Solar Value

[Randolph Kinney]

Because the appraiser SAID there was no VALUE!!

What are you not understanding here - just because someone "feels" there is no value, doesn't mean the appraiser doesn't have to FOLLOW THE GUIDELINES.

The lender agreed with the appraiser because it is in their benefit to do so!

You have a double negative in that sentence which translates to the appraiser does have to follow guidelines. What is that reason? Because the appraiser's job does depends on the market to demonstrate value, not his personal feelings about value. And what benefit does the lender derive from agreeing with the appraiser?

Seems like you have a bone to pick with the lender. Does the lender recognize the income capitalization method to determine value? If not, you are done. You need a lender that does.

 

[Mikeyvee17]

So all of you can see this - taken from my appraisal report:

 

[Randolph Kinney]

Randolph,

Phoenix would be an optimal sunlight area, while Long Island is not.

Start with how many days those solar panels were covered in snow, and start subtracting efficiency/optimal days to generate.

On this chart, you would compare Phoenix to New York City.

http://www.bigfrogmountain.com/SunHoursPerDay.html

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It becomes obvious (to me) that solar PV systems have their maximum value where there is maximum sunshine year round. Solar PV systems have their least value, like at the north or south pole.

Even in Phoenix, there was a very slight contribution to market value of owned solar systems. The article was being very generous to suggest a 4% value add to the resale price. The graph suggests even less. But it did point out the effect of not having net metering; no more sales of solar PV systems.

 

[Randolph Kinney]

The premise of buying solar PV systems for individual homes is that solar rooftop power generation is cheaper than what the utility cost of power is. That ain't so. The governments have to add tax incentives and the utility has to buy excess power generated at the same price they sell it to the individual rooftop solar system owner in order for the price of power to be in favor of the individual rooftop solar system owner.

The more excess power produced by rooftop solar system owner, the greater the advantage and savings. That comes at the expense of all other rate payers who must absorb the overhead and transmission cost of maintaining the utility grid.

California and Arizona utilities are getting the regulators to change that. Here, it is going to be something of a flat rate minimum charge - may be $135 a month.

 

[Randolph Kinney]

How much will you save with your PV system?

The value of your PV system's electricity depends on how much you pay for electricity now and how much your utility will pay you for any excess power that you generate. If your utility offers net metering (and so pays the full retail price for your excess electricity), you and your utility will pay the same price for each other's electricity. You can use the calculation box on the next page to roughly estimate how much electricity your PV system will produce and how much that electricity will be worth. Actual energy production from your PV system will vary by up to 20% from these figures, depending on your geographic location, the angle and orientation of your system, the quality of the components, and the quality of the installation.

Also, you may not get full retail value for excess electricity produced by your system on an annual basis, even if your utility does offer net metering. Be sure to discuss these issues with your PV provider. Request a written estimate of the average annual energy production from the PV system. However, even if an estimate is accurate for an average year, actual electricity production will fluctuate from year to year because of natural variations in weather and climate.

If your utility does not offer net metering, you can still use the calculation box to determine the amount of electricity your system will produce. However, this is not as straightforward, because the excess electricity will not be worth as much as the electricity you actually use.

You may earn only 2 cents per kilowatt-hour—or less than half the retail rate—for your excess power.

PV systems produce most of their electricity during the middle of the day, when residential electric loads tend to be small. If your utility does not offer net metering, you may want to size your system to avoid generating electricity significantly beyond your actual needs.

 

[Mikeyvee17]

New York State just called me and will be assigning someone to review my case. I will let you all know when the State rules in my favor and I get a refund for the appraisal that was done incorrectly.

Thank you for all of your comments and help. And for those of you who disapprove, thank you for pushing me to challenge this even further!

 

[George Hatch]

See, this is why appraisers are often reluctant to talk to homeowners about atypical appraisal situations. We can explain how we do things but if that conflicts with their world view or the results don't match whatever their sales person and the eco-advocates are saying then most homeowners invariably retain their assumptions that it just can't be true.

You may be 110% correct and this appraiser may indeed have undervalued your home. Or, you may be incorrect and the appraiser may have done the right thing. You apparently have no market data that supports your opinion, so that puts you at the distinct disadvantage in a discussion about how your local market operates with respect to solar installs.

The difference between the appraiser's opinion and your opinion is that you have a desired result and the appraiser doesn't. Not only does the appraiser not care what you want but he is required to *certify* that he/she doesn't care what either you or their own client wants. The appraiser isn't on your team and they're not supposed to be on the lender's team, either.

That means the appraiser has no incentive to lie about their conclusion or to take sides. That conclusion may be in error, but if so that would be the result of making the assumption (which is what you have done) instead of actually looking for the data and working the analysis.

And before you go just dismissing their judgement and experience out of hand you might want to take a moment and think about what the judgement and experience consists of.

Our profession has added very few new fully licensed appraisers over the last 8 years so that means this appraiser most likely has at least 10 years of full time appraisal experience under their belt. That's because it takes a minimum of 2 years just to accrue enough acceptable experience to even qualify for the full license. So that's at least 10 years of analyzing - specifically for value - at least 100 local sales transactions a week and quite possibly a lot more than that. That's 10 years of completing and submitting appraisal reports that are accepted by various lenders for their use in making these decisions. Including their own reviews that are being performed by other appraisers and underwriters, each of whom have their own professional experience.


