Unable to find comps which have "owned" solar panels. What to do?

[George Hatch]

how long do those babies last. so you capitalize, then what if the remaining life is short, then the cost to remove them. i always hate to say this, but if you don't need that adjustment, why risk explaining how you really didn't figure it out.

It's the "explaining" part that causes the problem. If you understand what you're doing them explaining it is straightforward. If you don't then it becomes a problem.

In our business the appeal to reason > appeal to authority.

"Trust me because I'm an appraiser" is an example of the appeal to authority - "you don't need to understand what I'm doing, just trust me because i have a license"​

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"Trust this output because this is an AVM " is an example of the appeal to authority - "you don't need to understand how the machine works, just trust it because it's the machine" ​

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"You don't need to review my work because I'm an old-timer CG" is an example of the appeal to authority. I don't even need to illustrate the foolishment of that one. If someone says that to a reviewer then that's when the reviewer reaches into their desk for the big magnifying glass.​

All of those being inherently weaker than "trust this workproduct if it makes sense to you and you find it credible" which is an example of the appeal to reason. And is the reason we show our work.

 

[alebrewer]

i always hate to say this, but if you don't need that adjustment, why risk explaining how you really didn't figure it out.

I didn't know that was an option... So if we don't need an adjustment, we can just choose not to apply one?

 

[J Grant]

We use techniques every day that homebuyers don't use... but granted - those are kindergarten fodder compared to DCF.

Actually, we in the apparisal develop a model method version of what they use, or what they do, or how they decide.

Buyers adjust with their wallets, For example, avg in aX price range tend to pay 20k more for a pool and 30 k more for a high end new kitchen - if we extract that, we make a similar adjustment, as we would for any key feature or defect. Buyers have a rough idea of repair costs, our adjustments for repairs or replacements have a relation to what it would cost them to have it done.

Buyers choose a property according to the competition of other avail houses in their price range, which become the comps, and sellers compete for a same buyer pool as well. .

A sophisticated investor or commercial buyer is using more sophisticated methods ( or they can hire someone to do it ), so more sophisticated appraisal methods would be appropriate to value those properties and in line with what the buyers do to evaluate and make decisions

 

[alebrewer]

I'll share a secret - for those of you who own HP 12C's, and who still have the manual, DCF is explained as 'Calculating Present Value' on page 44. Caveat: I only recommend CG's using HP 12 C - Reverse Polish Notation should NOT - I repeat NOT - be attempted by CR's or Licensed appraisers.

 

[alebrewer]

Actually, we in the apparisal develop a model method version of what they use, or what they do, or how they decide.

Buyers adjust with their wallets, For example, avg in aX price range tend to pay 20k more for a pool and 30 k more for a high end new kitchen - if we extract that, we make a similar adjustment, as we would for any key feature or defect. Buyers have a rough idea of repair costs, our adjustments for repairs or replacements have a relation to what it would cost them to have it done.

Buyers choose a property according to the competition of other avail houses in their price range, which become the comps, and sellers compete for a same buyer pool as well. .

A sophisticated investor or commercial buyer is using more sophisticated methods ( or they can hire someone to do it ), so more sophisticated appraisal methods would be appropriate to value those properties and in line with what the buyers do to evaluate and make decisions

so you're saying now that the 'typical' buyer uses extraction and/or allocation to arrive at a site value? Or are you saying that a 'typical' buyer uses paired sales analysis, sensitivity analysis, and bracketing? This is a rhetorical question, as you and I both know the answer.

 

[J Grant]

I wonder wrt to solar as a litmus test for demand - one is simple, drive around if you see lots of panels on roofs it has demand, only a few shows area low demand.

Ask area RE agents, do buyers come in asking for a house with solar panels ? The way they ask for a house with a pool, lake view, or new upgrades ? I bet very few buyers do , because they realize 1) they can easily add solar panels to any house they buy ! 2) focusing on just houses with solar panels would in most cases greatly limit what is available to them.

So a house with solar panels is one of the group they see and how likely are they to pay extra for them....might depend .

 

[J Grant]

so you're saying now that the 'typical' buyer uses extraction and/or allocation to arrive at a site value? Or are you saying that a 'typical' buyer uses paired sales analysis, sensitivity analysis, and bracketing? This is a rhetorical question, as you and I both know the answer.

I said, we use an appraisal model version of what they do. Most buyers don;t give a sh**about site value which is why many res assignments don't require or need the cost approach. but if a buyer is considering costs such as they are looking to build or buy new they might do a rough version of it, or compare land sale prices to completed home sale prices.

The buyer does use their own version of paired sales analysis, they compare the houses they looked at or considered to each other, and they also bracket, this house is bigger so we will pay more, this house is smaller so we will pay less, this house has the lake view we want, this house does not have it but if they took 30k less maybe we would buy it and so on.

 

[Dublin ohio]

I wonder wrt to solar as a litmus test for demand - one is simple, drive around if you see lots of panels on roofs it has demand, only a few shows area low demand.

Did a sold countywide MLS search for solar in a county of 1.3M over the past year. Total of 10 out of 16,646 SFR sales. Of course this is central Ohio. Not exactly the sunshine capital.

 

[Sandra Koutsopoulos]

What I'm seeing in the marketplace, is virtually NO increase in sale price for leased NOR owned solar, and sometimes, surprisingly, LOWER sale price by $5000 to $10,000. One would assume if 2 comparable houses are selling for the exact same price and one has paid off solar, that would be a value incentive. But I'm not seeing that. Whenever a homeowner has solar, I ask him what he paid for it, when, what his difference in electric bill is now vs before, and what his payments are on the system if leased or under purchase agreement. Generally they tell me they paid $20,000 to $35,000 for the system. Sadly, it seems price vs benefit is a boondoggle, and may even cost homeowner some equity. I hate that.

 

[George Hatch]

I'll share a secret - for those of you who own HP 12C's, and who still have the manual, DCF is explained as 'Calculating Present Value' on page 44. Caveat: I only recommend CG's using HP 12 C - Reverse Polish Notation should NOT - I repeat NOT - be attempted by CR's or Licensed appraisers.

You're serving up a lot of salt in this thread. Particularly when I already acknowledged that the license isn't the measure of the competency. The competency is the measure of the competency.

BTW, the only calculator I own is an HP12c but I haven't used it for a DCF for probably 25 years. Spreadsheet is mo' faster and easier, particularly when running several iterations.

Fun fact No2; I understand and use DCFs but I don't have the competency to use those calculators either because they don't do what an appraiser is required to do when using a DCF; they don't appear to analyze all the elements an appraiser would have to consider nor do they disclose all of the assumptions they're using or how they got there. Some of what they're doing is hidden and it isn't readily apparent.

Cost (<, =, >) Value
Income (<, =, >) Value

This shouldn't be a difficult concept for people to understand.