Solar is an important investment you make in your home and offers long-term benefits like significantly lower electricity bills, reduced reliance on fossil fuels, and protection from rising energy prices.
But what if you decide to sell your home after installing solar panels on your roof or property? Will solar still be a good thing for your bottom line? And what if you are looking to purchase a home that already has a solar system installed?
The good news is that the benefits of solar kick in immediately, and solar panels can lend a significant boost to home resale value. So, if you are considering installing solar but may sell your home in the near future, solar is still likely to increase your bottom line. Similarly, if you are a home buyer, buying a house with solar panels allows you to tap into the benefits of solar as soon as you move in. The cost of solar panels has dropped 36 percent in the last five years.
There are also tax incentives to install solar
HOW DO SOLAR PANELS AFFECT HOME RESALE VALUE?
A number of studies have demonstrated the positive impact that solar panels have on home resale value. According to a recent Zillow report, homes with solar panels sell on average for 4.1 percent more than comparable homes without solar across the US. A study conducted by Berkeley Lab also found that homes with solar panels tend to sell faster than those without.
WHAT IF I FINANCED MY SOLAR SYSTEM WITH A SOLAR LOAN?
Purchasing a solar system with a solar loan allows you to own your system while paying the cost over time. With a solar loan, you still have access to the benefits that come with purchasing and owning a solar power system, like a federal tax credit.
Should you decide to sell your home during your solar loan term, you have a couple of options depending on the type of loan:
If you financed your solar system with a secured loan, such as a home equity loan, you will need to pay off the rest of the balance before you sell (since your property was used as collateral for the loan.)
If you financed your solar system with an unsecured loan (one that is not tied to your property), you can sell your home before paying off your loan — but you will still be responsible for paying off the loan.
Whichever route you take, keep in mind that your home will likely command a higher selling price because it has solar panels; so, you can likely pay off the loan with that additional revenue.
WHAT IF I’M SELLING A HOME WITH A LEASED SOLAR SYSTEM?
If you sell your home before the end of the lease term you have two options:
- Pay the rest of the lease. Buying out the remainder of your lease allows you to own your solar energy system before you sell your home. That way, you can sell the system as part of the home and command a higher selling price
- Transfer the lease to the new homeowner. This option allows you to transfer the lease agreement to the new homeowner’s name. While some homebuyers may not have a problem with this, it may be an issue for others. The buyer has to qualify for the mortgage, adding the extra monthly lease payment as debt and qualify with the solar lease company as well.
Having solar can greatly reduce your monthly utility bills and the payback can take anywhere from 10 to 25 years depending on the plan. If you sell before that time, you will get a higher price for your home if it is an owned solar system, meaning it is already paid for or you will pay it off at closing and there is no cost for the system to the buyer.
A leased system is not as favorable as an owned system and you may need to extend the closing time to allow for the lease transfer. A leased system may not have an increase in the sales price over other similar homes depending on how long is left on the lease. If you have any questions about selling your home with a solar system or are thinking of buying or selling a home, please feel free to reach out to me anytime.
Lorraine is a Multi-Million Dollar producing agent, has been a full-time Realtor for over 13 years, is an Associate Broker of KOR Properties, a Certified Negotiation Specialist, and is on the Professional Standards Board. You can reach Lorraine at (602) 571-6799