The Dirt on Solar Panels

House with solar panels

House with solar panels in the Central Oak Park neighborhood of St. Petersburg, FL

 

I just sold a house with solar panels. There are some misconceptions about them, and some inaccuracies generated by solar salespeople. I did extensive research prior to listing this house. The main points to know are:

1). When a home w/ solar panels is sold, they don’t add much value to the house.

Some appraisers say there are so few comparable sales with solar it makes it hard for them to determine value. Keep in mind that most home improvements don’t realize a full return on investment (ROI). For example, the average kitchen remodel provides a homeowner with a 69% ROI. One local Tampa Realtor said, “I’ve had appraisals twice on homes with solar panels, once the appraiser only gave $5,000 and the other time they gave us nothing.”

2) When a home w/ solar panels is sold, the seller has to pay them off in full at or before closing. Statements from salespeople such as, “You can transfer the payments to the new buyer,” or “You can move the panels to your new home” are just bogus.

Transferring payments – Think about it, how many people buying a home want to take on a new mortgage AND solar panel payments? And to complicate matters more, if they qualify to purchase a home at a certain price, that number changes if they are adding the additional payment. One local Realtor said, “Buyer taking over payments will affect their DTI (debt to income ratio). Its never wise to expect a buyer to take over someone else’s debt. If a homeowner updates a kitchen with a loan, they aren’t going to sell the house and ask the buyer to finish making the payments.”

Moving the panels to a new home – If you have already purchased a new home and you move the panels to that house BEFORE selling, that is feasible. What exactly the charge will be to move them is unknown. But think about it this way – if you were buying a home that had panels on it that were not conveying with the sale – at minimum you would want them removed BEFORE doing a home inspection. What if the removal of the panels damages the roof? What if the panels aren’t removed prior to the scheduled closing and closing is delayed? And if you are closing on your new home the same day as the sale of the solar panel one, then you essentially have to have all of those things happen IN THE SAME DAY. This scenario makes Michelle want a glass of wine just thinking about it. If you have to sell a home with solar panels in order to buy a new one, that is tricky to say the least.

3) Don’t put solar panels on an aging roof – When you put on the new roof, you have the extra cost of removing and reinstalling the panels.

4) Don’t count on saving money on low electric bills – My clients were paying $135 / month for the solar panels on their 950 SF home. They still had electric bills ranging from $60-$80. Those 2 bills combined were more than they paid BEFORE having solar.

The bottom line is that my sellers paid $26,000 for solar panels thinking they would increase their home value and save them money. However, a few years later with an expanding family they decided to sell. $20,000 had to be taken from their closing funds to pay off the solar panels to clear the lien on the title. They consider getting them a mistake. Here are some other quotes from Realtors on a local Realtor Facebook page:

“Huge load of garbage! A good way for a seller to throw away all the equity they have gained in our great market. I’ve had to sell a few homes with solar and all of them saw extremely minimal increases in value.”

“National average has homes with solar selling for 3.75% higher.”

“Sold a home in Temple Terrace with solar panels and the appraiser said he couldn’t use them in the value unless there was another comp in the area with them.”

“I have a listing with panels. 10+ buyers noted they would only buy it if seller paid off panels.”

“My seller said solar was the worst financial investment they ever made in their life.”

Posted on October 5, 2020 at 10:49 pm
Michelle L. Anderson | Category: Real Estate Market, Selling Your Home | Tagged , , , , ,

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