Forecasts for 2020 home sales are in, and they’re strong thanks to three factors. The combination of rising rents (3% annually) and low interest rates will motivate buyers to purchase. The
Don't get burned by solar panels
Dated: September 17 2019
Equipping a home with solar panels is becoming more popular because they can reduce monthly electric bills and reduce carbon emissions. Homeowners, however, should approach the transaction knowing a solar system could complicate the sale of a home.
When a homeowner sells a home with a solar power system, he or she should be prepared to share important details about the system. Is it owned or leased? If it’s leased, then the seller should provide a full copy of the lease. That’s what I ask for when a buyer client considers purchasing a home with a system. More specifically, I ask:
- What’s the average reduction in the monthly electric bill?
- What’s the term of the lease?
- What’s the monthly payment?
- Does the monthly payment increase over time?
- Will the seller pay off the lease at closing?
- Is the lease assumable?
- If the lease is assumable, must the leasing company approve the buyers?
- Could the leasing company require the buyers to make a “downpayment” on the system before assuming the lease?
The additional cost of a solar panel lease might not be an issue, but it could negatively affect a buyer who must secure a mortgage to purchase the home. According to Jennifer Miller at Hancock Mortgage Partners in Greenville, SC, the cost of a lease for solar panels is included in the calculations she makes to pre-qualify a buyer. That means the additional $75, $100 or more per month could mean a buyer would qualify for a less expensive home.
Despite what some sellers of solar panel systems might say, having a system does not automatically increase the value of a home. One appraiser told me she cannot justify an increase in a home’s value if the solar panels are leased. In fact, she said the U.S. Veteran’s Administration specifically told appraisers they cannot increase a home’s appraised value if it has a leased solar panel system. (Federal agencies like the VA and the FHA [Federal Housing Administration] dictate many guidelines appraisers follow.)
That seems reasonable since you don’t own something when you lease it. The lessor retains possession.
When I checked www.sunrun.com for specifics on my home, the website reported I could save $36,600 with a solar system and at the same time increase the value of my home by $43,900.
In my opinion, the latin phrase caveat emptor—buyer beware—needs to be remembered with solar energy for residential properties. Solar panels do reduce electricity bills. But homeowners need to beware what they are “buying” or actually leasing, especially when it comes to the advertised lifetime energy savings and suggested increase in the value of their homes.
My mission for every one of my clients is to exceed their expectations and provide exceptional service. The details matter to me, and I am always available. I chose real estate to help clients get the....
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