Rooftop solar panels are a rising trend that can raise the value of a home, cut down utility bills and cut down the green footprint on the earth; however, when it comes to buying or selling a home with rooftop solar panels this can bring up a lot of questions for all parties involved.
The quick movement of the solar industry is leaving many of those in the industry behind when it comes to understanding how the entire process works. With so many factors to consider navigating the “solar systems” in the real estate market might be just as much of a mystery as the Milky Way itself.
Here are some factors to consider before buying a home with existing solar panels:
Home appraisers don’t always factor solar panels into their assessment of the home’s value, especially if there aren’t other comparable homes in the area that have solar. “The awareness about the value of solar varies widely across the country,” says John Livermore, executive director of the nonprofit Healthy Home Healthy Planet. When the sellers price a home based on the value of solar features but the appraiser doesn’t, that can create a gap between what the buyer offers to pay and the amount the mortgage lender is willing to loan on the home.
Is the System Leased or Owned?
If the seller bought the panels upfront, you’ll own the panels outright once you purchase the home. This is the ideal situation because you won’t have to pay anything for the solar panels. Even if the panels were acquired with a solar loan, the seller will be responsible for paying off the loan.
If they’re leased, you’ll want to find out the details of the contract, including monthly fees and length of the contract. Solar leases are an ongoing liability (often with escalating payments), assuming a lease can raise your debt-to-income ratio and hinder your ability to qualify for a mortgage on the home. Leasing solar may also give you fewer certainties than owning them.
Who is the manufacturer?
Even if you haven’t chosen the solar manufacturer, you should still research its reputation. If the panels were produced by a US corporation, you’re covered by the Magnuson–Moss Warranty Act, which protects US consumers from misleading warranty terms.
Who installed the panels?
The roof is one of the most important structures of your home, therefore, you’ll want to learn about the company and the warranty details so you know who to contact if there are any issues with the panels. Most solar companies provide ten-year workmanship warranties.
What’s the warranty?
Ask about the warranty terms. If you’re the seller, make sure to consult your paperwork to see if your warranty will cover a second homeowner and for how many years.
Whether you’re buying or selling a home with solar panels, research your options and don’t be afraid to ask questions of your solar manufacturer and real estate professional.