Value For Solar System.

[Terrel L. Shields]

IF you can find other solar comparables maybe not complex. There is no good definition but Randolph posted this some time ago and it is still relevant. From the OREA board

[url]http://appraisersforum.com/showthread.php?t=108550[/URL]
among possible complex assignments....

A single-family residence in a custom home market, where the quality of materials utilized and amenities differ significantly between residences. The assignment is complex because it will involve detailed identification of the quality of materials utilized in constructing the subject property improvements, the ability to quantify value influences for differences in the quality of materials utilized in the subject property improvements as compared to the comparable sale property improvements, and an analysis of higher cost amenities and determination of their contribution to value.

 

[Appraising4u]

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The OP might ask himself (herself?) "Is this the hill that I want to die on?"

Given what the owners have before them and their assertions, the appraiser who delivers the bad news via the new appraisal...well, I'll leave it to your imagination.

Leelansford, This just might be the hill I will die on. Just have to understand if it is worth loosing life. ;/
I pretty much think all the odds are against me on this one, and just might gracefully back out. 1) the owner is a judge in this city and good friends with the local appraiser who appraises all the divorce cases, 2) that same appraiser does not like me or any other appraiser for that matter, and I know he will sit down for days looking at all the details of the report so as to find a way to turn me in. He has done that to just about every appraiser in this city, including myself. This appraiser teaches classes I have been told, and in one of his classes he states you are to give solar systems 100% of cost in value. I can see it now when the homeowner see's that I didnt give $60,000 in the report.... geees!
I just want to make sure I have my facts straight before I continue with the assignment or bow out.

P.s leelansford, ask herself! :laugh:

 

[Appraising4u]

yes

If you had comps with solar panels,

would you still have the question?

Actually I would....
Even if I found a sell with solar panels, how can I be assured it is a comparable system? How can I assume it produces the same amount of energy or credits the homeowner at the end of the year? Will one solar system be more appealing to a buyer than the other. Would a buyer rather pay $60k more for a home and have no PG&E bills, or pay $30k more with a $300 PG&E bill? I would imagine it would depend on how long the buyer plans on living there, however market value does not base itself on time.
I find myself asking more and more questions, even if I were to find a sale with solar panels.

 

[Appraising4u]

IF you can find other solar comparables maybe not complex. There is no good definition but Randolph posted this some time ago and it is still relevant. From the OREA board

[url]http://appraisersforum.com/showthread.php?t=108550[/URL]
among possible complex assignments....

Great thread, Thank you!!!!!

 

[Tim The Enchanter]

Leelansford, This just might be the hill I will die on. Just have to understand if it is worth loosing life. ;/
I pretty much think all the odds are against me on this one, and just might gracefully back out. 1) the owner is a judge in this city and good friends with the local appraiser who appraises all the divorce cases, 2) that same appraiser does not like me or any other appraiser for that matter, and I know he will sit down for days looking at all the details of the report so as to find a way to turn me in. He has done that to just about every appraiser in this city, including myself. This appraiser teaches classes I have been told, and in one of his classes he states you are to give solar systems 100% of cost in value. I can see it now when the homeowner see's that I didnt give $60,000 in the report.... geees!
I just want to make sure I have my facts straight before I continue with the assignment or bow out.

P.s leelansford, ask herself! :laugh:

Based on 1 and 2 I say, run away! Tis a silly hill to die on.

 

[Appraising4u]

Based on 1 and 2 I say, run away! Tis a silly hill to die on.

Lee, I am pretty much there!!!

Thanks for the ever so thoughtful input, it is a silly hill! haha

 

[Randolph Kinney]

You can use Google Maps or Bing Maps to view the roof tops of the neighborhood to see if there are other homes with solar PV and then research them to see if and when they sold, hopefully through the MLS.

From my experience, the cost of solar PV takes 15+ years to pay back. There in lies the problem; people tend to sell before 15 years and may never recoup their initial investment.

Also, solar panels generation capacity deteriorates over time; it is not recoverable. In addition, the technology improvements are rapid making a 5 year old system almost obsolete.

A buyer of an existing home with solar panels cannot qualify for the tax credits and rebates the seller got when he initially bought and installed the solar panels.

Realistically, there is no way a $60,000 solar PV system cost can be 100% justified to $60,000 market value on resale.

Most buyers will use a 3 to 5 year payback for a used solar PV system.

