Home solar power systems have become increasingly popular in the past several years, but selling a home with one can add complications. Homes must be properly marketed to extract the maximum value from these systems upon resale.

  • Make sure you have answers ready for buyers about solar panels on any listing. Know what the buying or leasing procedure will be and the savings.
  • Calculate how many watts the solar system puts out times 4 -- and you have the solar panels' value.
  • The Energy Efficient Mortgage program may be more beneficial to homebuyers than a HERO loan.
rSnapshotPhotos / Shutterstock.com

rSnapshotPhotos / Shutterstock.com

Home solar power systems have become increasingly popular in the past several years, but selling a home with one can add complications. Homes must be properly marketed to extract the maximum value from these systems upon resale.

The use of solar power on California homes has skyrocketed over the past few years. Having a solar power system on the roof is a good thing, on many levels.

However, the systems typically cost well over $10,000 to install and often can cost several multiples of that. But how can you show that value to buyers, and persuade them to pay for it? And, what if the solar panels are leased versus owned, how can that affect the marketing and sale of a home? This article explores the ins and outs of selling a home with a solar power system.

1. Prepare a disclosure package about the system

Buyers are going to have a lot of questions about the solar panel system. Make sure you have the answers ready for them. Be prepared to show when it was installed, by whom and what the warranty and service plan look like.

If the system is leased, know the procedures for getting the lease assigned to a new owner. Also, you’ll need to disclose to the buyer — and have it written into the contract — that the deal is contingent upon the buyer getting approved to assume the solar lease.

Get the paperwork ready, and know all the steps that are involved in getting the lease moved over to a new buyer. It can take some time to transfer a lease, so if you are not prepared, you might find the home sale takes longer to close than anticipated.

2. Document the dollar savings

Show buyers how much benefit the solar panels add to the home so they see the value in paying more. Gather the energy bills from a year before the panels were installed and the most recent year’s electric bills to really show the power savings.

Make sure that your buyer understands that the savings should increase over time. The utility provider will be increasing the cost of energy from the grid, whereas the energy cost from a solar panel system will remain relatively fixed.

Go ahead and make a projection into time to help them visualize the savings down the road.

3. Calculate the system’s added value

Let’s say the owner paid $25,000 to put a solar system on the roof — does that make the home worth $25,000 more than the neighbor’s identical tract home that lacks a solar system?

The New York Times ran a piece last year about a study by the Lawrence Berkeley National Laboratory appraising solar panels. The study found that for solar panels that are owned (not leased), buyers paid about $4 per watt.

So calculate how many watts the solar system puts out, multiply that by four — and voila, that’s what the solar panels are worth — according to this one study anyway. Of course, the value varies from market to market; expect the dollar-per-watt to be lower in areas of cheap electricity and higher where electricity is more expensive.

Many homeowners, though, don’t actually own the solar panels on the roof — quite a lot of them are leased. Does a leased solar system add any value to a home? This is more difficult to calculate, and to figure it out, you’ll have to know how much the monthly savings are.

Say the electric bill went from $200 a month before the system to $50 a month after the system, but the lease costs $100 a month. That means you are saving $50 a month versus not having the system.

How much value any one appraiser would add for that — if any — is open for debate. A good, defensible number would be five years of energy savings, so $50 a month times 60 months equals $3,000 in added value.

4. A HERO loan won’t save the day

Thousands of homeowners in California have turned to the Home Energy Renovation Opportunity (HERO) Program as a way to pay for their solar systems. The HERO Program is a wonderful way for homeowners to get money to do all kinds of energy-efficiency improvements in the home. But there’s just one problem.

The HERO loan is attached to the property, and you pay it back on your property taxes.

As of today, due to most loan guidelines, it will be difficult or impossible for a buyer to get a loan on a home with a HERO loan attached to it (see Fannie Mae’s press release).

To sell the home, the HERO loan will need to be paid off before or at closing — so remember that when you’re calculating the sale.

5. Educate buyers about the Energy Efficient Mortgage

If the home has a solar power panel system, the homeowners will want to charge buyers a bit more for it. That can be a problem though, as the higher the price for the home, the smaller the pool of buyers will inevitably be.

You can help sell the home by highlighting the Energy Efficient Mortgage, which allows buyers to qualify for slightly higher mortgages because their cost of ownership will be somewhat lower due to the energy savings offered by qualifying homes.

The Energy Efficient Mortgage is a Federal Housing Authority (FHA) loan program, and you can learn more about it here.

6. Have the owners take the solar panels with them

If the owners own the panels outright, but are having a tough negotiation with a buyer who claims the panels have no value, suggest that the homeowners take the panels with them when they leave.

The truth is: most buyers will see some value in the panels and could be persuaded into paying more for the home.

7. Offer to buy out the lease for the buyer

Many buyers will feel skittish about having to apply for credit with, and ultimately make payments to, a financing company that they have no experience with.

If you find that buyers are balking about taking over the lease, suggest that with a higher offer price, the solar lease could be bought out, and they would not need to make any lease payments. The solar system would still be serviced by the leasing company for years to come. It could work out to be a win-win-win situation for all concerned.

Owning a home with solar panels provides great benefit for the environment in terms of lower power usage and wonderful benefits for the homeowner with reduced electric costs.

Properly marketed, a solar power system on a home can also differentiate your listing from the competition and help you sell the home quicker and for a higher price.

Sebastian “Seb” Frey is the broker and owner of Realty World Virtuoso. Follow him on Twitter or Facebook.

Email Seb Frey.

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