With solar energy becoming more popular and pitches for panels everywhere you look, you may be wondering whether you should install solar panels if you’re selling your home.
Will the panels make your home more appealing to buyers and will they add value?
The answer is that solar panels aren’t necessarily a selling point, and depending on whether you lease or purchase the panels, they may actually be a sticking point when it comes to selling your house. In fact, if you enter a solar lease with the wrong terms, the panels could end up costing you money rather than saving you money.
It seems you can scarcely turn around anymore without a pitch for solar panels. You might wonder how installing something that could decrease your energy costs could possibly be a negative? Wouldn’t every buyer love to have lower electric costs?
But it’s not that simple.
Solar panels can be purchased or leased. And if you’re selling a home with leased panels, your buyers might need to qualify on credit to take over your solar lease payments for the next 15 to 17 years. Some of them may not want to take on the financial obligation of the remainder of the lease — which could be a total of $15,000 to $20,000 or more — because of concerns that the equipment could be obsolete or fail to produce the promised energy savings. If you end up having to pay for the rest of the lease, your expected savings could become a big loss.
You should always consider very any financial obligation related to a home improvement that has a longer term than your planned home-ownership. For example, we recently sold a home that had a alarm system that was state-of-the-art when the homeowners installed it several years ago. They had negotiated what was a competitive monthly agreement at that time and assumed that the buyers would want to keep it and take over the payments when they sold the home. However, the buyers were able to find what they thought was a superior alarm system with no installation cost and a lower monthly payment and didn’t want to take on contract for the older alarm system, leaving the sellers to pay off the balance.
Solar equipment can be far more costly than alarm systems so it’s something to consider very carefully. A recent LA Times story reported that a Fresno couple paid $22,000 to get out of a solar lease before they could sell the house after having two buyers back out of contracts because of the lease terms and cost.
Residential solar installations have been increasing dramatically in the past few years.
The number of homes and businesses utilizing solar energy has increased by 50% since 2012, according to the Solar Energy Industries Association. Currently more than 600,000 homes and businesses now have on-site solar, according to the association.
Being environmentally responsible and saving money is a terrific goal and solar panels may be a plus for buyers seeking green homes. But here’s the bottom line if you’re wondering whether you should install solar panels if you’re selling your home: If you’re planning to move in the next few years, weigh costs and benefits very carefully before entering any solar agreement, particularly a lease.
Before you opt for a lease on solar panels or other equipment, understand exactly what you’re saving and what you’re committing to whether you stay in the home or decide to sell. And if you already have a leased solar system and you’re thinking of selling your home, contact the solar company well in advance to learn exactly about the cost and process for transferring or buying out your lease. After all, surprises in real estate are never a good thing.