The appeal of solar panels, with the promise of lower electricity bills and a smaller carbon footprint, is obvious. If you’re considering buying a home with a solar installation, however, be aware of factors such as who owns the system; the age and condition of the panels; and local utility and regulatory policies that might influence solar performance and savings in the area.

Who owns the solar system? Homeowners have three options when adding solar: They can purchase a system outright or with financing; lease solar panels from a third-party company; or sign a power purchase agreement (PPA) through which they buy electricity generated by a third-party company that owns the solar panels installed on their home. Real estate contracts vary by state, but many include language that specifies whether panels are owned or leased.

Mortgage underwriting guidelines require the panels to be owned before an appraiser can consider whether they add “contributory value” to the property. If the owners took a loan to finance the system, that loan must be paid off before the home sale closes. If the solar panels are leased or tied to a PPA, you’ll be assuming a contract with a third-party solar company. That means monthly payments, usage terms and restrictions on modifications. Read any lease agreement carefully before committing. The lease agreement may require a UCC (Uniform Commercial Code) lien on the property, and the lease payments will be considered by your lender in determining your creditworthiness. In some states, solar companies offer PACE (property assessed clean energy) loans. These are paid back through an increase in the property taxes you pay, and the Consumer Financial Protection Bureau warns that if you don’t make the payments, you could lose your home.

How much can you expect to save on energy costs? That depends on a range of factors—from the age of the system to how much sunlight the roof gets. Energy Sage offers a solar calculator, but ask for documentation on the existing system as well as past electricity bills and solar production records. That will enable you to compare the cost of energy with that of homes that don’t have solar.

Also be aware of:

  • The system’s age. Upgrading an aging system is costly. The lifespan of a solar system depends on the photovolatic (PV) technology used. A typical system today is expected to last 25–30 years, though a system could produce meaningful power past its useful life.
  • How the local utility handles excess solar energy. Net metering policies, which allow you to sell surplus power back to the grid, vary by state and utility provider.
  • Whether the system was properly permitted and inspected. Unpermitted systems can create headaches for buyers and sellers.
  • What warranties transfer with the property. Read Energy Sage’s explanation of what to look for in a solar warranty.
  • Whether there’s a homeowners association. Confirm that there are no HOA restrictions on solar panels or future modifications to the system. (Many states have outlawed such restrictions.)
  • The condition of the roof? Because solar panels are roof mounted, an inspection that confirms the roof’s age and condition is essential. If the roof needs replacement in the next few years, you’ll have to pay to remove the panels, reroof and reinstall them.

Should you expect to pay a premium for a home with solar? While solar can add to the desirability of the home, a home’s price depends on what buyers are willing to pay in a competitive situation. The factors above will influence whether homes with solar can command a higher price.

Note: Talk with your insurance agent to determine how solar panel placement could affect coverage, and work with a real estate professional who is knowledgeable about solar. Those who hold the National Association of REALTORS® Green designation have received training on a range of sustainability topics.

Your real estate agent will help you navigate the purchase or sale of your home; for legal advice, consult an attorney licensed in your state. Not all real estate professionals are REALTORS®. Only those who are members of the National Association of REALTORS® may use the term REALTOR®, and they are obligated under NAR’s Code of Ethics to work in your best interest. Please visit facts.realtor for more information and resources.

REALTORS® are members of the National Association of REALTORS®

Consumer Guide: Navigating Mortgage Interest Rate Shifts

When you’re in the market for a home, fluctuations in mortgage interest rates can be unsettling. After all, the interest rate on your mortgage affects the price range you can comfortably afford. Approaching the issue with knowledge—including an understanding of how rate changes impact your monthly payment—can help keep your home purchase on track.

What affects the interest rate that lenders charge you?

Individual lenders set interest rates based on economic conditions, their risk tolerance and other factors, including the yield on 10-year Treasury bonds and the price of mortgage-backed securities. Your credit score, debt-to-income ratio and down payment amount also impact your rate.

What’s the difference between fixed-rate and adjustable-rate mortgages?

Fixed-rate mortgages keep the same rate during the life of the loan. Adjustable-rate mortgages (ARMs) may offer lower initial payments (usually for five or seven years), but your rate could rise later based on market conditions. With an ARM you get early money savings for a share of the interest-rate risk down the road.

What’s included in your monthly mortgage payment?

Typically, your monthly payment includes a portion of the principal loan amount, interest, property taxes and homeowners insurance. If your down payment is less than 20% of the purchase price, it can also include private mortgage insurance. Most experts say your monthly housing costs should be about 25% of your net monthly income, but lenders may approve a higher percentage if you have good credit, a large down payment or high cash reserves.

How do higher interest rates affect your monthly mortgage payment?

With a 20% down payment on a $400,000 home, the monthly payment for a 6% interest rate on a 30-year fixed mortgage would be $1,919. The payment would be $2,023 at 6.5% interest and $2,129 at 7% interest. So, a 1% increase in the mortgage interest rate would raise the monthly payment by $210. Use an online mortgage calculator to see how changes in rates and down payments impact your monthly payment.

