How do you value Solar in a home appraisal?

[George Hatch]

My advice is to basically ignore the various calculator programs because in real life the contributory value of a solar install varies by location, and by pricing tier. The latter meaning the same install in the same local can have different contributory value depending on the different pricing tiers in which they're found.

The variance for locale isn't minor or trivial, either. Solar installs with the same construction costs are worth more in some local markets and less in others. The only way to reliably value them is to find other properties with an install and check their sale prices against other properties like them which lack the install.

You're not looking for a property that's directly comparable to your property. You're looking for a donor that can be used to identify an adjustment factor for the install, which you can then import for use with the local sales which - aside for lacking solar - really are otherwise among the most similar to your property.

As an example, if your home is 3000sf but you can find an 1800sf home with similar install located across town, that property isn't directly comparable to your property as such. But if you can find other 1800 sf homes in that other neighborhood you can compare their pricing to the w/solar property's sale price to see what difference the solar added to that sale price. Let's say that other property demonstrates a $20,000 premium for the solar, you can then import that $20k adjustment factor for use with your subject's local sales.

Obviously this process works better when you can find several sales of homes w/solar so you can see what the trends are.

The other thing that's tricky about solar is -as you mentioned up front - they don't all have the same capacity and won't all return the same levels of savings. So that makes it helpful to call a couple of the brokers in those transactions to see what the capacity is. Or, you can manually count solar panels off of the overhead imagery and get an idea of similar in size or larger than or smaller than when compared to your install.

I realize that's a lot to take in but it just underscores the difficulties appraisers run into when they encounter features which are atypical. "I feel like it should be worth $xxxxx" isn't what you ever want to hear an appraiser say.

 

[Dublin ohio]

I suspect the OP will have a hard time finding sales with a similar system. 16.8Kw seems like overkill. That equals 42-400W panels.

 

[Dublin ohio]

Something here doesn't wash. Op says they "save" $6000 per year. The average home in Michigan uses 800-900Kwh/mo. Using the highest rate in Michigan for a home using 1000Kwh/mo which is 25 cents per KWH. That would mean that the OP is using at least 2000Kwh/mo. Using the average rate of 19 cents per Kwh equals about 2600Kwh/mo. From what I have read. Michigan caps residential installations at 20Kw or the amount you actually use which ever is less. So either the OP has a very high usage for an 1860 sf home or something is amiss.

 

[Artemis Fowl]

How much value is your assessor giving it?

 

[MoistMitten]

I spoke to an agent about owned solar panels that were already paid off. This was a random comparable I found while doing research for another report. Whenever, I see anything interesting I call the agent and have a chat and put it in a general work file that I can use for support, if need be. Anyways, the agent said that there was very little interest in the solar panels from potential buyers that came to see the house. Square footage, site size, bedroom count, bathroom count, basement and location are the most important characteristic, the solar panels are last and are more of an amenity. From my experience solar panels in a 4 season climate provide very little to no contributory value.

Agent meaning real estate agent or appraiser? Appraisers know how to assess value, but real estate agents are normally way off.

 

[George Hatch]

I've seen market areas and pricing where the contributory value to the sales was inconclusive or so minimal it got lost in the noise, and other market segments where they were getting 75% or more of their costs back upon resale. I hate to say it this way, but the prevailing politics of an area seems to be a factor in buyer/seller attitudes on solar and net-zero efforts in the construction and remodeling. And the weather patterns and the local costs of grid energy. Locales with cheap power take a lot longer for a solar install to break even.

As an appraiser, I can never assume what the reaction will be in any given market segment (otherwise similar properties competing with each other). I always have to first develop my opinion of the market reaction among those sales prior to having that opinion. If I don't have those indicators among my comparables then I have to expand outward and into different neighborhoods and home sizes until I can find enough data on it to analyze.

Opinions to be developed, not assumptions for appraisers to make.

 

[Dublin ohio]

Agent meaning real estate agent or appraiser? Appraisers know how to assess value, but real estate agents are normally way off.

Appraisers regularly talk to agents to discover buyer and seller motivations. Not sure where you get the idea that agents are "normally" way off.

 

[George Hatch]

Even if we disagree with an agent's opinions, just reading what they say in their listings and how those explanations relate to the pricing is instructive as to what the buyers and sellers are thinking. After all, that's the perspective we are attempting to emulate in our work - how the market participants are reacting to this combination of attributes and features. "MY" personal opinion of the attribute or feature in relation to my own list of priorities is irrelevant. I'm looking to see how THEY are spending their money.

 

[BRCJR]

I did not read every post. If this was already addressed, sorry.

Does a calculated savings of energy cost have to be discounted back to a NPV for an adjustment?

 

[Dublin ohio]

Just got off the phone with an agent about a sale I was considering for a comp. On the surface it was the "best" sale as compared to my subject. But the sale price seemed very low for the neighborhood. My subject is on 27 ac with a 3000 sf home, outbuilding, 2 ponds, some wetlands and heavily wooded. The sale was on 27 acres, 2360 sf home similar in age but recently remodeled. pond and woods. But it sold for substantially less than similar homes on 5-10 acres. It sits within 700' of US Rt 33. Which is heavily travelled as it is the primary access for the 4 million sf Honda facility to the northwest. Heavy auto and semi traffic all day and night. Of course my first take was that the location was the issue. When I pulled up to the drive to take my photo. The noise from traffic was like I was next to US 33 and it was loud. I could also see US 33. I was approx. the same distance from US 33 as the improvements. Before I could even get my complete question finished. The agent said location, location, location. So he just confirmed my suspicions. Maybe a $100K location adjustment. Just so happens that an adjacent 27 ac unimproved parcel had also sold and would have been a good land sale for my subject's site value. But it sold for less than similar 10-15 ac sites. So I have credible data for a substantial location adjustment. But we are talking about at least an $80K-$100K adjustment as compared to my subject which is under contract for $695K and at this time appears to be supportable based on my other sales. Always good to be able to say I got the info from the horse's mouth and it is supported by market data