What Homebuyers Should Know About Solar Panels

Consider these questions before buying a home with solar panels.

As Americans gain awareness about the financial and environmental cost of non-renewable energy sources, residential solar installations are increasing across the country. The Solar Energy Industries Association reports that the U.S. now has enough solar installations to power 5.7 million homes, with more than 1 million individual solar installations across the country. While solar installations were once common in high-end homes, the decreasing cost of these systems means they’re showing up on moderately priced homes, too.

As homeowners with solar panels sell those homes, it presents an opportunity for new homeowners to reap the benefits of lower electric bills and a smaller environmental footprint. Still, new owners won’t qualify for the solar rebates and tax credits that the original installer could get. “The single most effective thing that any one individual can do [to combat climate change] is to go solar,” says Raina Russo, founder of Women4Solar, and advisor for CREW: Own the Switch Advisor for Integrity & Mission Council Team Builder. “A homeowner that buys a solar powered house should feel very proud,” she adds.

Of course, the decision to install solar panels goes beyond the potential energy savings and environmental impact. The original owners have the opportunity to thoroughly research their purchase, choose between different manufacturers and installers and make other choices. Meanwhile, homebuyers searching for a residence with existing solar panels can avoid this legwork, but they should still do their homework since the purchase has more complexities than a conventional home purchase. Solar is essentially a “25-year marriage,” Russo says.

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In general, buyers are willing to pay more for a home with solar features since they know they’ll be rewarded with low (or no) electric bills. A 2015 Berkeley Laboratory study found that buyers are willing to pay an average of $4 per watt of solar photovoltaic energy system installed, which equates to about $15,000 for the average system.

 However, 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. “That’s a conversation that the agent should be having with the appraiser,” says Shane Herbert, a real estate agent at Summit Sotheby’s International Realty in Park City, Utah.

With that in mind, here are some questions to consider before buying a home with existing solar panels.

Are the panels leased or owned? Ideally, you’d buy a home from someone who owns the solar panels affixed to the home rather than assuming their solar lease. Because 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, adds Christina Mathieson, vice president of marketing at the New York-based SUNation Solar Systems and a LEED Green Associate. “What we’re seeing is that many leasing companies retain the right to change their production guarantee,” she says. “They retain the right to every year or two lower the amount that they say their system is going to produce,” she adds. Plus, there’s no guarantee that the leasing company will approve you as the new lessee either.

 Who is the manufacturer? Even if you haven’t chosen the solar manufacturer, you should still research its reputation. In the best-case scenario, the solar system is from a U.S. company, according to Mathieson. “That doesn’t necessarily mean that the panels are exclusively manufactured here, but you want them to be a U.S. corporation so you’re protected by the Magnuson–Moss Warranty Act [a law that protects U.S. consumers from shady warranty practices],” she says.

Who installed the panels? Mathieson suggests researching the reputation of the person who originally installed the solar system. “The roof is one of the most important structures of your home,” she explains. “Check out the installer that put the system in and make sure that that installer has a warranty,” she suggests, pointing out that the installer or the company that sold the system may be willing to inspect it for you to provide peace of mind. Herbert also suggests getting an independent professional to inspect the system before you commit to buying a new home with existing panels.

Can I see past electric bills? Ask to see the current owner’s utility bills from the past year, so you’ll know what to expect. Most parts of the U.S. operate under net metering where your electricity bill can be zeroed out by solar, but not reduced further. Still, you could roll over credits from a sunny month into a less sunny month, according to Livermore. In a few areas, you can actually get paid for excess electricity your solar panels generate as allowed by your state and your utility provider. Not all solar systems are created equal. “The age of the solar does make a drastic difference, also how many panels and how much energy usage the house is seeing,” Herbert adds.

 What’s the warranty? Ask about the warranty terms. You likely have two separate warranties: one for the panels and another for the inverter, which converts the energy produced by your panels into alternating current that actually powers your house. “Usually the warranty for the inverter is shorter and the expected life is shorter,” Livermore says. “Sometimes when a solar system is sold, the buyer will purchase an option for the replacement of the inverter. Sometimes they don’t,” he adds. The typical solar panel warranty might run 25 to 30 years, while inverters might be warrantied for 10 years, according to Livermore. “They need that documentation to be passed on to them [in case] there were any issues down the road,” Russo adds.
 Source: USMoneyNew

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