A home owner (HO) came to me the other week with an appraisal. The HO seemed dismayed as there was no adjustment “credit” for the solar panels they had put on their house. After reviewing the appraisal I did comment that the solar panels had been mentioned but as the HO stated no adjustment was applied. I asked the HO if they contacted the appraiser and asked them about the adjustment and the HO reported that the appraiser ((stated there are no comparables with solar panels; the housing market (not the renewable energy market) has to give solar systems a value before the appraiser can determine there is one)). No comps, no value?
I gave this example to the HO on a property I recently appraised. The home I appraised had a tennis court. I searched sales and no sales that sold in the past 24 months had a tennis court. That does not mean that no other properties had a tennis court it just means that a property with a tennis court has not sold in the past 24 months. It also does not mean that since no other homes with a tennis court sold in the past 24 months that it had no value. After looking at an ariel of the market area tennis courts on other properties were observed.
Did I give the tennis court value? Yes I just had to use other methods than the sales comparison approach to determine it.
Sales comparison approach: from “The Dictionary of Real Estate Terms” – Value is determined by analyzing sales prices of similar properties (comparables) recently sold.
Sales comparison is one method that appraisers use in order to determine an adjustment but there are other methods: GRM, cost approach, survey of builders, and Nevin’s multiplier that appraiser’s can use to determine an adjustment.
After reviewing the appraisal I determined that there was a $15,000 positive adjustment for a solar retrofit that should have been applied.
If you have further questions regarding value to your property please contact the energy efficiency appraisal experts at: www.socalappraisalserv.com
