Three steps to getting an accurate appraisal for home’s solar power system

Solar panels are a great investment for your home.  Not wanting to sound bias, I believe it is not only the single best home improvement investment but the best investment available in the market.  A better investment than the stock market.  I am making that claim in the face of a surging stock market that keeps beating it's all time highs.  Over a 20 year period, the stock market has historically produced a 10-12% return on investment.  With periods of high volatility and insecurity.  Conversely, a solar investment will return a 15% ROI over 25 years with a high degree of security.  In this article, we will review the security factors that make solar power a great investment and break down the home value appraisal process that produces Solar’s great investment security.

 

Even though your solar investment is secure it is important to understand how that security works, how the real estate market responds to solar, how to avoid misconceptions about the appraisal process and understand what you need to do to get the best value for your solar panel system.

 

First, let's look at how the real estate market views solar power.  The real estate market looks very favourably on solar energy as a great enhancement to your home. The real estate’s value on solar fluctuates depending on realtor solar experience, are of the country and available examples of homes that are sold with solar panels vs similar homes that do not have solar panels.  A very important point to make is if you get into the market to sell your home make sure you use an appraisal service and realtor that has solar experience.  There have been cases where an inexperienced solar realtor/appraiser may not know how to accurately value the price of solar.  A good way to look at this is if you go to the doctor and your doctor realizes you need an oncologist your doctor will not diagnose your situation but rather refer you to a specialist that can make an accurate diagnosis.  Real Estate is the same, except some realtors without experience attempt to value the home without a specialist and might miss value/diagnose your home.

 

As great of a secure investment solar is, it is also important to get a realistic value of solar appraising.  You need to protect yourself from dishonest solar contractors who will overestimate the value of your solar panel system.  An example that I see used a bunch is taking the amount of estimated savings in a year and times it by 20.  So if you save $2000 on your rooftop solar panels system your home will appreciate by $40,000.  This was accurate back in 2009 when solar prices were more than double what they are today.  So the cost of the system in 2009 was $60,000.  The $40,000 appreciation makes sense when compared to the total cost of the system.  Today that same system will cost $30,000 and the most important thing to consider is that your home will not appreciate more the cost of the system you install.  Hence the appreciation in this example to day would be adjusted down to about $20,000.  Which is still great in terms of securing your investment.  Especially when you factor in the 30% federal tax credit of $9000.  Hence your system appreciated by $20,000 which means all by $1,000 is secured in the value of your home.  Again in this example, you can see that you will save $2,000 over the course of the year which will make you net positive on your investment year 1.  That is not even taking into account that you have transformed an expense that you pay every month into a profitable asset.

 

Just don’t be oversold into believing that installing solar panels will improve the value of your home more than the purchase price.  According to Forbes Magazine they have concluded that 97% of your investment is secured upon installation of solar energy system.

 

Here is what you need to do to ensure that you get the best solar appraisal value for your home.  The first thing to do is locate a solar appraisal specialist.  You can use the directory from http://www.appraisalinstitute.org/ to locate an appraiser that know how to properly appraise a home with solar.  You can also learn more about what to expect from this 6 state study on solar home appreciation values.  I found this study to be highly reliable and accurate in terms of what is needed to be done to get an accurate appraisal.  

 

You may also familiarize yourself with PV Value which is the recommended tool of the appraisal institute.  The tool was developed by actual appraisers and can give you an accurate expectation of your home's value with solar.

 

Following the information in the article will help you get the best value for your solar home with reliable accurate expectations.  Keep in mind your investment with solar is highly secure, to maximize your return make sure you use the tools described here as well as contact an experienced solar appraiser.  Even though it is a great and secure investment keep your expectations realistic and don’t expect your home to appreciate more than the value of the system.

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