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Solar Panels For Detached House In Dc, Se

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adia9

Freshman Member
Joined
Aug 10, 2006
Professional Status
Certified Residential Appraiser
State
Virginia
Hi Fellow DC appraisers, I am working on a detached house in SE ,DC . Owner mentioned the house has solar panels ... I know it is becoming more typical for houses in DC to have energy efficient features (solar panels) but any idea how much adjustment you would add for this feature? Been doing the research and all the literature is a bit vague. Thanks,
 

Randolph Kinney

Elite Member
Joined
Apr 7, 2005
Professional Status
Retired Appraiser
State
North Carolina
Hi Fellow DC appraisers, I am working on a detached house in SE ,DC . Owner mentioned the house has solar panels ... I know it is becoming more typical for houses in DC to have energy efficient features (solar panels) but any idea how much adjustment you would add for this feature? Been doing the research and all the literature is a bit vague. Thanks,

Do you have any sales with solar panels?

You could run regression analysis on sales of all homes (with and without solar panels) in the zip code to isolate a contributing value of solar panels.
 

Wm. Hattaway

Senior Member
Joined
Mar 18, 2006
Professional Status
Certified Residential Appraiser
State
Florida
  • You don't mention how what type of solar panels they are (leased or owned) our what type of energy it is contributing to the property i.e. is it heating the water for the laundry, the pool, the whole house, etc. Here are some things to consider, depending on how large the system is, concerning FHA and Fannie Mae from energysage.com

    “If you own a home with a solar system, the FHA requires (to your benefit) that its value be assessed and added to the total appraisal value of your home when you want to sell it. However, if you do not own your panels, whatever value that they may add cannot be included for an FHA assessment

    Like the FHA, Fannie Mae has indicated that the value of a solar energy system may be included in an assessment of your home – but only if you (the homeowner) are also the owner of the system. If you lease your solar energy system, on the other hand, the system’s value (if any) may not be incorporated into the assessment, and there are a number of additional requirements that must be met before Fannie Mae will approve a mortgage for a potential buyer.”
 
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TJSum

Elite Member
Joined
Nov 12, 2007
Professional Status
Certified Residential Appraiser
State
Maryland
I work the Washington, DC metro area and I have seen more solar homes this year then my previous 25 years combined. I think the reason solar is really starting to take off is that the solar companies are offering all kinds of different ways to pay for the system instead of a large expense up front which was the most common method of payment in years gone by. So as mentioned above, the vast majority of solar systems I have seen are leased with very little to no equity yet built up in the system. So if the vast majority of the solar expense would pass along to a new owner, not much market value is added, if any. I've also seen homeowners put solar panels over top older roofs which doesn't seem wise as well as when the roof does get replaced they would have to remove the solar panels and re-install, etc. The MLS really needs to add fields to clarify for comps when solar is seen, how the system is being paid for, as an adjustment would have to take this into account.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
This issue has been raised often on the board, might want to research older threads.

Assuming the panels are owned, unless you have similar comp sales with and without panels showing a clear price difference, imo best way to handle it is to not make a separate adjustment but address it qualitatively as part of the reconciliation. We have a similar thing here with whole house generators, or advanced electronics smart houses etc. Usually owners who install these kinds of features also put a lot of other upgrades into the house, so it becomes part of a package. The problem with earlier model energy savings or smart house technologies is they are expensive to put in with often less than stellar pay back and cruder than systems that come after it which will be less expensive to put in, so buyers can be reluctant to pay X $ more for a system that might already seem dated to them, if they can wait for a newer system to come out in a few years and maybe get a tax credit for buying a new one.
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
DC is paying the freight to install solar panels in low income areas. Don't know if there is a payback if they sell, but check
 
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