Does a $20,000 solar system really add $20,000 in value?

Would you pay $20,000 for a solar system if you knew it added $20,000 of instant home value? That’s exactly what a solar salesman told the client of a real estate friend. Is that legit though? What advice would you give someone talking to this salesman? This is a timely scenario, so I wanted to share my friend’s question and my response. I’d love to hear your take in the comments below.

solar panels in real estate - sacramento appraisal blog - image purchased and used with permission from 123rf - 2

Real Estate Friend: I have a client that wants to add solar to his 1989 house and was quoted a price of $20,000. The solar guy told my client that it would add value dollar for dollar…doubt that. Let me know your thoughts.

My Thoughts: Where is this SALESMAN getting “dollar for dollar” from? Is he a real estate value expert? Could he prove the value actually? Would the system add $20,000 in value regardless of the neighborhood, state, or price range? What if the system cost $40,000 or $80,000? Would that add $40,000 and $80,000 respectively? It’s a great sales claim, but achieving dollar for dollar is not something that happens in real estate in every case. For example, a kitchen remodel might cost $50K, but that doesn’t automatically mean buyers are going to line up to pay $50,000 more for the house. Or a built-in pool could run $35,000, but we all know buyers don’t expect to pay full price in the resale market (sometimes they’ll go for $10-15K or so, right). Thus the cost of something doesn’t necessarily translate dollar for dollar to the value. When it comes to solar, it’s more of a marathon of value so to speak because there will be value recognized over time as savings happen (as opposed to an instant rush of full value at the present time). I am not saying the house could not be worth $20,000 more, but my BS alarm is beeping I am skeptical. Appraisers and the real estate community have to consider what buyers are actually presently willing to pay for the system. Granted, we have limited data, and solar is still an emerging field, but we have to study homes with and without solar. What sort of price difference is there? Also, how much money will the system actually save the owner each month? Moreover, when considering monthly energy savings, how much more home could a buyer effectively afford because of the savings? If I were your contact, I would read this solar Q&A I did, but I would also do the math. Will the savings from solar far outweigh the cost of the system? If not, what energy conservation steps might your client’s household make instead? Lastly, if the solar system is leased, it won’t actually add anything to the value because it’s more or less considered personal property.

Questions: What do you think of the solar salesman’s claim? How would you respond? Any thoughts, stories, or further insight? I’d love to hear your take as an agent, appraiser, or home owner.

Home Office Update: By the way, I’ve been building a new home office these past few weeks, and it’s been fun to make progress. Shoutout to Keith Klassen for helping me with the framing. If all goes well, crown moulding will be up this weekend.

home office

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A podcast interview with an appraiser and real estate broker

I did a podcast interview recently with Real Estate Broker Marguerite Crespillo, so I wanted to share. Our conversation is perfect background noise while working, driving, cooking, or doing Zumba (okay, maybe not Zumba). We talk about the flat market, how appraisers make adjustments, using price per sq ft in real estate, a suicide house I appraised, what market value is, Zillow, and many other topics. Thank you Marguerite for the invite. It was an honor. Listen below (or here). You can check out the podcast on Marguerite’s blog too at Understanding the Value of Real Estate. Enjoy and let me know what you think.

interivew with marguerite crespillo and ryan lundquist Thanks so much for listening.

SacBee Blog Love: By the way, I was quoted a few days ago in a Sacramento Bee news story, which is always an honor. I’ll admit though I was tickled to see they mentioned my blog on the front page. I’m not bragging in any way, so I hope it’s not coming across that way. I just thought it was cool, and thought you might too.


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