Value of whole home solar PV system

[Renee Healion]

Why assume an outcome of a valuation? Why assume the outcome favors a cause? Why insult the appraiser who applies recognized, accepted appraisal methods? Why assume their inputs and analysis are not appropriately developed and used? Why keep guessing here?

 

[J Grant]

Is the state reporting the most prevalent options chosen buy buyers? Because that right there, is the evidence of the "market value" of existing systems.

That can be the market value of the systems, but the appraisal assignment is find the market value of the real property- and then the solar system is considered in its contributory value to the whole. (which might be different than what buyers are paying for solar system as a stand alone retail purchase.

 

[J Grant]

Why assume an outcome of a valuation? Why assume the outcome favors a cause? Why insult the appraiser who applies recognized, accepted appraisal methods? Why assume their inputs and analysis are not appropriately developed and used? Why keep guessing here?

I did not make that assumption about all of them, note my posts said some appraisers...of course in best case scenario the educated appraiser applies it and reconciles with market reaction to get superior results. But we've all read the posts from math geeks who expound about formulas yet are tone deaf to the market . ( and lack the self awareness to realize it )

 

[Gobears81]

Why assume an outcome of a valuation? Why assume the outcome favors a cause? Why insult the appraiser who applies recognized, accepted appraisal methods? Why assume their inputs and analysis are not appropriately developed and used? Why keep guessing here?

No disrespect to any other appraisers, at least from me. But my experience has been that once rates get above a certain level, there are other factors involved. For example, I do Class C apartment appraisals where the cap rate is between 11% and 15%, but our company is big on band of investment, and I feel pretty weird putting in an equity rate of 33%. There was a broker that called me because he could not figure out why his apartment was not selling, despite a 16% cap rate. But after further discussion, it all fell into place. Same thing here - chances are that many of those buying solar might be motivated by intrinsic factors and aren't going back to their apartment or current house and plugging in the savings over the remainder of its useful life. Many are motivated by the environmental aspect and could care less about "profiting" from it, whereas others don't care about the environmental aspect and are simply looking at the savings on the utility bills. Hence why broker interviews on properties with solar panels could yield further insight on the buyers motivations, which could then determine the appropriate rate used. If the buyer is more concerned from the energy savings perspective, a DCF MIGHT be more applicable, but if not, then the appraiser shouldn't attempt to force this method to be used.

 

[Renee Healion]

I was not directing that to JGrant but to Marion for one who returns to the scaremongering despite not doing the work. My fault for not using the quote function more. But in general, I would say there are opportunities to learn out there, and it is not here, where guessing and politics prevail.

Hence why broker interviews on properties with solar panels could yield further insight on the buyers motivations, which could then determine the appropriate rate used. If the buyer is more concerned from the energy savings perspective, a DCF MIGHT be more applicable, but if not, then the appraiser shouldn't attempt to force this method to be used.

Yes, agree with using interviews to inform your analysis. But recently the extent of a poster's development was asking agents. That is in line with the guessing we see on AF. If posters want to guess on a forum, that is silly but harmless. If they apply those guesses and some casual agent interviews as their professional practice, then that is probably not harmless to themselves or their clients. I don't think anything you have ever posted would include you in that group.

 

[Carnivore]

Until the market actually provides enough data the PV calculation is more consistent and probably accurate than pairing sales since there are so many sizes of arrays you'd have to calculate on a net capacity basis. A quantified adjustment is far more defensible even if flawed. A simple sinking fund calculation is a consistent and defensible number. And a calculation that includes an accurate discount rate should replicate the available paired sales.

What I see in all of this is the immense amount of variables from one house to another. For paired sales to work it would almost require you to adjust for all other variables before you could come up with a net position and then calculate the quantified adjustment of a PV. Hopefully you have an identical twin that sold without a PV System. When I say identical this would include the location efficiency of the comparable and the subject. Plus, there can and will be differences in family size and lifestyle.

For example; I think they still reduce the rate per KW the more you use. That will probably change in most areas of the country. The PV system is only good for reducing your cost to live in that house. If you decrease KW consumption your rate goes up and vice versa.

Eventually there will be maintenance cost for the PV. Unlike a Mortgage Interest deduction that returns each and every year on income tax on a declining scale, PV cost(initial purchase) are not deductible as far as I know. If you 2nd mtg yourself for a PV installation then interest is deductible(saving income tax).

I guess i don't know where I am going with all this ....but I do know that whoever lives in the house will determine the savings based on their individual family life style.

So again its going to be a tough paired sale matching.

I really need to take that AI class. If just only for the knowledge and self improvement.

 

[DWiley]

What I see in all of this is the immense amount of variables from one house to another. For paired sales to work it would almost require you to adjust for all other variables before you could come up with a net position and then calculate the quantified adjustment of a PV. Hopefully you have an identical twin that sold without a PV System. When I say identical this would include the location efficiency of the comparable and the subject. Plus, there can and will be differences in family size and lifestyle.