Based on what you've told us one of those reviewers apparently told you that they agreed with this analysis and conclusion, most likely within the context of what they've seen from a number of other appraisers in your region.


These are the people you're arguing with, and this is the level of information that they have accumulated in your market area which you have not accumulated. In counterpoint you've got an AI position paper that points to the use of an Income Approach to value this amenity; but what they didn't make as clearly as they should have was that this mode of analysis can only work to the extent that someone either arbitrarily *assumes* the direct relationship between savings and contributory value or else develops that opinion based on relevant data that actually demonstrates that relationship.

Just so you know, two properties can have the same income but result in different values in the market if they have different uses. So saying a $2500/yr reduction in net income can indicate to $25,000 in additional value to one property (say, a 10-unit apartment) doesn't necessarily mean it will have the same effect in a completely different property type (single family residence). That's not an opinion, it's a fact; and the AI's paper really should have made more prominent mention of that.

 

[JTip]

Looking past the poor sentence structure, I can see where the appraiser was going with the thought.

Nobody in the neighborhood/market area has solar panels. No support can be extracted from the market to establish a value for the contributory item.

I have seen that here with consumer model wind turbines. Just because they cranked in $10k doesn't mean they get $1 back in market value.

Sometimes the wind blows, sometimes it's a cloudy day.

 

[Randolph Kinney]

So all of you can see this - taken from my appraisal report:


View attachment 27126

What are you going to do if the state does not agree with your complaint?

The Department of State is committed to maintaining the integrity and competence of the licensees within its jurisdiction. Should a member of the public believe that a licensee has acted in an untrustworthy or incompetent manner, he or she may file a complaint with the Department's Division of Licensing Services. The complaint will be reviewed and an investigation will be commenced to determine whether the licensee should be disciplined. Both the licensee and the complainant are kept apprised of the proceedings.

A licensee who is found to be in violation of the law is subject to reprimand, fine, suspension or revocation.

http://www.dos.ny.gov/licensing/complaint.html

STATEMENT ON APPRAISAL STANDARDS NO. 2 (SMT-2)

SUBJECT: Discounted Cash Flow Analysis

APPLICATION: Real Property


2272 To avoid misuse or misunderstanding when DCF analysis is used in an appraisal assignment to develop an

2273 opinion of market value, it is the responsibility of the appraiser to ensure that the controlling input is consistent

2274 with market evidence and prevailing market attitudes. Market value DCF analyses should be supported by

2275 market derived data, and the assumptions should be both market and property specific. Market value DCF

2276 analyses, along with available factual data, are intended to reflect the expectations and perceptions of market

2277 participants. They should be judged on the support for the forecasts that existed when made, not on whether

2278 specific items in the forecasts are realized at a later date. An appraisal report that includes the results of DCF

2279 analysis must clearly state the assumptions on which the analysis is based and must set forth the relevant data

2280 used in the analysis.

USPAP 2014-15

 

[Meandering]

The math does not work no matter how he spins it.
No buyer has to pay more for a home than the buyer and the bank are willing to finance. So it's all a moot point. As the buyer's bank said no, they don't want the value boosted if the amenity is not present in the neighborhood. This is just someone who has been had by the Kool Aid, and now wants to blame the appraiser.

Shall I send you the bill? $108 per month for 15 years.
Those are the terms from NYSERDA

Sure send me the bill. Post it here. I am fully trained in pulling out loan incentives to point out how they impact value. And wait for this one.
I can do the math.
But just to point out to you, before you post the bill, by your own admission, from math that makes no sense even to what you say, you’re paying $108 a month to save $75 to $100 a month.
Your government and your bank thank you. Perhaps you should see if they sent thank you letters to your former math teachers.

Nope don’t find any financing program on their site. Your numbers don’t work for the terms you state. You can holler all you want, the numbers don’t work.

Also, you act like the utility company will NEVER raise any rates.
Here on Long Island, since PSEG took over for LIPA, rates have increased over 18% in the first year!
You need to take into account an average rate increase.
Or does your spreadsheet not do that for you?

Did you take into account your federal and state income tax increases for your savings? Did you check the PUC to see the maximum amount they can raise rates by law?
Have you considered that one clothes line would have saved you a $30,000 loan and saved taxpayers approximately $20,000 you received as an incentive to pay for something that brings you no benefit?

And while you’re considering the possible increases in electric utility rates, did you consider the declining output of your solar panels as they age? The maintenance to keep them clean over the life of the panels and the maintenance to remove the leaves from behind them in the fall so the roof doesn’t rot, and the maintenance to remove the snow from them all winter so they will work?

Because the appraiser SAID there was no VALUE!!
What are you not understanding here - just because someone "feels" there is no value, doesn't mean the appraiser doesn't have to FOLLOW THE GUIDELINES.
The lender agreed with the appraiser because it is in their benefit to do so!

Nope.

For lending what the appraiser follows is not guidelines. They are laws and regulations which include assignment conditions from the lender who obviously is not going to “go along” with a value increase over some used solar panels. It is not our “choice” it is our mandate.

the math doesn't work


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