Large solar panels on the roof of subject property.

[Tom Foster]

I did a few homes in the Palm Springs area with panels that actually create a surplus of electricity that gets uploaded to the grid.

Instead of paying a electric bill each month the homeownerer gets a check in the mail from the electric company each month.

As far as being ugly... many consider it a status symbol to have the most panels on the block. You got 50 panels .... I now have 52 panels... I got you by beat by 2 panels !!!!

 

[AnonApprsr]

I'd make no adjustment and perhaps consider it as a slight positive in the reconciliation. I'd make very little of their existence within the report.

 

[JonWithrow]

Ugly Solar Panel Valuation.

When appraising houses in northeast Ohio which had gas wells, I would apply a discount rate to the cash flow over five years to arrive at an adjustment. In the case of solar panels, I would discount the savings cash flow for a period of five years. Then I would likely make a negative appeal adjustment similar to the adjustment for indicated savings from the panels. This would essentially show it on the appraisal and then zero it out. This one is more art than science but there is logic to it. While AMC's and underwriters may question it, my reply would be to either supply better evidence or prove it wrong.

 

[Metamorphic]

Am I the only one who thinks the negative effect on marketability due to the unaesthetic nature of the panels, and their location facing the street, might be as great or greater than the positive effect due to the decreased energy costs?

Maybe that's the case in Oklahoma. The exact opposite is true in California. In fact, I'd go so far as to say that visible PVs on the house of a single guy, like a Rolex and a Porsche, would help him get laid.

I really do believe they have become a status symbol of wealth and ecological "concern" and as such, obvious display is not a negative.

"Met" you say, "how can you make this accusation against the caring people that spend tens of thousands of dollars on these high tech systems that are saving the planet?"

I say, because is the last couple years I've done at least a dozen houses with PVs, and NOT ONE had a clothes line in the back yard. None of the comps I've considered had an obvious clothes line either. I must say, keeping track of clothes lines has become a fetish of mine and the only place you see them is in the very low end housing.

The people with PVs and a Toyota Prius never have them. But here's the thing... there is nothing more "green" than a clothes line. While a PV system make take 10 years to earn itself into the black, and Prius will go black only if you do a lot of around town driving (and turn a blind eye to the battery disposal), a clothes line will pay for itself inside of a month and will continue to produce for a decade...easy. Anybody who's looking for the green cachet and is not willing to invest their time to hang their laundry and put up with slightly scratchy clothes is just a poser.

 

[Terrel L. Shields]

When appraising houses in northeast Ohio which had gas wells, I would apply a discount rate to the cash flow over five years to arrive at an adjustment.

Geez, just throw darts ...

 

[fractal7221]

Maybe that's the case in Oklahoma. The exact opposite is true in California. In fact, I'd go so far as to say that visible PVs on the house of a single guy, like a Rolex and a Porsche, would help him get laid.

I really do believe they have become a status symbol of wealth and ecological "concern" and as such, obvious display is not a negative.

"Met" you say, "how can you make this accusation against the caring people that spend tens of thousands of dollars on these high tech systems that are saving the planet?"

I say, because is the last couple years I've done at least a dozen houses with PVs, and NOT ONE had a clothes line in the back yard. None of the comps I've considered had an obvious clothes line either. I must say, keeping track of clothes lines has become a fetish of mine and the only place you see them is in the very low end housing.

The people with PVs and a Toyota Prius never have them. But here's the thing... there is nothing more "green" than a clothes line. While a PV system make take 10 years to earn itself into the black, and Prius will go black only if you do a lot of around town driving (and turn a blind eye to the battery disposal), a clothes line will pay for itself inside of a month and will continue to produce for a decade...easy. Anybody who's looking for the green cachet and is not willing to invest their time to hang their laundry and put up with slightly scratchy clothes is just a poser.

Very good points. Many of these "green" solutions only become popular if they can be prominently displayed and cause virtually no disruption in lifestyle. PV panels and Hybrid cars only cost money. Hanging clothes on line would be a chore. Same reason you do not see people with their McMansion downgrading to a 1000-1500 sqft home or building home styles that promote energy efficiency. Its not easy to show off a new berm home.

 

[Rlong]

Saying they are a negative (appearance, cost to remove, etc) seems plain silly, and no less unethical to "guess" at this, than to give them $ for $ value, cause you think there cool. PV is a small factor in the market, with a wide range of demand (positive to negative), but it's not like putting magnets on your fuel line.. they do work.

