How do Solar Panels Affect my Home Sale?

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Real Estate Agent with Value Added Service, 602-620-2699 SA5376460000
https://activerain.com/droplet/55mg

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!

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Rainmaker
528,481
Nathan Gesner
American West Realty & Management - Cody, WY
Broker / Property Manager

A great article came out this week showing a more accurate cost of "green" energy. The production of the batteries for an electric car produces as much carbon monoxide as driving an SUV for eight years. So much for saving the planet!

Solar seems cool but the only reason it survives is because tax-payers subsidize it. Even then, it can take 15 - 30 years to actually save money. That doesn't add value to a home. It's really just making the user feel as if they are saving the planet which means the "value" is extremely personal.

Jun 24, 2017 05:46 AM #24
Rainmaker
1,150,046
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

I always learn so much from your informative posts, Jan Green ... and that's appreciated greatly.  As a former Appraiser in IL, (especially during the decades I was appraising) solar panels weren't a feature run into often.  I imagine that has changed greatly ... and ertainly as an LO I need to be informed and educated to transactions that may contain this feature.  Again .. thank you for increasing my knowledge and awareness on this point ...  

Keep the great info coming, Jan!

Gene 

Jun 24, 2017 07:42 AM #25
Rainmaker
350,743
John Wiley
Right Move Real Estate Group- EXP Realty - Fort Myers, FL
Lee County, FL Real Estate GRI, SRES,GREEN,PSA

With the increase attention that Green Homes are receiving, this is indeed an important topic to discuss.

You have generated some great comments that all add to the discussion.

We live in such a fast changing world that things that were a great attraction can now become a distraction. As agents we need to keep up with the latest.

Thanks

Jun 24, 2017 08:11 AM #26
Rainmaker
659,817
Nick & Trudy Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtors, Philly Main Line

Good post touching on a subject that many do not understand or know that much about. 

Jun 24, 2017 08:52 AM #27
Rainmaker
889,229
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Sam Shueh .  You might be close on the average panel size, but I'd have to see the data.  The number of panels includes several factors; energy bills, amount to eliminate, size of roof, which orientation of roof is available for the array, and so on  In Arizona, we can install panels on south and west sides and sometimes the east side of a roof, dependong on how much is available for south and west sides.  They do add value but I've never seen the depreciated.

Eva B. Liland with Century 21 Doug Anderson definitely research getting your green designation.  For NAR GREEN, visit greenresourcecouncil.org and for EcoBroker visit EcoBroker.com.  Those are the 2 nationally recognized designations but only NAR GREEN shows up on Realtor.com.  You'll have to manually add EcoBroker.  It's a great designation and in California you'll really see the need for it!

 

Jun 24, 2017 09:23 AM #28
Rainmaker
889,229
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Andrew Mooers I'm not sure what you mean if they don't work.  Solar panels work and are under warranty by the manufacturer.  Thanks for commenting. 

Yes Jill Sackler I can appreciate your clients' concerns.  Solar companies can "sell" the idea of a leased system as zero down and instantly saving money, but they NEVER tell you that they are worthless and can derail a home sale. 

Jay McHugh thank you for commenting!

Agreed  Tony Lewis solar roof tiles are in their infancy and VERY expensive  I calculated the cost for my 1500 sq ft roof at $32,000+.  Take into account that I llive in a 1979 home that has every energy efficiency retrofit but no solar panels and I pay an average of $60 per month for electricity!  So I don't need to add much, if any solar panels.  But if I didn't have those energy efficient improvements, my average bill would easily equate to $200 per month.  Our utility provider is now effecively killing net metering so if I over-produce with a solar tile roof then I get nothing back.  IMHO I'd rather spend the money with a shorter payback on other energy efficient improvements than spend thousands on owning a system.  

 

Jun 24, 2017 09:29 AM #29
Rainmaker
14,251
Cheryll Woods-Flowers
Cheryll Woods-Flowers, Mount Pleasant Home Team - Mount Pleasant, SC
Mount Pleasant Home Team

Thanks so much, Jan!  Enjoy your weekend!

 

Cheryll

Jun 24, 2017 09:31 AM #30
Rainmaker
889,229
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Yes Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents Solar City does charge $1000 to remove the solar panels and install on a sellers next roof; however, the roof has to be the right size and orientation to reinstall.  Not every company will do that so it pays to read the fine print.  Solar panel systems that are leased can really derail a sale! Thank you for commenting!

Thank you  Brian L. Sirota, Esq. !  I appreciate your comments.  It's so important to read everything and to reduce liability, make sure the homeowner has read and understood the entire process of the pitfalls of buying and selling homes with solar panels.  Currently there are lawsuits involving realtors who did not represent a home seller properly by disclosing the solar panels and/or the leases. A new solar course is about to hit the marketplace by NAR, funded through a grant by DOE.  That online course is awesome, I just reviewed it and added content.  Watch for that to hit soon.  Here in Arizona we also have a Solar Addendum about to go live.  Another method of disclosure to ensure all parties understand and fully disclose solar panel systems. Thank you for commenting!

Jun 24, 2017 09:33 AM #31
Rainmaker
889,229
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Gordon Crawford  another solar salesman overselling the benefits of solar panel systems - ARGH!  New Jersey is definitely at the forefront of solar systems.  Check out your statistic here per capita in NJ, you are #5 in the US 

http://www.seia.org/research-resources/top-10-solar-states

Very smart to understand and read everything on a system. Market it properly with "leased, must qualify for lease, payment added to DTI" in full public view!

