Years ago, home solar panels were relatively uncommon, but today, countless financing and installation options have brought solar to the masses. In most cases, solar panels add significant value to the home, but when financed, they can also complicate the sale. When selling a home with a solar installation, there are a few things every agent should know.
According to the National Association of Realtors (NAR), recent reports show that homes with solar panels installed sell for higher prices than comparable homes without solar. The additional premium is as high as 15 percent more. Sellers win on two sides. Their homes sell for more and they’ve lowered their energy costs over time. Add in federal (and sometimes state) tax credits, and solar installations make a lot more sense for many homeowners.
Over the past decade, prices for solar panels and installation have decreased approximately 70 percent, making solar power accessible for more homeowners. Currently 1.2 million homeowners have installed solar in their homes. This is great for energy-conscious buyers, money saving sellers, and local energy companies.
But while solar may be great for business, it can also be a challenge.
If you’re new to working with solar-powered homes, you might not realize all the different ways an owner can have solar installed. Both private companies and public assistance programs are available, and they each have their own rules. Here’s what you need to know about both options.
If your seller leased or financed their solar panels and installation through a private company, your job is fairly simple. You’ll need to make sure the lease contract is in order and that the panels and on-going payment, transfer to the buyer. This isn’t too big of an issue if the seller has a current contract.
When you contact the solar company, ask if the buyer needs to do anything specific and make sure everything is in order by the closing date. This will help everything move along smoothly and prevent nasty surprises right before closing.
There are multiple types of public assistance options to help homeowners go solar, but the most common one is PACE or Property Assessed Clean Energy. This program allows owners to finance and purchase solar panels and the installation. They’re able to pay back the money over time, typically through their property tax bill. It sounds simple enough, but it’s important to know that the money owed is placed as a super-priority lien on the home. If the borrower defaults, this lien gets paid back first, just like a tax lien.
The challenge for agents and buyers is that some lenders will not fund a mortgage if there’s a lien of any sort against the property, even a PACE lien. As more solar homes come on the market in your area, you’ll want to find out which lenders in your area will write a mortgage with a PACE-funded solar installation. Knowing this ahead of time will help you provide better service to your buyer and added value. It will also prevent any headaches and worries after an offer is accepted.
As more owners add solar panels to their homes and more organizations and companies find ways to help owners, it’s important to know how this impacts your local market. Work with local lenders, tax offices, and professional organizations to make sure you know how solar installations will affect sellers and buyers in the future.
Former Communications Director for a local Realtor Association and a big cheerleader for all things real estate related, Michaela is now a full-time freelance writer specializing in real estate and other business industries. When she's not writing the serious business-y stuff, she's likely to be found writing about the hilarity of being a Mom to two rowdy boys.