Solar Panels

[Ken Youngkrantz]

Over the weekend my wife and I were over at one of our neighbors house for a glass of champagne. We got talking about the high cost of everything. My neighbor told me his last electric bill was $13. This is on a 4500 square foot house. They have a good sized bank of solar panels on the south roof of their house. Another neighbor last year spent close to $20,000 to put solar panels on his house. He indicated his bills have been running under $10. This got me thinking. How would I adjust for solar panels on a house. I have not run into solar panels on a house yet.

Does anyone have experience with appraiseing a house with solar panels on it? Could I use the savings as a GRM? and give them that value ? My last electric bill was $253 and my house is about the same size as the neighbor who's bills are under $10. I don't know and am just thinking out loud here.

Any Suggestions?
Thanks
Ken

 

[MZ818]

Wouldn't your adjustment have to be market derived? If only 1 or 2 houses in the area have solar panels, then there isn't a market for solar panels, thus no adjustment. I have come across a few solar panels, I mention it, but can not adjust for it, as I would be pulling the number out the sky. Maybe in a few years more people will be installing solar panles and we can extract market derived adjustments for them. Wouldn't the adjustment also fall under energy efficient items? There is one community in Ladera Ranch that has solar panels. Actually all the comps in the area did, so I did not have to adjust.

 

[Blueprint]

Solar panels, just like a bedroom or bathroom, are worth as much as the typical buyer is willing to pay for them in the subject's PMA. Sounds like they may be becoming more popular in your area. Maybe it's a fluke. Can you find any similar comps with and without panels to extract a value?

In my markets, the only buyers willing to bear the cost of solar panels are the ones building the custom homes for themselves. They shell out the bucks for the solar systems as they intend to live in these homes for a long enough period to actually reap the benefits. These homes are extremely unique and I never see them on the market. As a result, there is no quantifiable data to give these panels any added value.

 

[Mztk1]

To heck with how would I adjust for them! Who is making them and how do I get in touch with them. We spend $500 a month on electric!

 

[Mike Garrett RAA]

Was a really big thing here back in the 70s and 80s but now it's considered more of an eye sore than a savings. My parents had a solar system to heat domestic hot water and also heat the swimming pool. Really looked ugly up there on the roof. Also took up about 25% of the garage space for the tanks and system. It was a fad that came and went.

Flat panel electric solar panels might be a better idea; however, my electric bill last month was only $43 or about 25% of the total utility bill. How long would it take to recover the investment?

If it was such a great idea and something the market wanted wouldn't builders be offering it as an option? Not seeing that here.

 

[Metamorphic]

We had a comp a couple months ago with photo voltaics. We made an adjustment that was about 50% of the estimated value of the improvement justifying that based on typical improvement to value ratios for other similar improvements that add value but are over improvements for the neighborhood, and then, to back up the value, we estimated a potential savings of the cost to own the house that backed up the value of the adjustment over a reasonable number of years. The analysis seemed very reasonable even though it was only 2nd hand market based association. Sometimes you can only do the best you can do.

 

[LA Woman]

Pres.Bush Crawford Ranch is Off-Grid

If anyone has any doubts about what to do, check out what the President does for his compound in Texas....he lives off grid:

Bush’s ranch is off-grid, boasting a range of eco-features including geothermal heating and cooling, that would make Leonardo di Caprio proud.

The passive-solar house is positioned to absorb winter sunlight, warming the interior walkways and walls. Does his inside knowledge lead him to suspect that he will need it to survive a downturn very soon? "

“He has installed a very environmentally friendly heating and cooling system, and he has put in place a system to recapture groundwater.”

Rainwater and household wastewater are reused for irrigation.

Under a gravel border around the house, a concrete gutter channels the water into a 25,000-gallon cistern for irrigation. In hot weather, a terrace directly above the cistern is a little cooler than the surrounding area.

Wastewater from showers, sinks and toilets goes into purifying tanks underground — one tank for water from showers and bathroom sinks, which is so-called “gray water,” and one tank for “black water” from the kitchen sink and toilets. The purified water is funneled to the cistern with the rainwater. It is used to irrigate flower gardens, newly planted trees and a larger flower and herb garden behind the two-bedroom guesthouse. Water for the house comes from a well.

The Bushes installed a geothermal heating and cooling system, which uses about 25% of the electricity that traditional heating and air-conditioning systems consume. Several holes were drilled 300 feet deep, where the temperature is a constant 67 degrees. Pipes connected to a heat pump inside the house circulate water into the ground, then back up and through the house, heating it in winter and cooling it in summer.

The water for the outdoor pool is heated with the same system, which proved so efficient that initial plans to install solar energy panels were cancelled.

The features are environment-friendly, but the reason for them was practical — to save money and to save water, which is scarce in this dry, hot part of Texas.

The materials used to build the house were relatively inexpensive. Factory-built roof trusses were shipped in and nailed into place. Most of the floors are concrete. The white roof is galvanized tin.

The walls are built from discards of a local stone called Leuders limestone, which is quarried in the area. The 12-to-18-inch-thick stone (sounds like a house built to withstand fallout with walls that thick) has a mix of colors on the top and bottom, with a cream- colored center that most people want.

 

[Lloyd Bonafide]

There are at least a couple of tract home builders here (Pardee / William Lyon Homes), that are including a photovoltaic solar electric system on some homes, that in theory, will be able to sell electric power back to the grid when it produces more than the home needs.

 

[Esox]

I don't know how you would adjust other than finding some similar comps. That being said a lot of money has been made on Wall Street in the last year on solar stocks. Expect to hear more and more about it. If the Dems win the White House and also control Congress expect less oil company incentives and more tax incentives for homeowners who turn to green technology. The current administration shot some of those incentives down last fall. One company, First Solar, was one of, if not the best, performing stock on Wall Street last year. I made a couple bucks on an investment in Evergreen Solar last fall. They are based in Massachusetts and are building two huge plants with lots of taxpayer money. These companies have pulled back considerably in the last three months so I'm glad I'm out.

If you want to learn about solar check out these stock symbols on Yahoo finance. FSLR, ESLR, CSUN, SOLF, SPWR, and the list goes on. Lots of money being spent on developing this technology. CA is talking about, or has agreed to, let solar powered homeowners attach to the grid, and homeowners will be paid for the extra energy they produce. It's absolutely huge in Germany right now. There is a private company called Nanosolar, which is using nano technology to develop films and paints that will work as solar collectors. FWIW, Google has made a huge investment in this company, and they usually make the right calls. Just wait for that IPO in the next three years.

I would expect you appraisers in the sunnier climes will see more and more of this technology, and it will become something to consider over the next five years. Here in Cheeseland, not so much.

Kevin

 

[Mike Garrett RAA]

Still, how do you show market driven value if you have no paired sales? I concur, it is probably a wave in the future but I cannot prove an adjustment at this time IN MY MARKET.