In today’s modern world, we are all working to be environmentally conscious, which includes finding new resources for energy while creating savings for our pocketbooks. Solar energy is an excellent way to heat your home and reduce your carbon footprint.
Solar panels are a popular amenity in many homes today; however, there are factors to consider if you are selling a home with solar panels. If you have solar panels, there are pros and cons when it comes time to putting your home on the market. In the end, it is essential to ask yourself if solar panels add value to your possible resale dollar.
First, let’s go over the most significant benefits of installing solar panels in your home.
Solar Panels can provide a considerable amount of electricity throughout your home. The amount varies depending on the style of panels installed, and the amount of sunlight your home sees throughout the day. If the panels are sufficient for the size of a home, they will reduce the usage of electricity by a sizeable amount.
Solar panels, if appropriately installed to fit your home, will save you a lot of money on your monthly energy bills. If your panel system can cover the energy supply of at least half of your home, then your energy costs will be cut in half. While you are saving on your monthly budget, the solar panel system will have been an excellent investment paying for itself over time.
So, solar panels have cost-saving benefits; however, do they add value to a home? The answer is not cut and dry. Though it would seem clear solar panels are a hot commodity, there are factors about the solar panel system that come into play when selling your home.
It is right in some markets, solar panels can add to the market value of a house, but in other markets, this may not be the case. As the “green living” trend catches on, homes with solar panels will have an advantage in the future.
What you Should Consider When Selling Your Home with Solar Panels
Before you put your home on the market, research is necessary to ensure you price your home right and consider how your solar panels may come into play. For example, some mortgage lenders, backed by Fannie Mae, may not allow the inclusion of solar panels that are on a lease in a properties market value. Therefore, there could be issues with an appraised value enabling the purchaser to obtain a mortgage for your home.
Leased Solar Panels
Some homeowners decide to lease a solar panel system to alleviate them from the upfront costs. Over time, they are saving on energy costs in which they will reap benefits from. When a lease is paid off, there are no issues; however, if a homeowner is still paying on the contract when selling a home, this can be tricky.
A seller will need to decide if they should pay off the balance of the lease prior or negotiate terms in the sales contract in which the purchaser will assume the lease and take over the payments. There are benefits to both sides of this scenario. However, there are a few things to keep in mind prior to making your final decision.
- The seller should contact the leasing company and/or lender to ensure the lease can be transferred and how to handle the transfer correctly before the closing of escrow on the home.
- A buyer’s lender may hesitate closing the loan with a lease transfer attached.
- The final negotiated sales price may need to be adjusted because of the added cost to the buyer over time.
- In some cases, a lender will not allow lease transfers, so it is always best to find out prior to any negotiations.
Is There a Warranty?
Often companies who install solar panels will provide a warranty on the entire system for a certain number of years. If the home’s system is still under warranty, it is a good idea to read the fine print to find out if a second homeowner will be covered.
How About Removal?
Depending on the purchaser who is attracted to your home for sale, you may find yourself in a situation where contract terms include removing the solar panels. It is best to be prepared before that occurrence and contact the company who installed your panels so you can be ready for possible removal if you so agree.
Market Value in the Scheme of Things
Considering the above factors is essential when selling a home with solar panels. Whether you own the solar panels outright or you are in a lease, these two elements factor into the sales price you wish to get for your home. You might be able to raise your current asking price, or you may have to lower it depending on the market in which the house is located.
Although the practice of solar panels is on-trend, some markets are not ready for this kind of change and added expense. Large, eco-friendly cities such as Portland, OR or San Francisco, CA welcome homes with solar panels and buyers see them as an added value. Many communities within rural markets are not yet accepting solar panel technology because of the upfront costs; therefore, if your home is in this type of market, you may not get a good return on investment.
However, it is essential to remember that many communities are gathering their resources and investing in solar power, and the addition of solar panels is on the rise. Tourist regions in which homeowners are flocking to for vacation lifestyles are attracting young, urban crowds which seek out new ways to leave less impact on their environment. For example, Park City, Utah, attracts young families to its picturesque mountain region, creating an opportunity for trends to take shape. Buyers in this realm are more likely to be attracted to solar panels and not blink an eye putting an offer in on your home.
In the end, there is still mixed data and mixed feelings as to whether solar panels add value to your home for resale. It is best to evaluate your current needs and weigh out the pros and cons when selling your home. If you need to get the maximum return on your investment, you may want to hold off on installing solar panels unless your housing market and demand support your decision. However, if you must save on energy costs and reduce your footprint on the environment, then installing solar panels may be the right decision for you.
If you want help determining what is best for you and your home in Park City, please don’t hesitate to reach out to us. We are always happy to answer your questions.