How are Green Homes valued?

Wondering how we evaluate green homes and provide a solid dollar amount? We’ll explain this, and define some industry terms so you have an “in” on the solar industry.

Using green industry standards green/solar homes are valued based on who the valuation is calculated for. What does that mean?

The Home Buyers Value is calculated based on what they will receive when they buy solar home. The electricity the solar generates or the energy upgrades saves or offsets is how the Home Buyer or Offset Value is calculated.

A Home Seller or Solar/Green Asset Value is the value of the assets installed on a Green Home. Those assets values are calculated based on how much historically they are worth less the depreciation or degradation of the effectiveness of those assets.

Sellers Versus Buyers

Solar Asset Value: Green Home Sellers Value

The Seller Solar Asset Value is the cash value of the solar equipment as it sits on the home. In order to accurately calculate that amount or value the following is taken into account:
- Size of the system
- Electricity output of the system
- Age of the panels, inverters and batteries
- Length of time remaining on the warranty.

In determining the asset value all this is accounted for along with the depreciation of the electricity output of the system as measured by historical degradation. This method of determining value is the industry standard set forth in the Study: Multi-State Residential Transaction Estimates of Solar Photovoltaic System Premiums conducted by the Lawrence Berkeley National Laboratory.

Solar Offset Value: Green Home Buyers Value

The Buyers Solar Offset Value is the difference in what the home buyer would have paid in electricity costs to the local utility company over the life cycle of standard homeownership. The Solar Offset Value calculations are done based on 10 years of savings of electricity. 10 years is the average time a homeowner will own the home.

The Solar Offset Value is the benefit that the home buyer enjoys for purchasing a Green Home. The Solar Asset Value should never exceed the Solar Offset Value since most home buyers will not want to pay more than something is worth to them.

Conclusion

Now that you have the insights to understand how Green Home assets are valued, you might be wondering, how much are my green home assets worth? On average, green home assets increase a property’s value by $20,000 dollars! Get a specific value appraisal by signing up for a Spark Green Home Report.