Solar technology is a fantastic and fast moving industry, and the national desire to switch from traditional energy methods to renewable energy like solar is commendable. Solar energy is among the most hyped subjects for home improvement, with the promise of a completely sustainable and off-the-grid electrical service that will save homeowners money and the environment. That’s a big claim, but is it grounded in reality and will it actually be of benefit to someone wanting to update and sell their home?
Like with most things in real estate, the answer is a little bit of yes and no.
Yes: Solar Panels Attract Buyers & Are A Good Investment
Everyone likes it when a home features things that make everyday life easier and more economical. Much like smart technology, solar panels attract the younger crowd and more economical buyers who appreciate that a) they are contributing to sustainable life practices and spending, and b) this isn’t an improvement that they’re going to have to worry about putting in later. One less project, one less budget, one less thing to have to think about doing later on. The actual property value can also increase with the inclusion of solar panels, and varies depending on the the home, the area, and the size of the system. You’ll want to check with a housing expert in your area what it can mean for a listing price, as some communities might see more of a demand.
Solar energy has abundant benefits, from water heaters that take a fraction of the time to warm water, money saved, and a more efficient use of resources that a house has to offer like the rooftop space. People feel good about their energy decisions, and everyone goes home happy in theory. The thing is that the solar panels are chiefly a good investment for someone wanting to stay in the house, and have historically been difficult for new people coming into ownership of the home.
No: Solar Panel Liens Can Limit Funding Opportunities For Buyers
The warm fuzzy feeling of saving the planet is a bit dampened by the financial realities of solar technology, even with the added home value. Solar panels and electrical systems are neither cheap nor easy to install. Many well-meaning homeowners get liens on their house when financing and installing solar that can be upwards of $25,000 to $35,000. While the theory is that this will pay for itself and will be a major draw for buyers, the fact of the matter is that many lenders won’t fund a buyer when these liens are in place. This can be an unfortunate surprise when you’ve already got your heart set on a home and have started the motions to buy it.
What’s more is that when this is purchased, it becomes the responsibility of the new homeowner to continue the payments if there’s still a substantial amount left behind. It’s like running into an HOA fee they never anticipated. Buyers who purchase a home with a beautiful kitchen don’t expect to pay the contractor who remodeled it, and if you’re trying to sell them on the cost-savings of solar panels, they won’t be as convinced if they come with an additional monthly payment.
A saving grace for this energy movement is that the government is onboard to help. A currently available federal tax credit pays for up to 30% of the installation of solar units, taking a huge burden off of the financing of the switch, and FHA and VA loans are now accepting homes with liens from the solar installation that have been approved by PACE. This should curb some of the challenges that are presented by having the installation done on homes that will be resold before the work is paid off.
Getting Better Everyday
As acceptance of solar technology and the benefits that it holds for the nation improves, solar is going to increasingly be a commodity that houses should adopt. In regions with frequent sunlight like California, Arizona, and other areas of the southwest and mid-west, it doesn’t make sense not to pursue solar. The utility of what can be powered by the sun and what can’t is expanded regularly. What needs to catch up is not our perception of solar as a good thing. (Most of us agree that it’s useful and smart in the long run.) What needs to catch up is how we finance and view the financing of solar on properties, and create a more accessible way for homeowners to transfer that to buyers.
If you’re considering adding solar to your home and may plan a move in the future, check out your local government resources to see if there’s any tax benefits or initiatives to make solar installation a positive experience for you and a future buyer. If you feel strongly about it and the ecological merits to it, don’t let the loan and its potential setbacks stop you; there’s a good chance acceptance of these kinds of additions will only increase over time. Even today there are options for financing where there weren’t a year before.