LaPlante Appraisals' Blog

As a real estate appraiser who recently completed a comprehensive solar continuing education course, I wanted to share some crucial insights that real estate agents and attorneys should understand when dealing with properties equipped with solar photovoltaic (PV) systems.

Key Considerations for Real Estate Professionals
System Ownership and Documentation

One of the most critical aspects of any solar-equipped property transaction is understanding the ownership status of the system. Real estate agents should:

• Verify if the system is owned outright or leased
• Check for UCC filings to confirm if the system has been paid off
• Ensure title companies are aware of the solar system's status during purchases
• Request the original invoice and installation documentation from homeowners

Market Value and Financial Implications

Understanding the financial aspects of solar systems is crucial for proper valuation and client advisement:

• Market acceptance varies by region and utility provider (for example, some utility companies are more solar-friendly than others)
• Net metering policies and connection fees can significantly impact the system's value
• System size, age, and efficiency all play crucial roles in determining market value
• Energy production history and utility savings documentation are essential for accurate valuation

System Performance and Documentation

For proper evaluation of a solar system, professionals should obtain:

• At least 6 months of utility bills to establish baseline energy costs and savings
• Documentation of the system's size in kilowatts (kW)
• Warranty information, particularly for inverters
• Maintenance records and performance history

Important Technical Aspects

While you don't need to be a solar expert, understanding these basic technical points can help you better serve your clients:

• System orientation (azimuth) and roof tilt significantly impact energy production
• Monocrystalline panels are typically more efficient and expensive than polycrystalline
• Microinverters vs. string inverters can affect system performance and maintenance costs
• Solar PV systems typically have a useful life that aligns with roof warranty periods

Best Practices for Real Estate Professionals
For Real Estate Agents

1. Request the Green Building Addendum from homeowners with solar systems
2. Understand the difference between owned and leased systems
3. Maintain relationships with qualified solar installers for technical questions
4. Document system details in MLS listings accurately (support documentation is extremely helpful for appraisers comparing systems with comparables)
5. Consult with an appraiser experienced in solar PV valuation before listing properties with solar systems or when representing buyers interested in solar-equipped homes
6. Consider pre-listing solar valuation services to sellers through partnership with qualified appraisers such as LaPlante Appraisals
7. Provide clients with accurate expectations about solar system value by obtaining professional appraisal expertise

For Attorneys

1. Review UCC filings and title documentation thoroughly
2. Understand local utility policies and net metering agreements
3. Be familiar with solar lease transfer requirements
4. Ensure proper documentation of system ownership in transaction documents

Looking Forward

The solar energy landscape continues to evolve, with new technologies, financing options, and regulations emerging regularly. As real estate professionals, staying informed about these changes is crucial for providing accurate guidance to clients and protecting their interests in transactions involving solar-equipped properties.

The real estate industry is adapting to include more detailed reporting of energy-efficient features in standard property documentation. Fannie Mae's Uniform Appraisal Dataset (UAD) requirements are being updated to include more comprehensive reporting of green features, including solar installations. This change reflects the growing importance of energy efficiency in property valuation and transactions.

For accurate valuation of solar panel systems, real estate professionals can benefit from working with appraisers who have specialized training in solar PV valuation, such as LaPlante Appraisals. We use industry-standard tools and methodologies to determine the true market value contribution of solar installations, helping ensure accurate pricing for listings and informed decision-making for buyers. LaPlante Appraisals can provide detailed analysis of solar system value, taking into account factors such as system age, efficiency, and local utility rates to determine the actual value these systems add to a property.

This blog post is based on recent continuing education coursework and reflects current industry knowledge as of January 2025. Always consult with qualified solar professionals for specific technical advice.

We have written a few blogs recently about Accessory Dwelling Units (ADUs) and therefore wanted to further address them. But before we start, do you know the difference between an ADU, Casita, Guest House and Mother-in-Law Suite? Depending on your market area, they can mean different things and sometimes are inner changeable.

Here in Arizona, Casita is used in replace of guest house, where there is a separate living area from the main Gross Living Area.

Typically, here in Arizona, mother-in-law suites are actually within the GLA and just a separate end of the house that includes a bedroom, bathroom and kitchenette (no stove top or oven) with an electric hot plate or sink and mini-fridge.

ADUs are separate dwellings with fully functioning kitchens (stove top and oven).

As mentioned before, zoning is a key to determine if the property has a legally functioning ADU. If zoning does not allow for an ADU, then an appraiser should give value to the amenity as a casita or guest house. If zoning allows for an ADU, then the key difference between a casita and an ADU is a legal full kitchen. Having a full kitchen classifies the unit as a separate dwelling. There is a bathroom, bedroom, living area, full kitchen and likely separately metered. 

Note: Casitas or Guest Houses are not counted in the GLA. If there is a mother in law suite, it would have interior access to the main dwelling and thus would be included in the GLA. ADUs, due to being considered a separate dwelling are also not included in the GLA. If they are not considered in the GLA, they should be given contributory value on the grid as a line item. However, not all markets are the same and some amenities are not given value due to various reasons. 

The Many Styles of an Accessory Dwelling Unit
Image from: AARP website

The next question might be: When is it considered an ADU verses a multi family property? If they are both separate dwellings couldn't ADUs be considered multi family type properties? 

The answer to this question would lead into a Highest and Best Use Analysis. Keep checking back as Highest and Best Use will be discussed in a future blog. Until then, see if you can spot these different types of ADUs when driving through your neighborhoods.