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PrePaid leased Photovoltaic System - Does it have market value? Reviewer says NO!

Carnivore

Elite Member
Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
This whole gnarly mess is pretty much a moot point if you are appraising for F/F. They are pretty clear and specific on solar panels. Feel free to get lost in the minutiae of the fine details of prepaid leases and when they become a part of real estate etc.
Well that is a problem about the minutia. Appraisers have to be very careful when they deal with certain lenders. It gets worse when the order comes through a AMC Oligarch. You can imagine the crap I hear from them. i.e. We just want you to include the Contributory Value as a Separate Line Item. REALLY! If they are leased then the only contributory value is the savings on the power bill. Meaning it reduces the Borrowers Payments/outlay to Live. It is a Debt load just like a Credit Card, Car Payments etc. We Appraise Property Rights. We don't get into Qualifying a Borrower for a Mortgage.

Now if they want I can analysis as a separate assignment(money for me) the Cash Flow or more accurately the Net cash after the lease payment. This wont work well in NC because Duke Energy uses Net Metering. There is two ways net metering is done. In NC you only receive credit for the Electrict Bill. Excess is carried over to the next bill and so on BUT it is on a One year Cycle. July to June. On July 1 any excess from the previous year is reduced to $0 dollars and you start over.
 

Meandering

Elite Member
Joined
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
Well that is a problem about the minutia. Appraisers have to be very careful when they deal with certain lenders. It gets worse when the order comes through a AMC Oligarch. You can imagine the crap I hear from them. i.e. We just want you to include the Contributory Value as a Separate Line Item. REALLY! If they are leased then the only contributory value is the savings on the power bill. Meaning it reduces the Borrowers Payments/outlay to Live. It is a Debt load just like a Credit Card, Car Payments etc. We Appraise Property Rights. We don't get into Qualifying a Borrower for a Mortgage.

Now if they want I can analysis as a separate assignment(money for me) the Cash Flow or more accurately the Net cash after the lease payment. This wont work well in NC because Duke Energy uses Net Metering. There is two ways net metering is done. In NC you only receive credit for the Electrict Bill. Excess is carried over to the next bill and so on BUT it is on a One year Cycle. July to June. On July 1 any excess from the previous year is reduced to $0 dollars and you start over.


Ah, the "income" of savings from solar panels.

What about the increase in the homeowners insurance policy?

Any increase in the local RE taxes for the "value added"?

And the expense of maintenance? Provided by the lessor or lessee?

.
 

sputnam

Senior Member
Joined
Apr 24, 2012
Professional Status
Certified General Appraiser
State
North Carolina
Don't know the answer for sure... since I don't know the Intended Use of the appraisal or the specific loan program involved (if any). However, FHA says you can't give value to leased equipment.
 

MMing5000

Thread Starter
Junior Member
Joined
Oct 24, 2013
Professional Status
Appraiser Trainee
State
California
Sorry, not sheep, just know the supplemental standards. Unless there is a clause in the lease contract that states the system is owned when paid off and not at the end of lease term years, the supplemental standards say no value given. You agreed to those supplemental standards when you accepted the assignment. Don't like the supplemental standards? Don't do GSE work.
Is you appraisal for financing purpose prepared based on "Market Value"? :cool:
 

MMing5000

Thread Starter
Junior Member
Joined
Oct 24, 2013
Professional Status
Appraiser Trainee
State
California
And you should read the lease to know if the lease or panels can be sub-let to any new owner of the home.

Leases are contracts.
New owners of properties would need new leases,
while previous owners would be due a refund of a lease.
Unless it is all covered within the existing lease,
which means you need a copy of the existing lease, paid or not.
And you'll actually have to read it, to know if any new owner of a property would have any benefit from an existing lease, paid or not.
Do you really think the Lessor of the leased panels who received the entire lease in advance, will refund to that homeowner, and then sign a new lease with the new Buyer? What would that accomplish for the Lessor asides from creating unnecessary paperwork and lose out on the prepaid profit? :cool:
 

Sadie

Member
Joined
Mar 20, 2008
Professional Status
Certified Residential Appraiser
State
Oregon
Do you really think the Lessor of the leased panels who received the entire lease in advance, will refund to that homeowner, and then sign a new lease with the new Buyer? What would that accomplish for the Lessor asides from creating unnecessary paperwork and lose out on the prepaid profit? :cool:
It depends on the terms of the lease. The point is you don't know, you are assuming. Back to your original post. Unless you can show the panels are now owned, you cannot give them value per F/F guidelines. You can argue all you want, but it doesn't change that. You think they should be given value? provide the U/W with the contract that shows upon payment in full of the lease, they are owned. Otherwise, buck up.
 

Carnivore

Elite Member
Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
I brought it up earlier. The GSE will not take a 2nd fiddle position. Period! No bank will do that either regardless if and who they sell the loan to.
 
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