For example; I think they still reduce the rate per KW the more you use. That will probably change in most areas of the country. The PV system is only good for reducing your cost to live in that house. If you decrease KW consumption your rate goes up and vice versa.

Eventually there will be maintenance cost for the PV. Unlike a Mortgage Interest deduction that returns each and every year on income tax on a declining scale, PV cost(initial purchase) are not deductible as far as I know. If you 2nd mtg yourself for a PV installation then interest is deductible(saving income tax).

I guess i don't know where I am going with all this ....but I do know that whoever lives in the house will determine the savings based on their individual family life style.

So again its going to be a tough paired sale matching.

I really need to take that AI class. If just only for the knowledge and self improvement.

Yes, the paired sales analysis is not as simple as just comparing a home with a PV system to one without. That alone is (almost) useless without knowing the capacity, age, type/size of inverter, orientation of the home, etc. There is far more involved than had ever occurred to me prior to taking the course.

 

[Randolph Kinney]

For example; I think they still reduce the rate per KW the more you use.

Not in California: the more you use, the higher the rate.

 

[Carnivore]

chances are that many of those buying solar might be motivated by intrinsic factors ..... Many are motivated by the environmental aspect Extrinsic and could care less about "profiting" from it, Extinsic whereas others don't care about the environmental aspect and are simply looking at the savings on the utility bills.

Yes, the paired sales analysis is not as simple as just comparing a home with a PV system to one without. That alone is (almost) useless without knowing the capacity, age, type/size of inverter, orientation of the home, etc. There is far more involved than had ever occurred to me prior to taking the course.

I may have mentioned this in a much earlier post, but Gobears brought it up again... We can not determine the Intrinsic and Extrinsic motivations. These have a Value associated with them. It would translate into the Price of a Home. I don't think its possible for us to determine that.

Motivation: Intrinsic vs. Extrinsic by Monica A. Frank, Ph.D.

Intrinsic motivation...is an internal form of motivation. You strive towards a goal for personal satisfaction or accomplishment.

www.excelatlife.com

What is the difference between intrinsic and extrinsic motivation?
Extrinsic motivation is an external form of motivation. For example, if your boss sets a deadline on a project and your bonus is tied to the deadline, that is a very clear form of extrinsic motivation. In fact, this example includes two extrinsic motivators: your boss's expectations and the bonus. So, extrinsic motivation doesn't always have to be another person, but it is some outside demand, obligation, or reward that requires the achievement of a particular goal.

Intrinsic motivation, however, is an internal form of motivation. You strive towards a goal for personal satisfaction or accomplishment. You may even work towards a long-term reward such as the development of a business or participating in a competition, but the primary motivator is internal.
---------------------------------------------------------------

I can give an example for the above; Take any well known and very wealthy Actor/actress

The Question with one of them is simple to answer. Would they buy a PV system and install it on their home. Most likely and probably already have!

Why would they? I think they would for Intrinsic motivation. So would cost of the system and potential savings really mean anything to them? I say No!

 

[DWiley]

I may have mentioned this in a much earlier post, but Gobears brought it up again... We can not determine the Intrinsic and Extrinsic motivations. These have a Value associated with them. It would translate into the Price of a Home. I don't think its possible for us to determine that.

Motivation: Intrinsic vs. Extrinsic by Monica A. Frank, Ph.D.

Intrinsic motivation...is an internal form of motivation. You strive towards a goal for personal satisfaction or accomplishment.

www.excelatlife.com

What is the difference between intrinsic and extrinsic motivation?
Extrinsic motivation is an external form of motivation. For example, if your boss sets a deadline on a project and your bonus is tied to the deadline, that is a very clear form of extrinsic motivation. In fact, this example includes two extrinsic motivators: your boss's expectations and the bonus. So, extrinsic motivation doesn't always have to be another person, but it is some outside demand, obligation, or reward that requires the achievement of a particular goal.

Intrinsic motivation, however, is an internal form of motivation. You strive towards a goal for personal satisfaction or accomplishment. You may even work towards a long-term reward such as the development of a business or participating in a competition, but the primary motivator is internal.
---------------------------------------------------------------

I can give an example for the above; Take any well known and very wealthy Actor/actress

The Question with one of them is simple to answer. Would they buy a PV system and install it on their home. Most likely and probably already have!

Why would they? I think they would for Intrinsic motivation. So would cost of the system and potential savings really mean anything to them? I say No!

I agree that the motivations are not always dollars. In the course there is a breakdown of the cost of electricity in various states, and another chart showing where (cost wise) it makes economic sense to install a PV system. Those charts do not line up with another chart showing where they are most prevalent.