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Appraising into the Sun: Six-State Solar Home Paired-Sale Analysis

Research or Whitepaper
Valuation, Analysis, BCA   
@National    California    Florida    Maryland    North Carolina    Oregon    Pennsylvania   
Abstract: Although residential solar photo-voltaic (PV) installations have proliferated, PV systems on some U.S. homes still receive no value during an appraisal because comparable home sales are lacking. To value residential PV, some previous studies have employed paired-sales appraisal methods to analyze large samples. Our first-of-its-kind study connects the two approaches. It uses appraisal methods to evaluate sale price premiums for owned PV systems on single-unit detached houses that were also evaluated in a large statistical study. Independent appraisers evaluated 43 recent homes sales pairs in six states: California, Oregon, Florida, Maryland, North Carolina, and Pennsylvania. We compare these results with contributory-value estimates-- based on income (using PV Value took), gross cost, and net coast -- as well as deonic modeling results from the recent statistical study. The results provide strong, appraisal-based evidence of PV premiums in all states. More importantly, the results support the cost-and income- based PV premium estimates when paired-sales analysis is impossible. PV premiums from the pair-sales analysis are most similar to net PV cost estimates. PV Value income results generally track the appraised premiums, although conservatively. The appraised premiums are in agreement with the hedonic modeling results as well, which bolsters the suitability of both approaches for estimating PV home premiums. Therefore, these results will benefit valuation professionals and mortgage lenders who increasingly are encountering home equipped with PV and need to understand the factors that can both contribute to and detract from market value.