I’m currently helping a family sell their late father’s home, which has a 24-year solar lease. The gentleman was 90 when the solar company sold him a 25-year lease, which in my opinion, should be illegal and is certainly unethical. He passed away just a few months later. Selling a home with a solar lease can be complicated, and situations like this make it even more challenging. That’s why I wanted to share some key information about solar and solar leases.
WHY SOLAR CAN BE A GOOD THING BETTER FOR THE ENVIRONMENT
Arizona has more sunny days than almost anywhere, making us prime candidates for solar. It’s renewable, clean energy that doesn’t burn fossil fuels or emit greenhouse gases.
SAVES ON UTILITY BILLS
Energy costs keep going up, especially here in Arizona with our growing population and businesses moving in. The cost of your solar system stays the same, so as utility rates rise, your monthly savings grow.
THINGS YOU NEED TO BE AWARE OF MISLEADING INFORMATION
The first thing to remember is that the person who comes to your home is a salesperson working for the solar company. Don’t just take their word. Do your own research and meet with at least two or three companies before signing anything.
DOES SOLAR INCREASE YOUR HOME’S VALUE?
Most solar companies will tell you it increases your home’s value and refers to surveys claiming at least 4%. I asked several appraisers how they value solar and if they agreed with that claim. Every one of them said the same thing – NO.
If the system is leased or financed, it adds no value at all. Only fully owned solar is considered, and while that can add a few thousand dollars, it’s nowhere near 4%. So don’t let “added home value” be a deciding factor. You may get a higher price, but it will be a fraction of what you paid for the system.
SYSTEM SIZE AND YOUR USAGE
I decided to meet with a couple of solar companies and after meeting with the first company, I was ready to sign. Then I met with the second company and realized how different proposals could be, not just in price, but in the type of system and the projected savings. One proposal only covered 40% of my usage while the other covered 80%. Usage estimates even varied by 8%, which made a big difference in both system size and savings.
Always get written proposals from at least two companies so you can compare numbers side by side to decide which is the best system, price, and savings for you.
GET A ROOF INSPECTION
One of the first things to check before installing solar is your roof. While solar companies inspect your roof, their goal is to sell you a system, not point out problems. It’s always best to get an independent roof inspection, and most roofing companies will do it for free. The last thing you want is to discover roof issues after installation and end up paying to remove and reinstall the panels for roof repairs.
OWNED, FINANCED, OR LEASED OWNED
Paying upfront is the best option. You’ll save the most money over time, own the system outright, and enjoy a boost in your home’s value. This also makes selling your home much easier.
FINANCED
Any remaining balance must be paid off at closing so the solar company can remove the lien on your home. Appraisers don’t typically add value for financed solar, but your agent can show that it will be paid at closing, and sometimes an adjustment can be made.
LEASED
The toughest option when selling. Many buyers don’t want to take on a lease, especially if there are a lot of years left. If they do, they must qualify with the solar company to assume the lease, which increases their debt-to-income ratio and can even prevent them qualifying for the loan.
If the leasing company goes out of business: You could still be responsible for lease payments if a third party owns the contract, but you lose the service, warranty, and maintenance support, leaving you with the extra costs of maintaining the system.
To summarize – Solar can be a good investment to save on utility bills long term, just be sure you do your research to choose the right system and the right company.
If you’d like more information about buying or selling a home with solar, please don’t hesitate to contact me.