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Solar Value Discrepancies

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Mg Hand

Freshman Member
Joined
Jun 20, 2017
Professional Status
General Public
State
California
Hi, all -

I had a recent appraisal done, and the value of the solar panels (10Kwh system, installed this year) was less than I expected. My own research included the article here https://emp.lbl.gov/sites/all/files/lbnl-1002778.pdf which indicates on page 8, section 4.2 that the average value in California should be $4.31/w of an installed system. Theoretically, that would be a value of close to $43k. It was valued by the appraiser around $17k. I don't understand why there is such a difference? My research included the document from the Appraisal Institute. Can someone offer me any real explanations? The only thing my appraiser and the bank could say was that it "just wasn't done."

I know I can't change the outcome, and I am not trying to fight this. I am just trying to understand what happened.

Thank you in advance for all responses.

Marigrace
 

gregb

Elite Member
Joined
Sep 3, 2011
Professional Status
Certified General Appraiser
State
California
Is your solar system paid for or leased? What was the total cost to purchase and install your solar system?
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
If you own it, your only option is to file a complaint with the state board. However most appraisers seem to think paired sales show a dramatic discount to cost or savings. I am concerned that appraiser are too negative or are not comparing similar systems, and discount too much, and don't use recommended methods as required by USPAP.
 

Mg Hand

Freshman Member
Joined
Jun 20, 2017
Professional Status
General Public
State
California
Is your solar system paid for or leased? What was the total cost to purchase and install your solar system?
Hi, Greg -

Thank you for your question. I own my solar system. The total cost to purchase and install the system is roughly $45k.
 

Mg Hand

Freshman Member
Joined
Jun 20, 2017
Professional Status
General Public
State
California
If you own it, your only option is to file a complaint with the state board. However most appraisers seem to think paired sales show a dramatic discount to cost or savings. I am concerned that appraiser are too negative or are not comparing similar systems, and discount too much, and don't use recommended methods as required by USPAP.

Hi, Terrel -

Thank you for your reply. I am not interested in filing a complaint at this time. I am trying to understand the logic behind the decision so I don't make the same mistake twice. This appraiser was rather cynical, and negative in general. He was not interested in speaking with me directly, even though I am the sole title holder. Instead he kept directing questions to my husband and adult son who were present at the time. That aside, I respect that he made his best professional estimate. I would like to better understand the standards guiding solar estimation.

Marigrace
 

gregb

Elite Member
Joined
Sep 3, 2011
Professional Status
Certified General Appraiser
State
California
Did you read this section of the pdf you posted? And Btw, how many watts does your system produce and what price range and geographic area is your residence? Sorry, the graph did not format but you can refer to it in the pdf you posted.

