Solar panels seem like a great idea. Solar panels create electricity without using the local economy electric grid. The benefits are obvious. Perhaps it is not economically the right choice, depending on the total cost of installation. Remember, there are parts on the installation that will wear out. After 20 years it may need updating.
As a Realtor we are concerned with comparables. With a cash transaction this fact does not matter. When financing, the lending company wants to make sure that if you default on your loan they can sell it quickly in the market. This would not include an "increased value" of solar panels.
If you are planing on staying in your home for a number of years, this may just be something that touches your heart and that you want to do.
The original author of this blog covered the topic so thoughly that I wanted to share.
Last week I met with a soon to be home seller who had just spent $44,000.00 on solar panels. The average sales price for homes like his is approximately $250,000.00. When the sales representative came to terms with Mr. Seller he informed him that his "investment" would bring substantial value to his home and that he should have "no problem recouping his investment."
This was a big, fat, horrible lie.
Let's look at the facts:
1. The comparable sales for the property are 250k, not 300k. Any dollar amount above and beyond the comparable range will be scrutinized by buyers, buyers agents, the appraiser and the underwriter. That's too people to appease. Real estate appraisers offer opinions of value that can either "hit value" or torpedo a current transaction that is under contract. In further out suburbia (Houston) you almost NEVER get dollar-for-dollar return on your investment. A 75k pool may only get you an additional 35k on your sales price.
2. NEVER believe "this will increase the value of your home" without first talking to a local Realtor or even an appraiser. The difference is that most Realtors will not charge a $450.00 fee to talk to you about the area values as they hope to be YOUR Realtor when you list your home. So if you want to know what your home is worth (before and after repair value) simply ASK.
3. Don't run to the world wide web looking for an "instant valuation of your home." Zillow does not have access to comparable sales in Texas and in fact, it gives themselves 1 star out of five for accuracy. Texas is a non-disclosure state.
4. Contact your current insurance company before adding such an expense as solar panels. Learn how it will impact the cost of your annual home owners insurance. Remember that buyers may not want the added annual expense that could very easily offset the money they just paid for the "overpriced house," not to mention the takeaway from the electric bill they thought they were saving on each month!
5. What happens when the roof goes bad?!? Will the roofer charge more to deal with this improvement? What about potential roof leaks?
Lastly, use common sense when taking on home improvement projects. Improve your home while you live in it and not just at the last minute. In Houston, people need good working air-conditions more than they care about mosaic tile in the master bathroom. Spend money in your kitchens, your floors, your water heaters and your roof as they're all solid investments.
Greg Nino, Houston area Realtor®.
Helping residential buyers, sellers and tenants 7 days a week.
Available @ 832-298-8555
RE/MAX Compass (Formerly RE/MAX WHP)
The information contained in this blog is believed to be reliable and while every effort is made to assure that the information is as accurate as possible, the author of this blog, and its comments disclaim any implied warranty or representation about it's accuracy, completeness or appropriateness for any particular purpose. All information is copywritten and the property of Greg Nino.