Something to consider when you take a listing

By
Services for Real Estate Pros with Marte Cliff Copywriting

Several weeks ago I had a chat with an attorney who talked about problems that can come up because not all liens against a house show up on a title report.

Your clients may not have the equity they think they have in their homes.horrified man

She mentioned three trouble areas:

  • The deferred balance on a Loan Modification
  • HERO or PACE loans
  • Solar panel leases

Loan Modifications: She explained that every loan modification is unique, so a smart attorney – or real estate agent – should read the agreement before trying to determine how much equity someone might have in their house. Of course, the homeowner should read it before even considering a sale.

Some agreements have deferred balances that are forgiven if the homeowner faithfully makes the payments for ten years. If they sell in 9 years and 11 months, that balance is due and owing. 

She had just heard of a case where a couple owed $90,000 more than they realized upon sale of their home. Had they waited just a couple of months, that money would have belonged to them.

I thought it was a bit scary, so I immediately notified friends who had a loan modification and were considering selling their home.

HERO and PACE loans also don’t show up.

Instead of being listed as a debt, these home improvement solar panelloans are simply added to a homeowner’s property tax each year until paid in full. This extra payment doesn’t transfer to a new owner, so the balance is due at closing.  Since people sometimes “forget” about them, the attorney or agent should check the tax rolls to see if such a debt exists.

Leased solar panels are also a tricky problem. The solar company may or may not be willing to re-write a lease for a new owner. Again, the homeowners and their agent should go back and read the original lease agreement to be certain of the terms.

 

Solar Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Horrified man Image courtesy of David Castillo Dominici at FreeDigitalPhotos.net

The original of this post appeared at: https://copybymarte.com/something-to-consider-when-you-take-a-listing/

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Rainmaker
3,491,955
Sheila Anderson
Referral Group Incorporated - East Brunswick, NJ
The Real Estate Whisperer Who Listens 732-715-1133

Good morning Marte. This is important! As usual a thoughtful and relevant post.

Apr 29, 2019 04:26 AM #1
Rainmaker
2,943,213
Nina Hollander
Coldwell Banker Residential Brokerage - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

These are important items, Marte, that can quickly derail a transaction. Fortunately, I've not had to deal with any of them to-date.

Apr 29, 2019 05:44 AM #2
Rainmaker
1,503,205
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Sheila Anderson I think the loan modification part is especially important. It would be terrible to lose thousands of dollars because you sold a home a few days too soon.

Nina Hollander Yes - any one of these things could mean there wasn't enough money to close the transaction.

Apr 29, 2019 07:30 AM #3
Rainmaker
1,949,899
Patricia Feager, MBA, CRS, GRI,MRP
DFW FINE PROPERTIES - Southlake, TX
Selling Homes Changing Lives

Marte Cliff - Here in TX I'm very aware of the Solar panel issues but nobody I know is talking about Loan Modifications or HERO and PACE Loans. I think I'll mention it to one of my local attorneys to see if we could get some education on it here. 

Thanks, Marte!

Apr 29, 2019 09:45 PM #4
Rainmaker
1,503,205
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Patricia Feager, MBA, CRS, GRI,MRP The attorney I spoke with was in California, so it could be that the HERO and PACE loans are unique to California. I'd never heard of it here in Idaho, but since it's been 10+ years since I let my license go, that doesn't mean they don't have them now.

Loan modifications were everywhere, but the attorney said that there's a wide variety in how they were written. That's why it's so important to get out those papers and really read what the homeowner agreed to at the time.

Apr 29, 2019 10:05 PM #5
Rainmaker
5,225,459
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

These are very good reminders to share with listing agents.

May 01, 2019 06:52 AM #6
Rainmaker
3,043,558
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello Marte Cliff, once again a great blog for us in the rain for us.  I am always concern about  leasing the solar manuals.

 

May 01, 2019 07:52 AM #7
Rainmaker
1,503,205
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Thanks Roy Kelley - these are definitely issues I didn't have to contend with when I was an agent.

