Real Estate and Solar  

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Real Estate and Solar

Selling Real Estate that has Solar Power

The History

We have been in the solar industry for over ten years. People are selling homes now with a solar component and we felt that there was very little information available for everyone involved. The banks, realtors, buyers and sellers were at a loss of how to value the solar income.
Energy costs are quickly becoming as big or bigger than the mortgage payments. The energy costs to run a home can make a difference which home a buyer wants to buy and the realtor that knows how to help these people will gain referrals and a loyal following.
The Overview

There are now more homes and properties offered for sale that include a solar energy system where the solar produces income as well as net metered and off grid properties.

The Appraisers
The following is an excerpt from The Appraisal Institute of Canada  http://www.aicanada.ca/membership-categories/ 

ACCREDITED APPRAISER CANADIAN INSTITUTE (AACI™): The AACI designation is granted to individuals who have completed the AACI program of studies and fulfilled all the professional requirements of the Appraisal Institute of Canada. AACI members are qualified to offer valuation and consulting services and expertise for all types of real property.

CANADIAN RESIDENTIAL APPRAISER (CRA™): The CRA designation is granted to individuals who have completed the CRA program of studies and fulfilled all the professional requirements of the Appraisal Institute of Canada. CRA members are qualified to offer valuation and consulting services and expertise for individual, undeveloped residential dwelling sites and dwellings containing not more than four self-contained family housing units.

The Problem

There are many CRA's and Real Estate professionals that fail to inform, misinform, neglect to inform, misstate,  and or deliberately thereby mislead property sellers in the evaluation of their property.
Several conversations with various Realtors and CRA's have shown that many of these professionals would rather attempt to put a lower value on a property than to inform a seller that they need an AACI appraisal to do the evaluation. The reason for the lack of referrals  is that they do not want to lose the business they normally get.
They do not have the training and insurance coverage to do an evaluation of this kind. By providing a suggested listing price they are selling the owners short.

EXAMPLE
 We own a residential property near Peterborough ON that has a microFIT system installed. The property was appraised in 2011 for mortgage purposes at $200,000 without the solar. A mortgage appraisal is a tougher (lower price) evaluation than a Market Value Assessment which provides an approximate possible selling price.
After unsuccessfully attempting to sell the property with an agent from January - June 2013 we engaged several other Real Estate agents to find one that would be able to represent us.

The following is a list of agents and their suggested list prices.

Agent 1 - This team of two agents suggested the property should be listed at about $300,000 but would wait on the AACI appraisal as they are not qualified to put a value on the property.
Agent 2 - Although they liked the solar, his team of 2 local agents openly acknowledged that they did not have the ability to put a value on the property and would wait until we had an AACI appraisal completed before committing to a listing price.
Agent 3 - This agent said she did not have experience in the area and suggested that the property should be listed at $269.000 including the solar income.
Agent 4 - This team of two local agents suggested that the property should be listed at $249,000.00. Neither one of them is CRA or AACI accredited. They sell many properties and some of their listings sell at full price. This could mean that the prices were set too low and the seller lost money by listing at the suggested prices.

The AACI Appraisal

The only Qualified evaluation for this type of Real Estate is that of an AACI.

We had an AACI appraisal completed on July 7,2013. The property including solar income is appraised at $293,000.00

Phone conversations with two other AACI appraisal companies in January 2013 suggested similar evaluations at $300,000.00.

The Solution

Real Estate Agents

Encourage sellers of solar properties to have an AACI appraisal done prior to listing. The cost of the appraisal can be around $1,500.00 and could payoff for the seller by having the house listed at a fair price. The appraisal can help the buyer and agents by having documentation  showing the properly estimated value of the home and would support any finance appraisal and application by the new buyer.

Sellers

Talk to several Real Estate agents before signing up. Keep looking if the agents you find are not following the guidelines set out here. Your agent may not be able to sell your property for the true market value if they do not believe in the price. 
Direct Real Estate agents to this site to get information on our information seminars.

See our list of Real Estate professionals to find one that is knowledgeable about selling homes where energy efficiency and getting a fair price for the solar is important.

Other Concerns
 
The conversation that concerns me most is one I had with a CRA. He relayed a story how he did a whitepaper for a bank. The bank wanted to know how to appraise properties with solar income. Rather than tell the bank that he was not qualified to provide this, he prepared the report stating that the solar should not be included in the financing. The only person served by this was the CRA. 

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