Solar Value

[Randolph Kinney]

I have spent close to $60k on improvements which include the solar PV system. Others such as a new high efficiency boiler, a brand new oil tank (triple lined), new chimney, and a new electric water heater (benefit of going solar) new hardwood floors throughout, base and crown molding, all new stainless steel appliances ( when we first purchased the home, the seller did not have appliances and the appraiser dinged the value because of it). I was given $12,500 of value off of all of that. The new heating system alone cost over $12k. So I am just confused as to how the appraiser comes up with these numbers and when I spoke to him he refused to explain any of it.

Cost does not equal value. What you spent for improving your home is not compared to what the most similar homes to your home have sold for. A comparison is made by examining homes that sold that have more updates and upgrades and, as well, homes that sold that have less updates and upgrades than your home. The market value of your home is going to be somewhere in between what those homes sold for.

You are not the client of the appraiser or an intended user of the appraisal report for lending assignments. The appraiser cannot discuss the appraisal with anyone who is not the client. The client can give written permission to the appraiser to discuss the report with you. Did you make that request with your lender?

 

[Terrel L. Shields]

You just threw in a BOATLOAD of money so you can enjoy a small monthly bill. You will be in the hole for years....

Good point. I bought a boat and got to use it two or three times a year...how much did I lose when I sold it for $1,000 20 years later?

Is the solar loan 100% assumable by a potential buyer?

You can always pay off a loan...

Your house mortgage will last 15 - 30 years. You make that payment and are "in the hole" too. Ditto the home remodel. But common sense tells me that if I buy a home that costs me $1,900 a month in mortgage and $460 a month in utility bills, I spend $2,360 a month. Then if I install solar and it costs $200 a month And if I save $ 260 a month, then my monthly expense will be $1,900 plus $200, or $2,200. No brainer. You are out less money therefore it is "worth" more.

USPAP says you have to keep up with the technology of this business. The principal of change - be aware of recognized methods and techniques. Regardless the consensus of the posters who think these panels are invisible, the literature is full of ways to estimate an adjustment. And outside a rain forest under the canopy, solar panels do generate more energy dollars than they consume in payments...and likely has a residual value even late in their life.

I just looked at an low environmental impact home that was built in 1988 and it has geothermal, super insulation, passive solar, etc. Will it bring $ for $ back? No, but it certainly contributed to saving money. And even when energy is cheap, it saves money. When energy skyrockets, it saves more money.

I raise the jaundiced eyebrow to the idea that these do not contribute value and suspect that the bias of the appraiser is the problem. I don't think they add value, therefore, I seek only the information that suggest that they do not add value and ignore the evidence that they do.
Whether you like the Appraisal Institute or not, they are basically the only Appraisal organization with a peer reviewed magazine and hardback textbooks. Their classes are approved nationwide. And they say solar panels positively impact value, and the mandate of USPAP to "be aware of recognized methods and techniques..." suggests we must listen to them and while the forum may be a great resource we are not a "recognized" source of appraisal technology. So don't be a luddite. And comparisons to 1970s systems is not valid argument either.

http://www.appraisalinstitute.org/s...vely-impact-home-values-appraisal-institute-/

CHICAGO (Oct. 31, 2013) – The nation’s largest professional association of real estate appraisers today announced that solar photovoltaic systems typically increase market value and almost always decrease marketing time of single-family homes in the Denver metropolitan area.

The Appraisal Institute partnered with the Colorado Energy Office to provide an analysis of the impact of solar PV systems on the home-buying process. The study sought to better understand the impact, if any, that solar PV has on the sales transaction process.
​

http://www.principalsolarinstitute.org/uploads/assets/162/document/CapstoneWebinarwDiscussion.pdf

Leased solar panels? A completely different issue.

 

[Mikeyvee17]

Maybe this explains it better.

View attachment 27121

Except the life expectancy of the solar panels is not 15 years, it's 25 (actually closer to 30)

The system cost was $30k at an interest rate of 3.49%

 

[Mikeyvee17]

Maybe this explains it better.

View attachment 27121

Except the life expectancy of the solar panels is not 15 years, it's 25 (actually closer to 30)

The system cost was $30k at an interest rate of 3.49%

Is the solar loan 100% assumable by a potential buyer?

p.s. the last two homes which sold within the past 5 years with "best thing since sliced bread solar" along the Hudson River here in the Lower Hudson Valley region of NY (hour and half NW from NYC) (both Contemporary Style w/5500sf and 8575sf above grade living area) built in the early 1990s with then "new" solar. Both sales contract prices (revised downward - I appraised them), and purchase loans, were contingent upon removing the antiquated, depreciated equipment resulting in $0. incremental value.