Will Hamm I would be too. In our area, people own their solar panels - what few of them there are. It looks like leasing could turn into an expensive mess if you decide to sell the house.

May 01, 2019 10:13 AM #8
Rainmaker
964,412
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Good points to ponder!  We don't have PACE financing here - yet!  But we definitely have solar leases, ugh!

May 13, 2019 05:36 PM #9
Rainmaker
1,503,205
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Jan Green Since the PACE financing is in California, it's probably coming your way. The solar leases sound like a nightmare.

May 13, 2019 08:38 PM #10
Rainmaker
964,412
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

You're probably right Marte!  I've heard rumblings of PACE but not seen it yet.  Yes solar leases and solar lawsuits.  Agents need to be aware of the pitfalls of listing a home with leased solar if they don't disclose properly or share all the details!

May 15, 2019 09:26 AM #11
Rainmaker
1,503,205
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Jan Green I don't envy you that task. How can you know going in whether the solar company will even allow a buyer to take over the lease? And what happens if they say no?

May 16, 2019 07:00 AM #12
Rainmaker
964,412
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

You aren't kidding Marte!  A sale falls apart when a buyer doesn't qualify for a lease.  I've seen some where the payments were so high that the buyer balked and walked!

May 16, 2019 09:08 PM #13
Rainmaker
1,503,205
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Jan Green I'm curious about that. What does it cost to lease solar panels?

May 16, 2019 09:48 PM #14
Rainmaker
964,412
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Good question Marte!  I frequently run into payments in the $100 range, but the other day heard of a $400 a month payment.  The payment depends on several factors:  how much electricity a homeowner wants to eliminate, how big their roof is and it's orientation, and what's their budget to name a few key elements.

The easy sale is that homeowners pay nothing down and then realize a "lifetime" of savings."  The part that slips through the cracks is the escalating lease payments, inverters last 7-10 years, and that at the end of a 20-25 year lease the system is still leased even though the lease term is paid.  So much to absorb for a homeowner!  And no one tells them what effect it has on their home sale. Argh!

May 17, 2019 07:49 AM #15
Rainmaker
1,503,205
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Jan Green That really does smack of a scam on the part of the solar leasing companies.

My son the power lineman has a similar feeling about wind farms. He says they're supposed to pay for themselves in about 20 years - but that by the end of 20 years the equipment is worn out and needs to be replaced.

May 17, 2019 01:17 PM #16
Rainmaker
964,412
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Good to know Marte Cliff !  Crazy for investors of wind farms.

Similarly, on a smaller scale, inverters last 7 - 10 years and have to be replaced.   Those can cost as little as $800, but are usually higher.  They wear out quicker when they are placed on a west or south facing wall.  

May 18, 2019 02:02 PM #17
Rainmaker
1,503,205
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Jan Green Now I wonder about the cost of buying vs. leasing. I have no experience with solar power except for the light over my horse barn - it works in summer, but after too many snowy days in winter, it doesn't.

The few people I know who have put solar power in their homes here have built their own systems, and I've never asked about the cost.

May 18, 2019 03:30 PM #18
Rainmaker
964,412
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Solar has it's good and bad, but in the right situation it's a good thing.  Your solar light would need a battery back up for those cloudy winter days.  Owning solar panels has an average ROI of 5-7 years with newer panels.  Used to be 7-10 years.  There is value for owned solar panels if you use the right appraiser and an agent that knows what they're doing.  It all depends on how much is the budget? How much electricity to eliminate?  Is the roof the right orientation?  Other lesser expenses fixes need to be done first as there are other ways to reduce a bill before adding solar.  The cost of solar is dropping all the time.  If not extended, the 30% tax credit for solar panels will sunset!

May 18, 2019 03:49 PM #19
Rainmaker
1,503,205
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

There's plenty to consider, isn't there Jan Green? Homeowners should really do their homework before going that route. 

The people I knew who used it had no alterntives other than gas or battery lights - they were living off the grid.

May 18, 2019 04:48 PM #20
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