Appraising sunrays: How to value solar on residential rooftops

Sandra Adomatis is on a quest to unite appraisers and installers so solar is properly valued on homes.

Adomatis is an appraiser in Punta Gorda, Florida, and is considered an expert in green valuation. She is one of the authors of the SunShot study Selling into the sun: Price premium analysis of a multi-state dataset of solar homes.

Her eyes were opened to the transforming market of green buildings about nine years ago, when she did a final inspection on a home built by Beth Cantin, a local builder in Port Charlotte, Florida. She was looking at another appraiser’s report when Cantin, also the owner of the home, said, “You do know the home is green, don’t you?”

Adomatis had no idea what Cantin was talking about. So she told Cantin, “I’ll spend all day with you if you help me understand what makes this home different.”

Cantin dug up her home energy rating system (HERS) ratings and green sheets to show Adomatis. She had no idea she should’ve shown those documents to the appraiser too.

“She learned a great lesson there, that the appraiser needs to know what’s behind the walls. We can’t just go out and have x-ray vision,” Adomatis said.

And Adomatis learned a lesson too: She needed to become an expert in green homes. She went home that night and signed up for LEED classes.

“I had been an appraiser for a long time,” Adomatis said. “If I didn’t know about green, there were a lot of others who didn’t either.”

Along the way, she was introduced to solar PV, which sparked her interest—and she had a lot to learn. “I had never even gone to my electric bill to figure out how many kilowatt hours I use,” Adomatis said. “How many people would know that?”

Adomatis has since become an appraisal authority on solar and green homes. She recently wrote a book called Residential Green Valuation Tools that includes tips for appraising solar PV.

Where’s the connection?

Adomatis thinks she was in the dark on solar because appraisers, real estate agents and lenders got left out of the green movement. Installers and contractors banded together and formed trade organizations, but then later wondered why appraisers didn’t know anything about it, she said.

It’s important for appraisers and real estate agents to know about solar and green energy so they can properly appraise and market homes. Although Adomatis said the real estate sector has recently been looped in to green and solar networking events, there’s still much work to be done to get everyone on the same page and ensure homeowners are getting the most value for their systems.

Adomatis said she often hears appraisers tell her, “I called an installer to ask them about solar or ask them about the cost to install in my local market and they won’t talk to me.” She said that by blowing off appraisers, installers are doing a disservice to the homeowner.

She said it’s necessary for the two professions to network. “That’s how we learn—from the professionals out in the field doing it,” Adomatis said.

When appraisers or real estate agents list a home on the market with solar, they’ll often just indicate that the home has solar panels. To get any details like the kilowatt hours or age of the system, appraisers have to call the installers themselves. Adomatis said the information isn’t readily available in the property record or assessor’s record because it’s not taxed in most states.

Spec solution

The label prototype made by Todd Fries of HellermannTyton and appraiser Sandra Adomatis.

One way Adomatis proposes to bridge the communication gap is by asking installers to put a sticker on the electrical box with all the relevant system information. That sticker would document the date the system was installed, the size of the system and the manufacturers’ contact information.

Adomatis has worked with Todd Fries, marketing manager of HellermannTyton, to come up with a prototype of such a label. HellermannTyton creates code-compliant labeling for the solar industry.

“I actually took their information and designed a label that could be used by the installer at the time of installation that would allow the homeowner and anybody in the future to understand exactly what’s up on that roof very easily,” Fries said.

Fries said that label could go on the electrical box or inside an inverter to make sure it stays intact for years to come.

Adomatis has included a prototype that installers can download for free in the AI Residential Green & Energy Efficient Addendum online.

Brian McFadden, compliance specialist and technical writer for solar safety label-making company Graphic Products, agreed the label would be useful.

“The solar industry has boomed in the last several years, and we can see applications like this really taking off,” McFadden said in an email. “There’s so much variation across PV systems, and there’s often no easy way to find detailed information about a given installation after the original purchaser moves on. An effective label could make a world of difference, simply by making that information available.”

