I just took the Solar PV: Technology and Valuation class offered for free by AjO Classes and sponsored by CA IOUs (California's Electric Investor Owned Utilities). It was very interesting and I learned a lot. They of course explained everything we should know about inspecting and appraising the value of a solar power systems. Then they went into using the three different approaches to value, i.e. sales comparison, cost and income.
You need a bit of data in order to determine the value. That data isn't always readily available for the comp properties. You can use cost or income approach if there's isn't enough market data in your area. If you give most weight to sales comparison approach, cost and income data are only supportive so ...
In order to calculate the value of a solar power system (not solar thermal for heating water) you need to know if it's owned versus leased, power of the system size in kWh and age. Assume 25 year life. Leased systems add no value. You'll need to collect data such as contract with power size, original price, current price of similar new system and maybe power rates. There are free online calculators available.
I'm pretty sure the solar people got together to try to help educate the agents and appraisers about the value of solar systems in home values. Most don't mention it or include data or value. This upsets sellers and solar companies. They want people to see the value in the systems. I was always taught to do regression analysis to see if there is a market reaction. Issue again is sufficient data.
A few takeaways. You need a bit of data to appraise the value of a solar system. You need to know power, age of solar system of comps. As rates continue to rise the value of solar systems will increase. The cost of new solar systems has come down dramatically. If you depreciate an older system, it will probably be higher than buying new. Use the lower of the two values. People buy homes with solar systems for more than just energy cost savings. I highly recommend the class.
"Appraisers and Realtors will advance their credibility and competency to better serve their clients with solar-powered homes.
Newly constructed homes have been required to have solar as of 2020 and existing home installations remain on an ongoing upward trend.
How much value does solar add?
What is the most essential number we need related to valuation?
While saving money is the primary motive for homeowners to invest in solar, CA building codes and energy policies are key market drivers as goals prioritize decarbonization; all-electric buildings powered by solar.
Attendees will be better equipped to represent solar assets accurately in sales, competently determine value, and be credible guides for buyers and sellers.
Course Highlights
The first question to ask about solar systems
The most important number to obtain related to valuation
How to determine value of solar PV: 3 appraisal approaches
Key points to include in listings and appraisal reports
How utility rates impact purchasing decisions and value
Components of solar systems and what to look for during inspections
Context: CA energy policy
Resilience: Solar plus storage to leverage TOU rates and power through extreme events
Future influencers: Evolving challenges in managing our power grid
Access to free online tools to inform and improve professionalism
Learning Objectives
Answer essential questions regarding the valuation of a solar system
Indentify components of solar systems
Be aware of variations in utility rates and their impact on value
Understand motives and market influencers of homeowner decisions
Determine the value of solar PV systems: 3 appraisal approaches
Accurately represent solar in listings including vital points to inform value
Stakeholder’s shared pool of knowledge to support fair valuations
Target Audience:
Real estate appraisers
Agents
Lenders
Related associates
Learning Level: Intermediate
*Course is designed for those familiar with valuation principles
Continuing Education Credits: 3 hours continuing ed. BREA, DRE, BOE "
Mary Cummins of Cummins Real Estate is a certified residential licensed appraiser in Los Angeles, California. Mary Cummins is licensed by the California Bureau of Real Estate appraisers and has over 35 years of experience.
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