 

 

Jun 24, 2017 09:36 AM #32
Rainmaker
889,229
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Thank you Amanda Thomas .  I do have both green designations, EcoBroker and NAR GREEN.  As for my name, that's my adopted name so I simply tell folks that Green adopted me!  Seriously, I grew up with this type of mentality and when I learned of the EcoBroker designation in 2007 I was all in!  Thank you for comenting!

You're welcome  April Swenson .  Thank you for reading!

Richie Alan Naggar they shouldn't void a roof warranty, that much is in the fine print.  They CAN eliminate an entire utility bill, I've seen that.  But remember that there might be a credit.  We pay 16c per Kwh for power and only receive 2c per kwh back from the utility provider so why would anyone consider over-producing on their power?  I've seen that,too.  Good for you for adding solar thermal panels for your pool -  now that's a good idea!

Jun 24, 2017 09:41 AM #33
Rainmaker
889,229
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Raymond Edler you have more solar panels than you know!  

http://www.seia.org/research-resources/top-10-solar-states   

You're #9 in the US for solar per capita.  You might have larger solar farms installed by the utility companies, but check out the link and see!

You defnitely should get a green designation.  Visit greenresourcecouncil.org for information.  They have 3 six hour modules and it can be done online  VERY good information and you'll be glad you did.  By the way, I'm on page 83 I think in the book!

Jun 24, 2017 09:43 AM #34
Rainmaker
889,229
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Praful Thakkar I can understand.  Good for you for getting it sold!

Cheryll Woods-Flowers feel free to re-blog if you like and make sure to advise them to contact me with any questions.  I work on a referral basis with others as well or I can consult.  I'm on 2 boards and run the Residential Committee for USGBC in Arizona and happy to answer any questions. 

Understandable  Kat Palmiotti but we still have to know about them.  Check into getting your green designation.  You'll be glad you did! 

GreenResourceCouncil.org

Nathan Gesner . I found an interesting study on EV chargers and Carbon - check it out 

https://www.afdc.energy.gov/uploads/publication/ev_emissions_impact.pdf

I haven't read all of it, but they talk about charging during on and off peak hours and carbon emissions.  Interesting point! 

 

Jun 24, 2017 09:52 AM #35
Rainmaker
889,229
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Thank you Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi !  If you run into a snag on a loan where the seller has solar panels make sure to send this link to your appraisal management company to get value for owned solar panels:

http://www.myappraisalinstitute.org/findappraiser/green_sustainability_residential.aspx

Since you're a former appraiser I'm sure you can understand that not many appraisers understand how to value solar panels.  But if they are trained and have taken all 4 days of green courses, then they'll be on the appraisal institute site.  A link of the list for your state can be provided to the AMC if they don't have a "green qualified" appraiser.  They MUST be competent to perform the assignment.  And if they aren't they can't accept it.  Your list is long on the site for Illinois.  Since NAR is in Chicago, that issue is close to home!

Jun 24, 2017 09:56 AM #36
Rainmaker
889,229
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

So right John Wiley and I bet homeowners in  your sunny state has solar panels as well!  Thank you for commenting!

True Nick & Trudy Vandekar, 610-203-4543 and that's why I write blogs on energy efficiency.  As an instructor you'd be amazed the misinformation that exists!

Jun 24, 2017 09:59 AM #37
Rainmaker
442,715
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Specializing in Brookside, Waldo, Prairie Village

Wow I've never thought of these questions!  I've seen solar panels on commercial businesses here, not as common on homes.  Very interesting--thank you!

Jun 24, 2017 12:56 PM #38
Rainmaker
889,229
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Thank you for reading Mary Hutchison, SRES, ABR !  This might be interesting: 

http://www.seia.org/state-solar-policy/missouri

Jun 24, 2017 05:41 PM #39
Rainmaker
1,370,298
Mike Cooper
Cornerstone Business Group Inc - Winchester, VA
Your Winchester, VA Real Estate Sales Pro

Jan, that's an interesting topic. Solar panels are still an anomaly around here. I doubt that anyone is leasing them, but they are sure financing them. 

Jun 25, 2017 09:37 AM #40
Rainmaker
889,229
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Yes, solar is an interesting topic Mike Cooper .  Check out the national site for solar installations re Virginia: 

http://www.seia.org/state-solar-policy/virginia-solar

Jun 25, 2017 11:59 AM #41
Rainmaker
1,395,728
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
your real estate writer

In our area, with limited days of sunshine, solar is not popular - and is usually only found in homes that are off the grid. Quite often, they're home-made systems. You have a whole different situation there in sunshine country.

Jun 25, 2017 03:15 PM #42
Rainmaker
125,551
Stavrula "Sam" Crafa, RNC,GRI, CDPE, PSA
Future Home Realty - Seminole, FL
Providing the integrity and service you deserve.

If you're thinking of getting solar panels, know how that will effect the warranty you may have on the new roof you put on last year. Most roofing companies will void the warranty if solar panels are installed. 

Jun 28, 2017 06:49 PM #43
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Rainmaker
889,229

Jan Green

HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN
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