Valuing the Contribution of Solar Panels
How to value the appraised property with solar panels
Valuing the contribution of solar panels on homes has become one of the trickiest aspects of our work over the past decade.
Attached is a very well written 45 page report that will help all appraisers better understand this issue, and perhaps lead you in the right direction when you encounter homes with solar panels. I strongly recommend that you print a copy for your library. Oh, and actually read it!
The basis of the report is how to value the appraised property with solar panels, when no comps have them – using paired sale analysis.
By the way, Solar PV means Solar Photo-Voltaic. This panels are designed to convert sunshine (or even cloudy daylight) into usable electrical energy. SPV systems produce DC voltage and current which can be stored in batteries, or run through an ‘inverter’ which changes the DC into 110 volt alternating current – which is what is wired in most homes wall outlets and lights. Solar PV systems can also be designed to ‘back feed’ the utility electric power grid if more power is produced by the installed system than the home consumes in normal usage.
Now, while this report well documents the procedures used to arrive at the conclusions, appraisers need to be very cautious about applying the ‘numbers’ in the report to your local current assignment. The authors are careful to explain this. Secondly, the data used for the analysis is from 2011 – 2013, so it’s not up to date.
Kudos to the 8 different appraisers in 6 different states who provided the paired sales used in the case studies. And to Sandra Adomatis, SRA, who was the primary author, assisted by Ben Hoen from Lawrence Berkeley National Laboratory.
By the way, a different ‘solar panel’ system is designed to heat water. That kind of system is not covered in this report.