Appraisals

An Appraisal Riddle Gets Closer to Being Solved : Green Homes

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Green Home AppraisalsOne of the bigger questions currently facing appraisers in the ever-changing landscape of real estate valuation is just how much more, if anything, buyers are willing to pay for homes with "green" features, including energy-saving systems such as solar panels. A new research study sponsored by the Department of Energy may offer appraisers some ammunition in proving there is value added to homes with solar panel systems.

Appraisers must prove their case to reviewers and underwriters for any adjustment made to a property in an appraisal report. Most often they rely on a basic sales comparison approach: if a home with a pool sold for $10,000 more than three other comparable homes without one, then there is a justifiable price adjustment of $10,000 for a home with a pool.

But because sustainable features are still relatively new to the market, appraisers have struggled with  a lack of sales data to back up their valuations of homes with such features. The Department of Energy sampled more properties than any previous research on the subject, covering eight states and almost 23,000 homes. The results produced the kind of numbers appraisers have long been seeking to validate their adjustments: homebuyers in the study were willing to pay $15,000 more for a home with an average-sized photovoltaic solar panel system, or roughly an additional $4 per solar watt of power. As the cost of solar panels has dropped over recent years, the number of homes with solar systems has increased to more than half a million nationwide, and Fannie Mae has issued a new guideline urging appraisers to analyze the systems for value. This study and the new guideline will hopefully make a case for further research and increasingly quantifiable results, enabling appraisers to make more accurate valuations of these of these  and many other increasingly popular "green" home features.

To view a recent article in The New York Times on the subject go to: http://www.nytimes.com/2015/02/22/realestate/solar-panels-and-home-values.html?_r=1

 

Maggie Marshall

Broker, Mosaic Community Lifestyle Realty

NC Certified Residential Appraiser