I just returned from the Oregon Solar Energy Conference as a guest speaker/panelist discussing the valuation of residential homes with owned (not leased) solar photovoltaic (PV) systems. It was an honor to share the panel with Ben Hoen, a staff research associate with Lawrence Berkeley National Laboratory who coauthored a study published in the Winter 2016 Appraisal Journal titled, “An Analysis of Solar Home Paired Sales across Six States.” The contributory value of PV in appraisals done for residential lending is a hot topic in the solar industry because the easiest way for owners to finance PV systems is within the mortgage of their home.
During our session we discussed the rapid increase in solar installations across the country, including Portland, and the complexities that such features present to appraisers. Some of the appraisal problems identified by the panel include: finding comparable sales of homes that sold with owned PV systems, difficulties in obtaining performance characteristics about the PV systems on home sales, how to ask for and find appraisers with solar or other green credentials, and the green addendums that can be filled out by homeowners and agents to help appraisers gather information about a property. (Click here for an example of one popular green addendum) The panel also discussed several different ways that appraisers can support adjustments for PV solar systems. A listing of techniques that appraisers can use to estimate and support adjustments for PV systems follows.
If you need more resources, the Appraisal Practices Board recently issued an advisory on “Valuation of Green and High-Performance Property: One- to Four-Unit Residential.” It is a voluntary guidance for appraisers on methods and techniques for valuation that includes green homes, but it also includes a section on PV systems. Solar power systems are here to stay and are becoming increasingly common. Are you ready?
Did I leave anything out or do you want to join in the conversation? Let me know in the comments below.
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