As shown in Table 3, PV homes took slightly more time to sell than non-PV homes on average (and also based on the median), but the differences are small, and therefore no clear pattern emerges in California. Table 2: San Diego Metro Area Paired-Sales Premiums and Contributory-Value Estimates Table 3: San Diego Metro Area PV Information, Days on Market, Electric Rates, and Escalation Rates Paired Sale ST Location Total PV Premium Sales Price Premium ($/Watt) Gross Cost ($/Watt) Net Cost ($/Watt) Low Income Estimate ($/Watt) Average Income Estimate ($/Watt) High Income Estimate ($/Watt) Sale Price of Solar House Premium as a % of Sale Price 1 CA Chula Vista $20,700 $5.05 $6.11 $4.14 $3.61 $3.89 $4.20 $400,000 5.18% 2 CA Chula Vista $11,000 $3.67 $6.37 $4.32 $3.62 $3.91 $4.23 $836,000 1.32% 3 CA El Cajon $16,800 $3.72 $6.11 $4.14 $3.61 $3.90 $4.22 $575,000 2.92% 4 CA LaJolla $15,000 $3.21 $5.63 $3.80 $2.17 $2.30 $2.43 $1,050,000 1.43% 5 CA San Diego $5,850 $4.09 $6.37 $4.32 $2.06 $2.18 $2.31 $675,000 0.87% 6 CA San Diego $30,850 $6.02 $6.37 $4.32 $2.95 $3.14 $3.36 $499,000 6.18% 7 CA San Diego $52,500 $7.53 $6.37 $4.32 $4.07 $4.40 $4.78 $500,000 10.50% 8 CA San Diego $16,580 $6.09 $6.11 $3.77 $3.72 $4.02 $4.34 $535,000 3.10% 9 CA Chula Vista $5,000 $2.46 $5.59 $3.77 $3.95 $4.28 $4.65 $455,000 1.10% 10 CA El Cajon $5,000 $1.46 $5.59 $3.77 $3.31 $3.56 $3.82 $475,000 1.05% 11 CA El Cajon $11,970 $5.70 $5.59 $3.77 $4.02 $4.37 $4.75 $500,000 2.39% 12 CA Alpine $14,500 $2.80 $5.63 $3.80 $4.08 $4.42 $4.80 $436,500 3.32% 13 CA Lemon Grove $16,900 $4.27 $5.59 $3.77 $3.14 $3.38 $3.64 $379,000 4.46% Mean $17,127 $4.31 $5.96 $4.00 $3.41 $3.67 $3.96 $562,731 3.37% Median $15,000 $4.09 $6.11 $3.80 $3.61 $3.90 $4.22 $500,000 2.92% Paired Sale Total PV Premium Size System (kW) Age System (yrs) Sale Date Solar PV SaleDays on Market Non Solar Days on Market Electric Cost ($/kWh) Est. Yrly Electric Escalation Rate (%) 1 $20,700 4.10 3.6 8/31/2012 10 113 $0.1637 2.89% 2 $11,000 2.99 2.2 4/3/2012 30 7 $0.1637 2.89% 3 $16,800 4.52 2.5 7/21/2012 9 10 $0.1637 2.89% 4 $15,000 4.67 11.41 11/16/2012 50 56 $0.1670 4.24% 5 $5,850 1.43 10.58 4/17/2012 35 8 $0.1637 2.93% 6 $30,850 5.12 7.12 5/24/2012 77 2 $0.1637 2.93% 7 $52,500 6.30 1.2 6/26/2012 18 21 $0.1637 2.93% 8 $16,580 2.72 2.5 6/15/2012 24 35 $0.1637 2.93% 9 $5,000 2.03 1.67 5/13/2013 4 5 $0.1670 2.85% 10 $5,000 3.42 4.75 4/20/2013 10 7 $0.1670 2.82% 11 $11,970 2.10 0.5 5/11/2013 21 9 $0.1670 2.85% 12 $14,500 5.17 1.25 2/11/2013 14 9 $0.1670 2.85% 13 $16,900 3.96 5.33 5/20/2013 22 4 $0.1700 2.80% Mean $17,127 3.73 4.20 10/21/2012 25 22 $0.1655 2.98% Median $15,000 3.96 2.50 8/31/2012 21 9 $0.1637 2
 

JTip

Elite Member
Joined
Oct 12, 2004
Professional Status
Certified Residential Appraiser
State
Pennsylvania
I gleaned +3% in CA. $17K is the 'average premium' in CA.

You can usually cherry pick data points to make it work for either side, so $17k looks to be the paired sale premium.
 

Mg Hand

Freshman Member
Joined
Jun 20, 2017
Professional Status
General Public
State
California
Did you read this section of the pdf you posted? And Btw, how many watts does your system produce and what price range and geographic area is your residence? Sorry, the graph did not format but you can refer to it in the pdf you posted.2

Thank you for your reply, Greg. Yes, I do read my research. There are no paired homes in my immediate area, so there are no "comps" that exactly match my home. My system produces roughly 55-60 Kwh a day. I do live in a different geographic area, near Sacramento, CA. I know I can't compare apples to oranges. Would the geographic location make that much of a difference? Perhaps I simply don't understand the graph.
 

Mg Hand

Freshman Member
Joined
Jun 20, 2017
Professional Status
General Public
State
California
I gleaned +3% in CA. $17K is the 'average premium' in CA.

You can usually cherry pick data points to make it work for either side, so $17k looks to be the paired sale premium.

Thank you, JTip, for your reply. So would the 3% be a better thing to apply then the per Watt value? Is that the logic?
 

JTip

Elite Member
Joined
Oct 12, 2004
Professional Status
Certified Residential Appraiser
State
Pennsylvania
Thank you, JTip, for your reply. So would the 3% be a better thing to apply then the per Watt value? Is that the logic?

No. If I were a CA appraiser (and I am not), I would most likely use $17k adjustment, based on your provided pdf, written by a gaggle of MAI folks.

3% on $100k and 3% on $2M is a big difference. $17k is my final answer.....
 
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