Both listing agents reported atypical extended exposure time (days on market prior to sale) with an atypical volume of serious buyers, many walk-thru "prospects" simply wanted to see what the hub bub about solar AND what recent improvements had been made to the homes to use as a potential basis for listing their own homes. Impact: negative, both homes required substantial, and multiple reductions in original List Prices before they sold. Additionally, keeping tabs on the "solar" influence as an Appraiser, review of Listing Activity includes monthly review of new listings to ascertain the prevalence of solar, and it's impact on marketability. Characteristically, to date, EVERY single house to come on the market (in my region), experiences similar reductions in Original Listing price due to potential buyer reaction and the unsupported overly-optimistic aspirations of both potential sellers and listing agents who price them "because that is what the owner wanted to list at, if I didn't I would not have gotten the listing". Hardly justification for reliance upon either List or Contract Prices. As market nuances reflect the actions of typical LOCAL buyers, results in other markets may be different.

Of further note: regularly appraising in the neighborhoods of both homes, and able to view both from the road (as well as "fly-over" google maps) neither new owner replaced the removed systems with new solar systems. (further confirmed by contact with the selling agents who use recent buyers as a referral base for new ones)

No the loan is not transferred to the new owner - I am responsible for the loan. I would not pass on the loan.

 

[Mikeyvee17]

Maybe this explains it better.

View attachment 27121

Except the life expectancy of the solar panels is not 15 years, it's 25 (actually closer to 30)

The system cost was $30k at an interest rate of 3.49%

Is the solar loan 100% assumable by a potential buyer?

p.s. the last two homes which sold within the past 5 years with "best thing since sliced bread solar" along the Hudson River here in the Lower Hudson Valley region of NY (hour and half NW from NYC) (both Contemporary Style w/5500sf and 8575sf above grade living area) built in the early 1990s with then "new" solar. Both sales contract prices (revised downward - I appraised them), and purchase loans, were contingent upon removing the antiquated, depreciated equipment resulting in $0. incremental value.

Both listing agents reported atypical extended exposure time (days on market prior to sale) with an atypical volume of serious buyers, many walk-thru "prospects" simply wanted to see what the hub bub about solar AND what recent improvements had been made to the homes to use as a potential basis for listing their own homes. Impact: negative, both homes required substantial, and multiple reductions in original List Prices before they sold. Additionally, keeping tabs on the "solar" influence as an Appraiser, review of Listing Activity includes monthly review of new listings to ascertain the prevalence of solar, and it's impact on marketability. Characteristically, to date, EVERY single house to come on the market (in my region), experiences similar reductions in Original Listing price due to potential buyer reaction and the unsupported overly-optimistic aspirations of both potential sellers and listing agents who price them "because that is what the owner wanted to list at, if I didn't I would not have gotten the listing". Hardly justification for reliance upon either List or Contract Prices. As market nuances reflect the actions of typical LOCAL buyers, results in other markets may be different.

Of further note: regularly appraising in the neighborhoods of both homes, and able to view both from the road (as well as "fly-over" google maps) neither new owner replaced the removed systems with new solar systems. (further confirmed by contact with the selling agents who use recent buyers as a referral base for new ones)

No the loan is not transferred to the new owner - I am responsible for the loan. I would not pass on the loan.

Cost does not equal value. What you spent for improving your home is not compared to what the most similar homes to your home have sold for. A comparison is made by examining homes that sold that have more updates and upgrades and, as well, homes that sold that have less updates and upgrades than your home. The market value of your home is going to be somewhere in between what those homes sold for.

You are not the client of the appraiser or an intended user of the appraisal report for lending assignments. The appraiser cannot discuss the appraisal with anyone who is not the client. The client can give written permission to the appraiser to discuss the report with you. Did you make that request with your lender?

Yes - they had me speak with their Staff appraiser who said, and I quote "the appraiser did everything correct, we do not assign value to a solar system if there are no comparable sales in the area" and would refuse to look at any of the documentation I sent him...

 

[Mikeyvee17]

Maybe this explains it better.

View attachment 27121

Except the life expectancy of the solar panels is not 15 years, it's 25 (actually closer to 30)

The system cost was $30k at an interest rate of 3.49%

Is the solar loan 100% assumable by a potential buyer?

p.s. the last two homes which sold within the past 5 years with "best thing since sliced bread solar" along the Hudson River here in the Lower Hudson Valley region of NY (hour and half NW from NYC) (both Contemporary Style w/5500sf and 8575sf above grade living area) built in the early 1990s with then "new" solar. Both sales contract prices (revised downward - I appraised them), and purchase loans, were contingent upon removing the antiquated, depreciated equipment resulting in $0. incremental value.