Bob in CO (where I have to deal with this as well, and address but give minimal value because "it's not been proven in the market yet")

 

[Terrel L. Shields]

but give minimal value because "it's not been proven in the market yet"

The idea of "giving" value implies it is a number pulled from the air. Ditto the poster who does the 5 yr. DCF of a gas well income -

"minimal"? Based on what? Solar panels have been around for 40 years. Not a high percentage, but they are not invisible. Ditto passive solar, green design, etc. Rodales old "New Shelter" magazine was popular back in the 70s and loads of these designs were available then in the West. The publisher died in a car crash and the magazine disappeared but seriously, you have to seek out those properties to determine if they sell better or worse...and I bet they don't sell for LESS, no matter what they look like.

Did you really look for market evidence?

As for gas wells or oil wells, You have 3 factors at play. What is the market (it exists and is very vigorous right now)? What is the PRICE of gas or oil? What is VOLUME and how fast is it depleting. And what is the REMAINING LIFE of a well? If you cannot answer all three, then you might as well pull a number from your a**.

Nat. gas prices have varied from $9 in 2007 to $2 this past spring, oil from $50 - $125. Local prices vary by the quality of the product. A well in early production from horizontal drilling will decline up to 80% annually, with each well highly variable from the next one. Wells with long production histories likely are still declining annually at 10% or more. Depending upon price and the life of the well, remaining life may be from 0 to 40 years...highly variable. Professional mineral buyers tend to buy for far different metrics that any 5 yr. DCF. Not to mention, are you sure the gas check is for only the owners footprint, or perhaps a legacy mineral interest of a larger parcel and or could have been a divided interest (50% of the interest...) These mineral interests are complex.

Likewise, we can easily adjust the contribution of the savings solar or wind generators. The initial cost is not relevant. Only the remaining life and maintenance would be relevant. Secondly, someone noted something about clothes lines...good point as far as being "green" but perhaps a little more subtle is that shanties are unlikely to save energy by using solar panels, far more likely to do so by using firewood and a stove. Solar panels are generally going to be found on above average quality houses...people who can afford the addtional cost.

In both the gas well and the solar panel, perhaps the location of the wellhead and / or panel is relevant. 1 - solar panels on the rear of the house (faces northwards) likely have little impact...or on a flat roof not visible. Less so in front. The gas wellhead in the front yard v. one not even on the property...different impact.

No one claims that such items are "easy" to appraise. PFA and arm waving adjustments that are "giving" value out of the clear blue are a dangerous way to value a property. Charge more and do it right or walk. And if you are so biased against solar that you won't make a truly serious effort to find other solar sales and/or only seek support for your position without considering the real impact of energy savings or income generating items on a residential property, then you will produce a misleading report whether the average UW or reviewer can tell it or not.

 

[Michael S]

The Appraisal Institute has a new class coming out called Residential and Commercial Valuation of Solar.
http://appraisalinstitute.org/education/course_descrb/Default.aspx?prgrm_nbr=844&key_type=C

The first one is here in Albuquerque on February 21-22, 2013. I'd love to go but unfortunately I'll be out of town during that time. I took a class from the teacher earlier this year, introduction to green buildings (commercial), and she was very knowledgeable about such things. She's an SRA out of Florida and she primarily handles single family residential.

 

[Terrel L. Shields]

Michael

USPAP said we are to maintain our skill in the marketplace by constantly updating those skills and we base our craft upon that "body of knowledge" which is the sum of the education and books, periodicals, and classes which are published. It is the same for science. Peer reviewed, peer created, peer vetted. Scientific articles reference past scholarly works.

It is the same thing here and you laid it out very nicely. We have a "body of knowledge" concerning the valuation of solar panels. There are methods. There are classes. There are no classes that teach you "give" value according to your bias towards or against solar panels. The majority of posters in this thread apparently think their bias is a substitute for real research and methods and clearly do not want to learn anything new. They offer no alternative but to "give" no value to it. They dismiss it as voodoo and proffer no alternative medicine in its place. Yet USPAP says we are to "be aware of, understand, and correctly employ those recognized methods and techniques that are necessary to produce a credible appraisal.."

It goes on to say this is an on going process... "the appraisal professon is constantly revieiwng and revising appraisal methods and techniques...to meet new circumstancess.." Some luddites don't want to heed that part of Std Rule 1-1 (a). If it's too hard and cannot be done with one simple pair, then they ignore it.