 

[Appraising4u]

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You can use Google Maps or Bing Maps to view the roof tops of the neighborhood to see if there are other homes with solar PV and then research them to see if and when they sold, hopefully through the MLS.

From my experience, the cost of solar PV takes 15+ years to pay back. There in lies the problem; people tend to sell before 15 years and may never recoup their initial investment.

Also, solar panels generation capacity deteriorates over time; it is not recoverable. In addition, the technology improvements are rapid making a 5 year old system almost obsolete.

A buyer of an existing home with solar panels cannot qualify for the tax credits and rebates the seller got when he initially bought and installed the solar panels.

Realistically, there is no way a $60,000 solar PV system cost can be 100% justified to $60,000 market value on resale.

Most buyers will use a 3 to 5 year payback for a used solar PV system.

Randolph, My MLS has a a solar section. I can refine my search to show only properties with solar panels/units. In my search, I found nothing. If I did find a sale, it was not comparable to my subject anyway.
I agree with you, my trained brain can not wrap itself around the fact that an appraiser is teaching to give 100% value to a solar unit. I understand that it generate "income", but it can also be a turn off to buyers.
I think I will walk away from this one, I would rather get the angry phone calls from the borrower who doesn't understand why I backed out then receive one from the OREA who doesn't understand why I didn't back out.
All of you input was very helpful and again appreciated....

 

[KenAZ]

I get that quote of $60,000 for a solar system almost everytime I appraise a home solar electric. Typically after the electric company, federal and state rebates, it cost under $10,000. At this time, you can get a full solar system leased for between $8,000 to $14,000, depending on how many panels you have. My house had 44 panels and cost me $14,000.

The market value typically does not exceed the replacement cost. Why would a buyer pay over $14,000 for a home with solar, when they could buy any other home they want, and then install it themselves?

In Arizona, we have many retirement communities where almost 50% of the homes have solar. I have found that solar panels add between $2,000 to $5,000. I have not seen any support for more than $5,000.

The other thing that gives solar minimal value is that in the contract, they are allowed to remove the solar panels if parts of the maintenance contract are not followed or if the homeowner sells the home to someone that will not qualify to take over the lease. The home owner is required to maintain an internet connection.

In my experience, the fastest you can recover the cost is 5 years, but if you make lease payments it can take 15 or more years.

They make another good point in the Appraiserscoop article is regarding CFL light bulbs. Would an appraiser give a higher value due to the lightbulbs that are used? I don't think so. They can be removed, replaced, burn out, etc. I replaced the 150+ bulbs in my house with CFL, and did not see a difference in my electric bill. The solar panels are typically leased, and also can be removed, outdated, replaced, etc.

 

[Meandering]

Actually I would....
Even if I found a sell with solar panels, how can I be assured it is a comparable system?

Do you compare heating systems in homes? Does a system 2000 use more or less energy than a system 26D? Do buyer know or care about the difference? Yes there is a difference in Solar systems, just as there is a difference in heating systems and air conditioning systems and backup generator systems. But does the market recognize or care about these differences or are they immaterial to a scenario where "typical" is a wide range of issues and considerations?

How can I assume it produces the same amount of energy or credits the homeowner at the end of the year?

The sun shines X hours a year and a solar system can produce X kilo watts based on the number of hours of sunshine. So, two homes without shade and having the same age and size system should produce the same energy. Are you saying if one has a few hours of shade from a nearby tree, home buyers will want to pay less money because the system is generating less electric?

Will one solar system be more appealing to a buyer than the other. Would a buyer rather pay $60k more for a home and have no PG&E bills, or pay $30k more with a $300 PG&E bill? I would imagine it would depend on how long the buyer plans on living there, however market value does not base itself on time.

So would a buyer pay more than market value for the energy savings to hang their clothes on the clothes line, cold shower and keep their refrigerated goods in a root cellar? No, because "Saving" is not what motivates buyers. Prestige, ego issues involving outward displays of evidence of their dedication to social consciousness concerning global warming, badges of wealth, these are motivations.

I find myself asking more and more questions, even if I were to find a sale with solar panels.

Because you are over thinking it.

If your house went on the market 3 months ago, who would buy it today? Would a neighbor buy it? Would someone travel from far away to buy it? Would someone Pay a bunch more money for it because of the solar system and overlook everything else about it?

These are the questions to answer first.


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