Maximizing the Value of Your Solar Investment with Cory Vanderpool, Founder at Spark

Welcome to another episode of The Solar Podcast. Today Dave is talking with Cory Vanderpool, founder of Spark. Join us as they discuss the post-installation challenges facing consumers and how Cory's company, Spark, is creating the tools that help homeowners recapture the value of their solar systems when it's time to sell. It all starts now on The Solar Podcast.

Dave Anderson (00:29):

Well, welcome to The Solar Podcast. I'm Dave Anderson, your host. I'm thrilled to have with us today Cory Vanderpool. Cory is actually an author, entrepreneur, an investor. He's also the host of his own podcast as well called the Solar Broadcast that can be seen on all of the podcasting channels and distributed broadly. And he's also working on another book. So we're going to be thrilled to talk to him today about his existing work on his company called Spark. We'll certainly dive into some of the things that he's talked about in his previous book as well as some of the research that he's doing on his existing and current book. So again, thrilled to have Cory on as well. Cory, I'd love to have you introduce yourself to the audience today as well.

Cory Vanderpool (01:02):

Yeah, thanks for having me on, Dave. Yeah, I've been in the solar industry for about 10 years now. Mostly on the residential side, was in real estate before that. Back in real estate now largely with what I do, but just ran up against a big problem with a lot of the homeowners that we had taken solar with real estate agents. And so about two and a half years ago dove into like why we were getting so much opposition from them and really discovered a lot of challenges there and it's been a really fun journey in not only discovering the challenges but helping to create and pioneer some solutions around that.

Dave Anderson (01:39):

Yeah, that's fantastic. To be honest with you, so I've been in solar for actually 13 years and some of the people that were actually the biggest people that were resisting the movement of helping customers go solar were actually real estate agents. And the reason was is because it complicated, particularly early days of solar, it complicated the transactions. So real estate agents didn't know how to price it, they didn't understand the value of it, they didn't understand the intricacies and the complications associated with some of the financing products. And so it actually, for most real estate agents, they would tell homeowners like, "Look, it's better to not go with solar because going solar is just going to complicate it when you try to go sell this really important investment asset you have, which is your home," and something that we're certainly going to want to dive into. So Cory, obviously, you've spent time as a residential installer. You've done everything in the solar game. Maybe give us a little bit more background specifically on your company, Spark, and what the focus is for the company.

Cory Vanderpool (02:31):

Yeah. With Spark, what our objective was was we went into trying to again understand this challenge, not to find another way to make money in the solar industry, but to really find out why we were getting so much opposition around the real estate transactions involving solar, kind of what you're talking about. And what we discovered is that there just wasn't a lot of the needed tools out there. For example, if you go to buy a car, you can go jump on Kelley Blue Book and you can find a great evaluation that gives you a good market base understanding, but that doesn't... It hasn't existed.

(03:10):

And so we had to create those tools. We wanted to make sure that solar didn't lose the base foundation that we have in terms of value because we just tapped over 3 million solar homes in the United States. And if the average system has got a system on it, a home that's worth $30,000, you look at the economics of that, the resale value. When they go to resale, if they recapture zero of that, and which happens all too often, then that's going to really destroy our ability to have a resale value of... If you were selling a car for $60,000 and you tried to resell that in three years and you got $5,000 for it, there's no way that all you manufacturer would be able to stay in business because no one's going to keep buying their cars. And so that is really challenging.

(03:58):

So Spark, we created really to help facilitate education for homeowners and agents post-install because too many times homeowners after the solar guy's gone, they're pretty clueless about what they've got on their roof, what agreements are tied to it because there's not a lot of financial incentive for installers to really connect with, or salespeople for that matter. But with the homeowner post-installation, there's actually mostly financial disinterest to do that, right? It costs money to do that because there's not a lot of revenue for these organizations post-installation.

