Special to the Village News
With all the chatter regarding the value photovoltaic solar panels add to a home, it’s important to define value. Let’s break it down by consumer value, market value and appraisal value.
A good example of consumer value is a solar home in Murrieta, where the home had a turn-key photovoltaic rooftop system with 23 years remaining, a transferrable 25-year 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 it would be paid off through escrow, leaving the new buyers with $53,000 of free power. Their current monthly Southern California Edison bills were between $1.08 to $1.89. Now that’s the ultimate consumer value. Consumers who are seeking energy-efficient homes with solar and are using all the added sub-panels and electric vehicle charging stations will find the most value, especially if they are renting.
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. Market evaluations include all these elements to ultimately price the property to what the market will pay. Those properties with turn-key photovoltaic solar systems, having written transferrable power performance and equipment guaranties will have an advantage to proving the added resale value over the lifetime of the panels.
Now, homeowners should keep in mind that 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 a 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.
Appraisers are trained to be conservative in valuations, especially after the mortgage disaster from which we are officially recovering. They base the appraisal value mostly on neighborhood comparables that have recently sold and use data collected from the multiple listing system and title systems, and again using properties with similar square footage, bedroom and bathroom count, similar upgrades, features and curb appeal to make their appraisal. When it comes to photovoltaic solar, appraisers are reluctant to add much value. The appraiser for the first buyer of 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 photovoltaic solar in same way, using all the other usual comparable data. Today, they do not consider much value at all for photovoltaic systems, even if the buyers are getting free power, solar add-ons, manufacturers’ guaranty and warranty and definitely not the estimated $53,000 in power savings. Hopefully, with more courses for appraisers in estimating the value of turn-key photovoltaic systems, including how the equity is affected by the method of acquisition, appraisal value will soon reflect more of the monetary value to the buyers.
So, which measure of value actually counts?
All of these factors describe added-value for the homeowner, and although they may help persuade a buyer to pay full or over asking price for property, the appraisal value is the only one that lenders consider. However, if there is no appraisal involved, then it’s worth whatever the buyer is willing to pay.
The homeowners’ first objective should be 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 warranties, in order to assure the highest return on their investment, homeowners needing solar may want to consider a few things.
What is the leading-edge, high performance and most proven equipment.
Equipment that has production and performance guarantees and warranties in writing from the solar panel manufacturer, which covers all replacement cost and is backed by a reputable, financially sound company.
Good “resale-ability” solar systems with transferrable performance guarantees, warranties, manuals, contracts and documentation.
Finally, a system which includes an automatic monitoring system to alert you before the large Edison bill 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 through the life of the panels. When looking at who actually provides the guarantees today, it’s the panel manufacturers, and even though it seems American-made panels are desirable, two major U.S. companies closed their doors earlier this year, citing fierce overseas competition.
Extensive research shows, currently, installations using the latest technology such as Sunpower’s Equinox 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 upgrade 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 they take up the basically the same roof space as the old 260’s.
This kind of leading edge photovoltaic panel technology has the best chance of holding its value, and they often include a 25-year total equipment and performance coverage, no matter how it is acquired. Locally, there is at least one master dealer, Precis Solar in Wildomar, who provides each newly installed homeowner a complete set of contracts, warranty and guaranty documentation and a user manual, 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, those companies staying price competitive, investing in research and development, 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 as far as long-term value and resale value for the homeowner.
If you’re considering selling your solar home and are interested more information or for homeowners wanting solar, but who want to know more about how they acquire it and how it effects their equity, you’ll want this information before sitting down with a solar representative.
Email questions or comments to Barbie Bennett at [email protected].