While it’s up to individual homeowners to decide whether rooftop solar is a good fit, it’s important to consider how the decision will affect the home-buying and selling process. While it seems like you’ll be in a home forever, the National Association of Realtors finds owners stay in a home for an average 10 years before selling. That means the investment decisions you make now will influence the home’s price and marketability when it’s time to make a move.
Here are some of the things to be aware of when considering jumping into solar or buying a home that already has a solar system.
Leased solar systems
When either buying a home with solar panels or getting solar panels of your own, it’s important to understand whether the system is owned or leased.
The typical solar lease is about 20 to 25 years, but it varies so make sure you know your own contract length and terms.
While a lease allows you to easily get into solar, often with no money down, it can affect the home sale. If you want to move before the contract is up, you’ll need to see whether the buyer will take over the lease, whether the panels can be transferred to another house or whether you can buy out the remaining portion of the lease.
Some buyers are willing to take over the lease, but it may concern others. The Lawrence Berkeley National Laboratory found 20 percent of study participants had buyers scared off because of the leasing agreement.
The solar panel company may also want the buyer to qualify for credit before assuming the lease. In some cases, the lease payment will increase the buyer’s debt-to-income ratio to the point where the buyer can’t qualify for a mortgage. In that case, a seller may be forced to lower the selling price or find another buyer.
For buyers, if you do decide to take on a lease, make sure you’ve read the contract and fully understand the terms and obligations before agreeing to assume the lease. You’ll also want to research the company, its solar panels and its reputation.
If the buyer is not willing to take on the lease, you may need to buy out the contract with the solar company or lower the price of the house.
With an owned system, homeowners can sell the solar panels as part of the real estate transaction. Keep in mind, however, if the seller has a loan on the panels, that could affect the sale if the house was used as collateral.
If buyers want to buy the solar system as part of the sale, it’s important to have an expert inspect both the roof and the solar system to make sure both are in proper working order. Buyers should also make sure their purchase contract clarifies that the solar system is included as part of the sale.
It’s also important to let the appraiser know about the home’s solar system so it isn’t unfairly compared to similar homes without a solar system. A 2015 study from Lawrence Berkeley National Laboratory found potential home buyers were willing to pay $15,000 more for a home that had owner-owned solar panels.
On the other hand, some sellers or buyers may want the solar panels removed before the sale. In that case, it’s important for buyers to inspect the roof before the purchase to make sure it wasn’t damaged during the panels’ removal.
Regardless of whether a buyer is leasing or purchasing a home’s solar panels, it’s important to thoroughly inspect them. It’s also essential to review the owner’s utility bills to make sure you’re getting the type of savings you expected.
Navigating a purchase or sale of a home with solar panels can be tricky. Make sure you’re using a Realtor who can help you negotiate and avoid pitfalls. Find a local Realtor at UtahRealtors.com.