Appraisal Process
Proven Steps Toward A Higher Solar-Home Appraisal Value
Many solar homeowners worry that their home valuation will be too low when selling their residence with owned photovoltaic (PV) panels and equipment. Considering solar-powered homes are not yet mainstream, it is likely that the lender’s appraiser will not comprehend how to properly place a value on your solar home. Therefore, when you list your home for sale, any value increase from the solar-equipment addition may be lost. Yet, there are proven ways to make sure you get the highest possible valuation on your solar home.
Solar Feature Value Limits
Owned solar-power equipment may add value to your home. However, you will not see a dollar-for-dollar increase. For instance, if your solar-power system costs $35,000, your home value will not increase by that same amount. Instead, you will see a percentage increase based on the kilowatt-hour (kWh) costs. For instance, Phoenix is seeing an average of $1.50 to $2.25 per watt increase in total value with a limit of $15,000 to $20,000.
Sales price, solar system size and the number of additional adjustments the appraiser makes matter too. Appraisers generally do not like to adjust prices by more than 10 to 15 percent of the sales price of comparable home sales without running the risk of raising red flags in their lender report. Other factors also affect solar-home valuation, such as local acceptability of PV features, location (sunny Phoenix versus cloudy Seattle), high area utility costs, frequent grid blackouts or environmentally conscience area residents.
Request A Green-Certified Appraiser
It is imperative that your listing agreement requires the buyer’s lender to use a competent appraiser schooled in solar-home sales. Use of an experienced PV solar or green-accredited appraiser should be contractually approved through the buyer’s purchase agreement, which you as the seller also sign. In addition, the buyer’s lender must be made aware of this contract requirement to request the right appraiser. A Green Certified Appraiser will also recognize the value of the Pearl Certification if your home has one.
Provide Market Sales Data
As with any home sale, your real estate agent determines listing price by researching comparable properties. This search for similar properties is difficult with solar-powered homes, especially those with owned PV panels and equipment. At Green Leaf Realty, we pick five or six solid comparable properties sold within the last three to six months that are similar in age, size, condition, and quality to price a home. That list goes to the appraiser along with the details on why certain properties were not chosen as comparable, so the appraiser understands that including these un-similar homes as part of the valuation is a mistake.
Know What’s On Your Roof
Provide the lender’s appraiser with the documentation on your solar system. Make sure the appraiser understands through spec sheets the system size, wattage and all system features, including battery storage if that is part of your system. Include system sales agreement with total cost, proof system is paid off, warranties, past two years of actual energy-generation reports and electric bills, plus any required easements.
Calculate PV Value®
PV value measures the financial worth of a new or existing PV rooftop solar system and can be calculated by your real estate agent with a GREEN designation and experience with solar-home sales. The Sandia National Laboratories website notes that the PV Value® spreadsheet tool was developed by their laboratory and Energy Sense Finance for use by real estate appraisers and others in the industry. This is yet another piece of information to present to the appraiser.
Complete Form 820.05
Having the 820.05 form filled out provides the appraiser with a completed Residential Green and Energy Efficient Addendum (Appraisal Institute [AI] form 820.05). In fact, the AI encourages those with the data to complete the form and give it to the appraiser to help accurately assess final valuation. This form details all the green features of your home, such as the PV panels and the equipment to tie into the grid, use of Energy Star-designated appliances and yearly costs of electric and heat. Getting your home Pearl Certified will also add value to form 820.05. After your home is certified, Pearl will fill out form 820.05 making it easier for your listing agent to work with the appraiser while adding the value of a 3rd party in the process.
Meet With Appraiser At Home
While it is illegal to pressure an appraiser to up a home’s value, it is legal to provide accurate documentation and data that may influence a more accurate valuation for homes with unique features. This includes meeting the appraiser at the home to discuss the solar-power system data previously supplied and answer questions.
Assure A Higher Valuation
Although all the above steps together practically assure a higher valuation due to your solar addition, it’s most important to require an experienced green-certified appraiser and you or your agent be present at the appraisal to go over data and answer questions the appraiser may ask. Skip these two steps, and most appraisers will not reflect a high value for your solar system. Make sure you don’t miss any step in the process so you can get the highest rooftop solar-home valuation possible.
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