This past year I have run into solar panels both as a buyers agent and a listing agent. It is important to understand what impact solar panels will have on selling your home. So far solar panels have not been completely embraced by home buyers. The thought of being green and saving money can actually create headaches and cost you money.
If you are currently a home owner that is contemplating the installation of solar panels, take a step back and think about it. The first question is do you think you will be selling your home in the next 5-7 years, you may want to rethink the solar panel idea. If this is a long term or forever house than installing solar panels may not be a bad idea for the saving you may gain in your electric bill.
What concerns do home buyers have with solar panels
As I stated before home buyers have not completely embraced solar panels. I have also talked to several appraisers and they are still uncertain on how solar panels will impact the value of a home. Home buyers are not necessarily on board with solar panels. Here is an article from the LA Times about solar panels complicating home sales. Other resources on leased solar panels impacting home sales
- Why leased solar panels may not be an asset when a house is up for sale– Washington Post
- Rooftop Solar Panels Scaring Buyers When It Is Time To Sell- Bloomberg
Home buyers are filled with some skepticism about solar panels. Don’t assume just because you like the idea of solar panels all home buyers will, as a matter of fact solar panels will add a whole other set of issues and scare away some buyers. Some of the buyers concerns are as follows.
- Do they actually save them money on their electric bill.
- What kind of maintenance is involved in having solar panels?
- What happens if their roof needs to be replaced?
- What happens if I resell my home?
- They are just ugly. Lets face it if they are prominently displayed on the front side of the home they are not the most attractive things to look at.
Selling your house with solar panels
So you didn’t resist the temptation of installing leased solar panels on your home but now you need to sell.
There is a million companies out their offering leased solar panels and the temptation of saving on your electric bill can be a big one.. The contracts that I have seen so far are leases for 20 years. The savings on electricity pays the lease and supposedly then some. So for the most of the listings I have been involved with the sellers have saved the homeowner between $200 to $500 a year on their electric bill after paying the lease payment of $35-75 a month.
Please bear in mind this is in New England, things may be different parts of the country. But here in New England only 5 or 6 months out of the year there is a surplus generated. Winter months the savings does not cover the lease payments. To some home buyers the fear of the unknown is greater than their desire to save $200-500 a year on electricity.
I also have one homeowner that owned the panels outright. They will certainly not recoup the cost of installation after 5 years. This does not mean other arrangements don’t exist but make sure you fully understand the impact of owning or leasing solar panels.
This is where things start to get a little funky. You have signed a 20 year lease for the solar panels. Most likely their is now a lien on your home from the leasing company. You have agreed that the lease must assumed by the new owner. You are locked into those panels on your home for 20 years.
Now, the solar company has to approve the new owner. It is a credit approval and they require a minimum credit score. You have now involved a third party in the sale of your homes. So there are three potential issues:
- The new owner may not have the minimum credit score needed to be approved by the leasing company.
- The new homeowner may have the credit score but now the added lease payment does not allow them to qualify for the mortgage if they are running tight on qualifying ratios.
- You are having trouble finding a buyer that whats to assume the solar panels.
That leaves you with two options:
- Prepay the lease for the remaining balance which could be upwards of $5,10-15,000 and all the other lease terms remain in effect for the buyer if they choose so. Obviously the farther you are into the lease the lower the prepayment will be.
- Buyout the panels for $20,000+ and pay the leasing company to remove the panels or try to figure out how to use and maintain the panels once they are owned outright.
So far with lots of buyer skepticism and hesitation we have been able to sell the homes with solar panels, with relatively little impact to the sale of the home. If you are selling a home with leased solar panels make sure you disclose up front that the buyer is to assume the lease payment.
Turn the solar panels into a positive for home buyers. Show them that the maintenance and up keep is taken care of by the leasing company. Be prepared with detailed bills and savings so you can show the new owner that the solar panel lease is beneficial financially. Also have the lease agreement readily available for the potential buyers to review. Do not wait for buyers to ask. Have the information ready the day you list the home.
Worse case scenario have a contingency plan in place if a buyer is not willing or can’t assume the lease.
Home buyers and homes with solar panels
If you are a home buyer make sure you fully understand the impact of either owning solar panels or leasing panels. You do not want to get into a situation that is not beneficial to you. Make sure you review any lease agreement you are signing. Review several years of electrical bills to see if there is a financial benefit. One of the biggest complaints I saw online was the lack of savings with panels installed.
Solar in the mainstream is still relatively young. As time goes on and technology improves solar panels/ electricity will probably become more of the norm. But if I had to take a guess, solar panels will be met with skepticism from home buyers the next few years. If you decide to explore the saving solar panels can offer you make sure you have a long term plan and you are not being short sighted about saving money now but having to give up big later if for some reason you have to sell your house.
This article, Selling Your Home with Solar Panels, was provided by Massachusetts REALTOR, Kevin Vitali. Thinking of selling or buying a home? Call me today at 978-360-0422.