How do Solar Panels Affect my Home Sale?
It's time to sell your home and you've added solar panels to the roof. Your first thought is, "They have to be worth something to a buyer, right?!" After all solar panels are all the rage and buyers must want them, right?! Let's examine the different ways a buyer might be interested in your solar panels.
Solar panels are known to lower energy bills. The cost of adding them to your roof has dropped dramatically over the last 10 years. So much so that they have become even more popular. But why did you add them?
If you added solar panels to reduce your energy bills and carbon footprint, good for you. But how did you pay for them? How do Solar Panels Affect my Home Sale?
Did you lease them and have monthly payments or do you have a pre-paid lease? Did you finance them? Did you buy them and pay cash up front?
Why would these questions matter? They matter a great deal in the sale of a home and in the eyes of an appraiser.
You see, according to Fannie Mae, appraisers can't give value to leased solar panels in an appraisal, even if the lease is pre-paid. And there are several hurdles to jump through when buying a home with leased solar panels.
Hurdles for buying a home with leased solar panels include:
The buyer must qualify for the lease payment as the lender will add the payment to their debt to income ratio as if they already own the debt. The buyer's FICO score may need to be a certain number in order to qualify for the payment, or pay a fee to surpass that hurdle. A seller might be able to transfer the panels for a fee by the solar company, but generally the new buyer must assume the lease with the purchase of the home. And the new buyer may not experience the same energy savings as the current seller if their habits are different and the number of occupants in the home differs.
So what about financing solar panels? Is there value in a financed solar array? That depends on the company and method of finance.
If the current owner of the home did not receive the rebates and incentives, then the UCC-1 filing will show the system as personal property and no value can be given for the panels. So don't assume financing means you own them.
What about paying cash for the solar panels or if the current financed method included incentives and rebates? Then those panels have value, but not necessarily the amount paid for the array. An appraiser who is trained and has all of the data needed from a home seller can provide value on an appraisal for the solar panels.
If you are interested in selling your home and have solar panels on your roof, make sure to use a real estate professional trained in homes with these features. Real estate agents trained in energy efficiency will know the method to gain the most value for a home with owned solar panels.
A trained real estate agent will know to request an appraiser trained in valuing solar panels, AND KNOW WHERE TO FIND the list of those appraisers. Don't leave money on the table for your solar array by hiring a real estate agent who has never sold a home with solar panels.
How do Solar Panels Affect my Home Sale? Solar panels may or may not have value so use a trained professional in the process of selling your home with solar panels! As of this writing, there are almost 90,000 real estate agents in Arizona and about 130 of them have a green designation. Research agents before you hire one!