Dave Anderson (04:35):

Yeah, so much we talk about there. In fact, I've actually had many conversations with just appraisers who, I mean it's their one job to be able to assess the value of a home. And you can get different appraisers that are assessing the value of solar in so many different ways. So maybe I'd love for you to explain, Cory, what are some of the things that you've seen in terms of how people are both assessing as well as being able to recapture the value of solar for the new home or when they go to sell the house? It's a huge part of solar is is the consideration of what happens after I move or when I move or when I sell my home?

Cory Vanderpool (05:06):

I would say it's the number one question asked in every single transaction involving solar. When a salesperson goes in, it's number one question, what happens when I move? This is not a three-year thing, right? This is solar's going to be on a long time. The biggest factor that we found when we are run into professionals that are dealing with this that don't understand it is they'll compare it against something that they do understand. So an appraiser will say, "Well, I don't know solar, but I know pools. And so we'll give a similar type of valuation what we did with pool." So there is some valuation typically given. I'll tell you for sure there is great data out there that backs up the value and we didn't create the data. There's actually been some significant national studies over the last decade around that. The Berkeley National Institute's done a lot of that research for us to understand what that looks like.

[NEW_PARAGRAPH]But the problem is no one really had made it their objective to provide that validated information. I shouldn't say no one, but very few. So that way universally they have them. And so you get an agent or an appraiser coming in and so they're going to say, "Well, this isn't worth nothing. It's worth something, but I don't know what it's worth. And so if I got to go sit in the court of law, what I could say it's worth 5,000 bucks." And so they might give $5,000 if they have no data to back that. But the Appraisal Institute says if you have the data then you should attribute it, but it really should come from a disinterested third party. And so that's why they look to someone like, again, a Kelley Blue Book to provide some disinterested third party value. But that's just even if you have someone who understands what to do. But the most common practice is it's not worth nothing, so let's give it something. But what we find is that when they're presented with the data, they're really good about utilizing it. It's just they need the data.

Dave Anderson (07:13):

Yeah. I think something, too, that's kind of interesting about this entire process is there's two different kind of use cases that you really need to talk about. We talk about solar fairly generically or fairly generally, but there's really a couple of different ways of going solar obviously. So you have third party owned, which is your lease or your PPA products. PPA meaning power purchase agreements where someone else actually owns the system, puts it on your house and you become the end user of it and essentially you get the benefit of discounted electricity.

(07:41):

And so people want to know, "Hey, this is going to be on the house for the next 20, 25 years. It's going to transfer to the next homeowner. What's the impact in terms of my ability to sell the home? Because there's two things that matter. How much is this going to affect my ability to resell the home? Meaning is it harder or easier to sell my house? The second thing is how much is it going to affect the cost of the house? Is it going to be an increase or a decrease? Is it going to be thought of as a benefit or a liability?"

(08:06):

And so the second use case is when someone owns the solar. And even when they own the solar, almost all instances, homeowners are typically financing the solar either through a loan or through a home equity line of credit. So there's a loan that has to be considered, and generally it has to be the loan will have to be paid off at the time of the transaction. It doesn't carry forward to the next homeowner. And so I don't know. Has Spark done much research or has it done much by way of trying to help homeowners understand the difference between what would be considered a third party-owned system versus an owned system in terms of assessing the value?

Cory Vanderpool (08:42):

What's a solar lease? No, I'm just kidding, Dave.

Dave Anderson (08:46):

Wasn't expecting that question.

Cory Vanderpool (08:48):

Oh, okay. We're starting foundational here. No, yeah, definitely. It's the biggest distinguisher between value and the process, right? So like exactly what you said, when we have to look at a system, there is always a first question, who owns it? And that's really how you understand whether value will be attributed or not. And I'll just tell you the rule of thumb across the board if third party-owned, so your lease, your PPAs. Even some people have their solar system owned by utility companies. It's pretty rare. But there are some utility companies who own distributed power systems on people's roofs. Any of those cases, if you don't own the system, in other words, if you don't own it outright or have a loan like you said, then it's really going to not impact resale value whatsoever. So you're not going to get any kind of contributory value to the value of the home if it's not owned by it.

(09:40):