SEIA and standards

Adomatis would like to see the form become a standard and has been working with SEIA on this initiative. She said she knows SEIA would like more uniformity on how solar is installed and documented.

SEIA’s senior director of project finance and capital markets, Mike Mendelsohn, said SEIA has assembled a group of installers, financing and housing experts to work on this issue. The group is discussing how the solar industry can communicate with appraisal, real estate and other industries. They had their first meeting in late 2016, and will meet again this spring.

Mendelsohn said SEIA is “seeing if we can provide more information on solar systems so that there could be a clear communication to the appraisal and real estate industries on the ownership and financing structure behind residential installations.”

Some companies in this informally named “housing industry working group” are installers Tesla, SunPower and Vivint; loan providers Mosaic, Dividend Solar and Spruce Finance; and real estate entities like the Appraisal Institute, in which Adomatis is a designated member.

Mendelsohn said SEIA thinks it’s important that the real estate and solar industries work more closely together, especially as solar becomes more common on residential rooftops.

Installer input

Palomar Solar includes its website on every installation’s safety plaque.

Adomatis said she is not aware of any installers making it easier for real estate professionals to find out solar specs.

But Californian “boutique installer” Palomar Solar has started to shift in this direction already. The company includes its website on the safety plaque on the electrical box.

“The plaque itself is required, but it’s not required that you put your company name,” Rizzo said. “We’re proud of our work, so we put palomarsolar.com on every single plaque that’s mounted to the electrical panel.”

In addition to the plaque, Palomar Solar gives each client electronic documents and a CD with all warranty information. But it’s easy to lose or forget about that information after it’s tucked away in a drawer or deep in an email inbox.

“Even our customers would have a hard time telling you what they have 10 years from now when they go to sell their house,” Rizzo said. “They just don’t remember.”

Rizzo said at the very least, companies should be required to put their names on the safety plaque. He can only think of two or three other installers who currently put their names on the plaque.

“Most companies are giving handwritten chicken scratch carbon copy contracts that homeowners will misplace,” Rizzo said. “That’s always the issue.”

He often receives phone calls from real estate agents asking about the specs of Palomar Solar systems as they’re trying to sell a home. He said he’s happy to talk to them, but a standardized spec sheet would save both he and the realtor time.

“It’s really tough to expect a realtor to get up on the roof and try to get under the panel to see what kind of panels and what the wattages are,” Rizzo said.

Just as Adomatis wants to see the real estate industry working more closely with the solar industry, Rizzo does too. Rizzo said he encounters lots of real estate agents who don’t know much about solar. Palomar Solar does its part by encouraging sales team members to meet with real estate agents and explain what they should look for when assessing a solar system.

These meetings are in part to help solar be properly valued. But Rizzo sees an added bonus too: “Real estate agents, once they understand, are a tremendous referral source for us.”

Rizzo said real estate agents should judge a system on whether it’s aesthetically pleasing, if it provides a decent amount of kilowatt hours depending on the size of the house and if the installer has a good reputation.

“I think realtors could sell homes faster and for more money if they just did a little extra work for the homeowners,” Rizzo said.

Although both sides partly blame the other for the disconnect, perhaps SEIA’s working group can put an end to the miscommunication and make progress for both industries.

Comments

  1. green expert says:

    With real estate agents collecting a 6% commission and splitting this commission with the listing agent. They are too lazy to get on the roof and inspect the solar panels? This goes to what the green expert stated now more than 14 yrs ago. real estate agents are more interested in their looks, nail polish and what type of car they drive. Where is the home inspector in this equation? The days of a real estate broker taking out a newspaper ad and collecting a 10K commission are long over. Any listing should have a COMPLETE EVALUATION.! This is why the real estate industry has a 90% turnover rate every 5 years. And why remax agents do so little for the consumer.

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