Solar has become more popular over the past few years not only because we are becoming more aware of the impact of traditional energy on the environment, but because of the increase in utility bills. SRP increased their rates by 2.2 percent in May 2019 and 4.7 percent in November 2022.
Now more than ever homeowners are looking for environmentally clean and cost savings energy, and solar fits the bill. But before you sign up for solar I did want to share a couple of things I discovered when I sat down with two solar companies to get bids for solar on my own home.
MISLEADING INFORMATION
Does solar increase your home value? Every solar company will tell you solar will increase your home’s value and refers to Zillow or other companies’ surveys that claim it increases your home value by at least four percent. However, don’t let this be a deciding factor for you as this is very misleading. I spoke with several appraisers to find out how they appraise homes with solar and if the value increased by four percent as claimed. They all said the same thing — no.
First, an appraiser will give zero value to a system that is financed or leased. They will only consider solar if it is owned and paid in full at the time of the appraisal. They compare homes with and without solar to see if homes with solar sold for a higher price. They all agreed while there is value to owned solar it’s usually a few thousand but certainly not four percent.
So, if you are considering installing solar, don’t let an increase in your home value be a deciding factor. While a buyer may be willing to pay more for solar it may not appraise for that higher price.
SYSTEM SIZE AND YOUR USAGE
After meeting with the first company, I was quite happy with what he showed me and was ready to sign up. Then I met the second company and realized there was a big difference in what each company was offering not only in price but in the type of system.
I would not have known this if I hadn’t had two companies to compare. It’s like that saying, “you don’t know what you don’t know,” and that was so true when I looked into solar.
One company was only offering a solar system that would produce 40 percent of my energy needs while the other offered a system that produced 80 percent. One company had my usage at eight percent higher than the other company, which would make a big difference not only in the size of the system I would need but also in the savings projection.
So, make sure you get proposals from two or more companies in writing so you can analyze the numbers and compare them side-by-side to make sure you are not only getting the best deal, but the best system based on your usage and potential savings.
PROS FOR HAVING SOLAR
- Do Homes with Solar Panels Sell Faster? — Yes, studies have shown homes with solar sell 20 percent faster than homes without, however, that also depends on if the solar system is owned, financed, or leased.
- Better for the Environment — We live in the state with the most days of sunshine, so we are the prime customers for solar. Solar power is generated through photovoltaic technology, which is natural, renewable, and clean. It does not involve burning any fossil fuels or emission of greenhouse gasses.
- Saves on Utility Bills — Energy costs continue to go up, especially in the past couple of years, and are expected to continue to increase, especially in Arizona with the increase in population and businesses moving here. The cost of your solar will never increase and as the energy costs increase you will be saving more each month.
- Financial Incentives — There are credits that can be used to reduce the cost of solar. Currently, the credits are:
– Federal Tax Credit: 30 percent
– State Tax Credit: $1,000
– SRP Rebate: $250 - Owned Versus Loan or Leased — Of course, the best pricing is based on paying for the system upfront and this will give you some increase in your home value but most homeowners finance or lease their solar.
When you finance solar the balance you owe will need to be paid off at closing so the solar company cannot have a lien against the home. This then becomes the same as selling the home with owned solar. While the appraiser will not add value to your home because it is financed, your realtor can notify the appraiser it will be paid in full at closing and the appraiser may adjust the value accordingly.
With leased solar, you have two options. You can pay off the rest of the lease prior to selling your home or during the closing process — this will then be the same as owned solar. Or as most homeowners do, sell the home with the lease in place for the new buyer to take over the contract. This can be a bit more difficult as not all buyers want to take on a solar lease especially if there is still a long period left on the contract.
If you would like more information on buying or selling a home with solar or for the two companies I met with please do not hesitate to contact me.
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.