Both listing agents reported atypical extended exposure time (days on market prior to sale) with an atypical volume of serious buyers, many walk-thru "prospects" simply wanted to see what the hub bub about solar AND what recent improvements had been made to the homes to use as a potential basis for listing their own homes. Impact: negative, both homes required substantial, and multiple reductions in original List Prices before they sold. Additionally, keeping tabs on the "solar" influence as an Appraiser, review of Listing Activity includes monthly review of new listings to ascertain the prevalence of solar, and it's impact on marketability. Characteristically, to date, EVERY single house to come on the market (in my region), experiences similar reductions in Original Listing price due to potential buyer reaction and the unsupported overly-optimistic aspirations of both potential sellers and listing agents who price them "because that is what the owner wanted to list at, if I didn't I would not have gotten the listing". Hardly justification for reliance upon either List or Contract Prices. As market nuances reflect the actions of typical LOCAL buyers, results in other markets may be different.

Of further note: regularly appraising in the neighborhoods of both homes, and able to view both from the road (as well as "fly-over" google maps) neither new owner replaced the removed systems with new solar systems. (further confirmed by contact with the selling agents who use recent buyers as a referral base for new ones)

No the loan is not transferred to the new owner - I am responsible for the loan. I would not pass on the loan.

Cost does not equal value. What you spent for improving your home is not compared to what the most similar homes to your home have sold for. A comparison is made by examining homes that sold that have more updates and upgrades and, as well, homes that sold that have less updates and upgrades than your home. The market value of your home is going to be somewhere in between what those homes sold for.

You are not the client of the appraiser or an intended user of the appraisal report for lending assignments. The appraiser cannot discuss the appraisal with anyone who is not the client. The client can give written permission to the appraiser to discuss the report with you. Did you make that request with your lender?

Yes - they had me speak with their Staff appraiser who said, and I quote "the appraiser did everything correct, we do not assign value to a solar system if there are no comparable sales in the area" and would refuse to look at any of the documentation I sent him...

I personally would pass on a house with solar and go with the one offering a good geothermal system.



You just threw in a BOATLOAD of money so you can enjoy a small monthly bill. You will be in the hole for years....

How so?

The $30k system really only costs ~$15k since the Federal and State Tax credits pay for about half.

I will be in the hole for at most 15 years, plan on paying the loan off in 7. Even if we use the 15 year figure. I have 10 years (lesser figure) of free and clear electricity with NO PAYMENT due to the utility company.


How do you folks come up with your logic? Please, someone help me understand...

 

[Mikeyvee17]

Except the life expectancy of the solar panels is not 15 years, it's 25 (actually closer to 30)

The system cost was $30k at an interest rate of 3.49%[/QUOTE

If we include the the tax credits from the Federal Government and New York State, the cost of the system is roughly $16k over 15 years at 3.49%

So redo your numbers, they are way off....

 

[Randolph Kinney]

The system cost was $30k at an interest rate of 3.49%

How many years of electricity will that $30,0000 spent buy from the utility? And you are paying interest on that luxury of supplying your own electricity.



State solar users would lose savings if proposal is OKd; SolarCity describes 'catastrophic' future

http://www.latimes.com/business/la-fi-solar-net-metering-20150927-story.html

 

[Elliott]

Mikeyvee,
How much electricity is produced by the system (on average) and how much is that electricity worth per month.

So here's my back of the envelop calculations with the limited information you've given. It costs $30K, at 3-1/2% interest, that's $1000 per year, it will probably have an effective life because of improving technology of 20 years, so that 's $1500 of depreciation. I doubt these things are maintenance free, so let's add $300 per year (I imagine a Hurricane Sandy would rip one of these off with ease). So just to break even, you need to make, use, sell the equivalent of $3000 per year. If there is an amount you save over that then that could be capitalized at 10% (5% depreciation + 5% safe interest rate) and that would be a reasonable value. From there the market would probably discount it 30% to 60% depending how they feel about the solar improvement in relation to the rest of the house, neighborhood, etc.

 

[Randolph Kinney]

Except the life expectancy of the solar panels is not 15 years, it's 25 (actually closer to 30)

The system cost was $30k at an interest rate of 3.49%

No the loan is not transferred to the new owner - I am responsible for the loan. I would not pass on the loan.

Yes - they had me speak with their Staff appraiser who said, and I quote "the appraiser did everything correct, we do not assign value to a solar system if there are no comparable sales in the area" and would refuse to look at any of the documentation I sent him...

So you are saying it is the lender's guidelines that no value is to be given when there are no comparable sales with solar PV systems?

That is called an assignment condition. The lender will not consider the solar PV system unless there are market sales demonstrating: 1- market acceptance; 2 - contribution to market value.