1) for not having solar panels? That number should be a good indication of the influence the solar panels had on your appraised value. If it were me I would basically clone the initial report, adjusting dates, disclosing prior services, make a negative adjustment (equal to the positive adjustment you made to your other comps) to comp #1 and remove the adjustments to your remaining comps, sign and submit.
 

sputnam

Senior Member
Joined
Apr 24, 2012
Professional Status
Certified General Appraiser
State
North Carolina
If they requeste the market value of the fee simple interest in the property, and the solar panels are permanently affixed, then they are part of the subject. They get included. If they now want you to to provide the value of a segment of the property, that's a change in the scope of work. You can do it but, I require an updated request/letter of engagement from them and there would be some additonal fee involved. Sorry Lender, you don't get to change the rules after the game is played.
 

Carnivore

Elite Member
Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
Interesting to say the least. In residential assignments can you legitimately remove a fixture from the assignment? I suppose you could, but what is your basis. How do you report AS-IS, if you eliminate/exclude the Fixture?

OTOH if it was misrepresented of what the PV systems was; Fixture or Not a Fixture then that is not difficult to deal with.

BUT

Either way it is a new assignment.
 
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