What can you do to get the lowest rate?

  • Shop around. Talk to a mortgage broker or check with different lenders. Multiple studies have shown that shopping could save you 0.1% to 0.5% off your mortgage rate.
  • Improve your credit score. Paying off debt, making on-time payments and disputing inaccurate information on your credit reports can help you to repair or raise your score.
  • Lock in a rate. When you find the best rate, enter an agreement with the lender to lock it in for a set period, typically 30 to 60 days, to protect yourself against rate increases before closing. If interest rates fall, lenders will typically let you “float down” once to the lower rate before closing.
  • Consider a refinance. It’s difficult to predict the direction of rates, but if you expect them to fall after you close on your home, refinancing later at a lower rate is an option. There is no time constraint on how soon you can refinance with most conventional loans, but cash-out refinances require you to wait six months; government-backed loans (such as FHA and VA) require you to wait 210 days; and USDA loans require you to wait a year after you close on the sale.
  • Buy discount points. Points are a fee paid at closing to reduce the interest rate on your loan. Although costs can vary, one point typically costs 1% of the loan amount (so, on a $400,000 loan,you’d pay $4,000). Some lenders allow you to buy fractional or multiple points.

Mortgage products vary widely, and rates can change daily. Work with trusted professionals who can help you compare options and choose what best fits your needs.

Your real estate agent will help you navigate the purchase or sale of your home; for legal advice, consult an attorney licensed in your state. Not all real estate professionals are REALTORS®. Only those who are members of the National Association of REALTORS® may use the term REALTOR®, and they are obligated under NAR’s Code of Ethics to work in your best interest. Please visit facts.realtor for more information and resources.

REALTORS® are members of the National Association of REALTORS®

Realtor.com says April 16-22 is best time to sell in 2023

The Best Time to Sell April 16-22 It's almost the peak week to sell your home this year!

March 16, 2023

If you’re thinking about selling your home, now is the time to prepare. That’s because a new report from Realtor.com says the best time to list a home is the week of April 16-22.

Even though April 16 is still weeks away, many sellers need time to prepare, repair and declutter before putting their house up for sale. A survey from Realtor.com and HarrisX found that 60% of home sellers took up to three months to get their home ready to list. That means the week of April 16 is approaching quickly.

Listing during this crucial week can make all the difference for those who are looking to sell quickly and for the best price.

Based on an analysis of national data, Realtor.com says April 16-22 is likely to offer the best combination of higher prices, fewer homes to compete against, faster sales time and strong buyer demand. In fact, Realtor.com says a seller who lists during the week could bring in $48,000 more than if they’d put their home on the market at the start of the year.

“Many home shoppers kick off their search in the early spring and they often beat the majority of home sellers to the punch,” said Realtor.com Chief Economist Danielle Hale in a press release about the report. “For this reason, sellers who list on the earlier side will get more buyer attention and therefore be more likely to sell quickly and for a higher price.”

Realtor.com made the selection by looking at data and seasonal trends from 2018-2019 and 2021-2022. Because of the unique year at the onset of the pandemic, researchers excluded 2020 numbers.

Analysts looked at active and new listings, listing prices, how long properties were on the market, likelihood of price reductions and number of property views. Each week then received a Best Time to List score with the week of April 16 receiving the highest score for a “balanced selection of market conditions that favor sellers.”

Here are the benefits of listing the week of April 16:

  • Higher prices: The report said homes listed during this week historically had prices that are 2.1% higher than the average week throughout the year and 12.1% higher than the beginning of the year. That could equate to $8,400 above the average week for the national median listing price. The report did note that while prices tend to peak later in the season, there are significant benefits that come this week because of less competition from other sellers.
  • Strong buyer demand: Generally, the more buyers who look at a home, the better. Historically, listings this week get 16.4% more views per listing compared to the typical week.
  • Fast-selling homes: Historically, homes for sale during this week have sold 18% faster than the average week.
  • Less competition from other sellers: During this week, there are typically 9.3% fewer sellers on the market compared to the average week. Fewer sellers could increase the chance of a successful close and favorable negotiations.

It takes most sellers between two weeks and six months to prepare their home for sale, according to the Realtor.com survey. As you think about selling your house, keep in mind that most sellers said it took longer than expected to get their property market-ready.

In preparation, sellers said they made repairs/updates to the home, cleaned/decluttered and searched for an agent. The most common repairs sellers made were:

  • Minor cosmetic updates
  • Carpet/floor replacements or refinishing
  • Landscaping enhancements
  • Full painting of the exterior
  • Touch-up paint
  • Full painting of the interior
  • Appliance replacements

“In today’s market, it’s really important to price your home well and make sure that it looks its best in order to get top dollar and find a buyer quickly,” said Hannah Jones, Realtor.com economic research analyst, in a press release about the report. “There are still buyers in the market, but due to high prices and interest rates, they’re being a bit more picky than they were the past several years.”

To learn more about steps to prep a home for sale as well as the best times to sell in your neighborhood, contact a local Realtor. Your agent can provide you with information about buying/selling trends in your community as well as a customized sales and marketing plan.