TO GO SOLAR OR NOT TO GO, THAT IS THE QUESTION…

I get asked about solar panels a lot with regards to resale value. Solar energy certainly has its environmental benefits that are hugely impactful and my position has always been in support of sustaining and preserving our earth. That said, solar panel leases tend to hinder and complicate a real estate sale due to the terms and conditions, and lender requirements. Unless these panels are bought outright, it will sometimes turn people away from a purchase. Sometimes homeowners don’t like the way they look, aren’t interested in dealing with the material once the lease is paid off, or don’t want to be burdened by an additional lease payment.

In my opinion, these leases really didn’t make much financial sense up until recently as the costs were often on par with the cost of your actual energy bill. On top of that you have roof preparations, potential maintenance issues and the long terms of the leases. From a buyer perspective, the fact that buyers are required to be pre-approved to assume said lease as well as incorporate the lease into their debt to income ratio (as compared to regular utility bills which are not considered with DTI calculations) just complicates the loan approval process.

Currently, I am finally seeing a change in the way the solar panels are sold today that is starting to make better sense. While I am not sure we are actually at a place where these panel sales actually enhance the value of a home, progress is progress. Some contractors are approved for the HERO program (Home Energy Renovation Opportunity), where the cost for the lease is incorporated into your tax bill as an assessment. While this is a great solution for homeowners who plan to remain in their homes for the duration of the lease/assessment payoff, this assessment is recorded against your tax bill and most lenders won’t lend on a property with this additional tax. You are thereby required to pay it in full prior to funding a loan as there is too much risk involved of non-payment for the lender.

There is a new program which I just learned of from a client that is offering a low fixed energy rate for a 20-year term and no additional cost to the homeowner, with zero down and actually a cost benefit. That said, the future buyer of your home will still be faced with the approval process for taking over the lease payments. The best advice I can give you is to recognize the environmental benefits of generating your own power, but do not count on solar panels to enhance the value of your home when you go to sell it…yet. If you have any comments, call me I would love to discuss it with you!