As a REALTOR® , I am asked if solar systems increase the value of a home for sale. My short answer is “yes” – solar PV definitely adds a premium to a home’s value; however, quantifying that additional value depends to some extent on the appraisal process.
Ben Hoen, a researcher with the U.S. Department of Energy’s Lawrence Berkeley National Laboratory, and Sandra Adomatis, an appraiser and specialist in appraisal of solar systems, authored “Appraising into the Sun: Six-State Solar Home Paired-Sales Analysis”. This report was based on a 2015 study of samples taken from a database of 4000 home sale transactions in California, Florida, Maryland, North Carolina, Oregon and Pennsylvania, combined with an evaluation of 43 pairs of home sales in local markets within each of these states, thus combining the paired sales method typically used by appraisers, in which the sale of a home with solar PV is compared with the sale of a comparable home without PV, with a statistical analysis of the larger database . The report concluded that the average premium for a home with PV in this study varied from 2.5% to 6.4% of the sale price, depending on the location.
Appraisers need to determine how much particular features such as solar PV are worth, and must be able to justify a corresponding adjustment in value to a mortgage underwriter. It is not practical for the appraiser to point to a large academic study, but a paired analysis of local homes is more acceptable. The challenge in both New Hampshire and Vermont is the (thus far) limited amount of data available – until there is a larger pool of sales of homes with PV in our local markets for comparison, it is challenging for appraisers to quantify solar PV value using the paired sales method.
That being said, the results of “Appraising into the Sun” demonstrate that PV is an asset that should be valued. As sales of homes with solar PV increase, the need for appraisers trained in solar valuation is becoming more apparent. The Appraisal Institute (AI) offers training for appraisers and real estate professionals, as well as a Residential Green Addendum to the standard appraisal format to document a home’s energy efficiency features.
As more appraisers become familiar with solar valuation, the appraisal process will document the value of PV more effectively. Use of qualified appraisers and documentation such as the Green Addendum will help mortgage underwriters approve enhanced value. In our area this is a continuing process – but it is clear that solar PV does increase the value of a home for sale.
Dick DuMez, CBR
REALTOR®, Licensed in NH and VT
Four Seasons Sotheby’s International Realty
8 Glen Rd., West Lebanon NH 03784
603 359 6100 Mobile, firstname.lastname@example.org