SOLAR— To Save or Not to Save

Temperatures are heating up and we all know what that means, increased electrical bills. Notice the solar panels going up all over town, even school districts have jumped on the band wagon to SAVE.

All this excitement to SAVE has lead to a few discussion with our past and current clients and therefore the creation for this blog. So if you are considering solar, I would like to give you a few things to consider to help you in your decision. If you have already began enjoying the benefit of low/no utilities, just somethings you will want to think about in the future.

First I would like to start by dispelling a “myth” I commonly hear from my clients that the solar salespeople have told them…. “Solar will increase your homes value.” First, this should definitely not be a consideration when purchasing solar. I have seen Solar panels priced from $10,000-$30,000 depending on the size of home and wattage needed. I have completed several sales with homes that had solar and in speaking to many appraisers, on average the value added to the appraisal was $5,000. Also note that these units were 1-2 years old. You might be thinking that swimming pools are the same, actually swimming pools will add approximately $7,000-20,000 and we do get buyers all day long requesting to see ONLY homes with pools, that is not the case with solar.

As you can see to pay $20,000 for something that is worth $5,000 the very next day isn’t a value. Therefore it could potentially eat your equity.

Of course there are financing options, making solar even more affordable. Word of caution, when you sell your home, the new buyer will have to qualify and be approved by the solar company in order to transfer the lease. Several things to consider here. Some companies require at 680 credit score or better, however we sell homes to buyers with lower credit scores, so you have just limited your buyer base.

We have also had the issue with the buyers lender not wanting the solar company to run the buyers credit for fear it would lower their score. In that case we had to wait until a few days before closing to see if the buyer could even qualify for the lease, thankfully they did and we closed without a hitch… but it could have had a very different turn out.

Also keep in mind that most solar companies do not put a lien on the property. What does that mean? As a seller, it is your responsibility to confirm the transfer. If not it is your personal credit and you could be responsible for the bill.

As mentioned previously about limiting the amount of buyers able to buy your home, here’s something else to consider. Having less buyers, could mean a lower sales price for your property and I am not just talking about low credit scores. For example Winter visitors. They are not living in the home during the peak months and may not want to make payments on a solar panel all year in order to conserve summer increases. Speaking from experience here, we lost a buyer under this condition.

So in closing I want you all to know I am all for solar savings. However keep in mind the average solar panel takes 7-10 years to break even, do the math or ask APS or a reputable company. As a real estate professional I know that the average move out in AZ is 5-7 years, job transfer, divorce, additions to the family, death and many other reasons. Perhaps their are less expensive energy efficient items you can add without eating up your equity, cause in the end, we want the most amount of money in your pocket.

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2 Responses to “SOLAR— To Save or Not to Save”

  1. Glenda, real estate agent says:

    I just read your post on Solar panels….many people in my community are looking into it, but I (for one) am not…..yet. Many of the incentives that were available before are no longer there for future purchasers or those wishing to lease. At one time I had 2 buyers for homes with Solar City leases; one had “good/acceptable” lease terms but the other was so bad (going up 2% per month each year for 22 years, that left the final year of the lease as paying almost $200/month on a 1300’ home) that my Buyers chose to pull out of the home purchase. We kept asking for a copy of the lease contract, and it was only when I cc’d the Broker on my request did we receive it…..self explanatory as to why he did not want to let us see it until we were deep into the purchase.

    I have heard about certain “property taxes” that may be added to Solar Leases (not solar panel purchases, I believe) which will add to the cost. And if a Seller cannot sell their home with the solar panels, they may be forced to continue to pay the lease, or pay to have them moved to their new home – costs about $5,000+. Who knows what damage would be done to the roof after such a move.

    So, Jenn, have you heard about this tax that is being suggested for solar leases?….Or will the current contract (without that extra tax) be grandfathered in?
    Have a safe, happy and profitable summer,
    Glenda

  2. Vicki, mortgage under says:

    We have 3 right now that are at a stand still because there is a lien, property sellers purchased them on payments and the company they bought it from put a lien on the house. They won’t come get the solar – loan isn’t assumable so seller has no choice but to pay it off but there’s no equity. Had one that was a lease, can’t remember what payment was but put buyer in a mode he couldn’t qualify loan finally canceled and buyer went and got a different house.

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