A Little Information on Solar Panel Home Value
With all the chatter regarding the value Photovoltaic solar panels add to a home, it’s important to define solar panel home value. Let’s break it down by consumer value, market value, and appraisal value.
Consumer or User Solar Panel Home Value
A good example is a solar system home in Murrieta, CA, where the home had a turn-key PV rooftop system with 23 yrs. remaining, a transferrable 25 yr. production guaranty and performance guaranty. The power savings over the next 23 years conservatively estimated at $53,000. The home had an upgraded main electrical panel, and additional 100-amp sub-panel, PLUS an electrical vehicle ready station. The home was highly-upgraded with new stainless-steel appliances, granite, and the solar panels were NOT visible. The owners had purchased the system with an unsecured loan which, even though the payoff amount could have been negotiated, they decided that would be paid off through escrow leaving the new buyers with $53,000 of FREE power. Their current monthly SCE bills were $1.08- $1.89. Now that’s ultimate consumer value! Consumers who are seeking Energy efficient homes with solar and are using all the added sub-panels and EV charging stations will find the most value–especially if they are renting.
Market Solar Panel Home Value
Market values are based on the most recent ACTIVE and SOLD comparable properties in their neighborhood. Evaluating the condition, square footage, bedroom and bathroom count, similar upgrades and features, curb appeal, location plus supply and demand, are all factors. Marketevaluationsincludealltheseelementstoultimatelypricethepropertytowhat the market will pay. Those properties with turn-key PV Solar systems, having written transferrable power performance and equipment guarantees will have an advantage in proving the added resale value over the lifetime of the panels.
Now Homeowners, keep in mind a buyer can agree to pay any price, and even enter into escrow, but as long as there is a mortgage lender involved, an appraisal will be REQUIRED. Unless negotiated upfront, there is always an out for the buyer if the property appraisal doesn’t meet the agreed-upon selling price. If the buyer has enough of down payment, the lender will not stop the buyer from paying the difference, but will NOT include it as part of their loan. Appraisals are optional with cash buyers.
Appraisal Solar Panel Home Value
Appraisers are trained to be conservative in valuations, especially after the mortgage disaster we are officially recovering from. They base the appraisal value on comparables that have recently SOLD. The appraisers use data collected from the MLS (Multiple Listing System) and Title data, with similar square footage, bedroom and bathroom count, similar upgrades, features, curb appeal. When it comes to PV solar, appraisers are reluctant to add much value. The appraiser for the first buyer, for the Murrieta solar home mentioned above, refused to give any additional value for the extras. A typical appraiser will consider those homes that acquired the PV solar in the same way, using all the other usual comparable data. Currently, they do not consider much including any manufacturers’ guaranty/warranty, and definitely NOT the estimated $53,000 in power savings. There is a great need for more valuation courses for appraisers to further their knowledge of appraising turnkey residential PV systems.
So, which SOLAR PANEL HOME VALUE actually COUNTS?
All of these factors describe added-value for the user/homeowner; and although they may help persuade a buyer to pay full or over asking price for the property, the appraisal value is the only one that lenders consider. However, if there is no appraisal involved, then it’s whatever the buyer is willing to pay.
Homeowners’ #1 objective is to drastically cut power cost over the next 20-25 years, and achieve power cost containment. Since no one can see into the future as to who will be around to support the warranty’s, in order to assure the highest return on their investment homeowners needing solar may want to consider the following:
- Leading-edge, high performance, proven equipment.
- Equipment that has production and performance guarantees and warranty’s in writing from the solar panel manufacturer, which covers all replacement cost, and backed by a reputable, financially sound company.
- Good “resale-ability” solar systems with transferrable performance guarantees and warranties, that have manuals, contracts, and documentation.
- Finally, a system that includes an automatic monitoring system to alert you BEFORE the large Edison arrives. Homeowners who can’t afford to wait for new technology are asking who to choose today because Home Warranty policies do NOT cover solar panels. They need assurance that their investment will continue to perform as contracted for, through the life of the panels. When looking at who actually provides the guaranty’s today, it’s the panel manufacturers, and even though it seems American made panels are desirable, 2 major US companies closed their doors earlier this year, citing fierce overseas competition.
Extensive research shows, currently, installations using the latest technology such as SUNPOWER’s® EquinoxTM system where low-profile panels have individual inverters optimizing power generation on each panel, are proven and leading-edge. Unlike older technology with separate inverters managing an array of panels. This means the power production isn’t so drastically minimized when, for example, if a leaf falls on a panel. These are high-efficiency panels, generating substantially more power, yet take up basically the same roof space as the old 260s.
This kind of leading-edge PV panel technology has the best chance of holding its value and includes 25-year total equipment and performance coverage, no matter how it is acquired. Newly installed homeowners should make sure they get a hard copy of and completes a set of contracts, user manual, and all warranty/guaranty documentation, which will be very important down the road if reselling or submitting a claim.
So even though today there is no way of knowing who will be in business tomorrow, that staying price competitive, investing in R & D, have strong financials, offer a transferrable 20-25 year performance and production guaranty, with reputable dealerships, appear to be the at the top of the list today as far as long-term value and resale-ability for the homeowner.
If you’re considering selling your solar home, and are interested in more information, or for Homeowners wanting solar, but want to know more about how they acquire it, and how it affects their equity–you’ll want this information before deciding.
Questions or comments? Contact ElectriCare, Inc.