Solar Panel buying Experience (Howe: sale, real estate, lease)

[ChristieP]

Just keep in mind that in order to sell your house, the solar system must be totally paid off, and the system does not add any value to the sale price of the home. A friend of mine got that very rude awakening when she attempted to sell her house while still owing about $40k on her solar system.

[escanlan]

Originally Posted by ChristieP

Just keep in mind that in order to sell your house, the solar system must be totally paid off, and the system does not add any value to the sale price of the home. A friend of mine got that very rude awakening when she attempted to sell her house while still owing about $40k on her solar system.

Can you explain what happened and why it would need to be paid off?

[ChristieP]

Originally Posted by escanlan

Can you explain what happened and why it would need to be paid off?

She decided that she was going to sell her home, and when she contacted a realtor to start the listing process, the realtor saw the solar panels, and asked if they were paid off. When she said no, he told her she needed to contact the company that was financing them. The company told her that the house could not be sold until the panels were fully owned/paid off. The realtor also told her that the panels did not add any value to the home.

[Johnhw222]

I don’t see why it would not add value to the house unless there is some major ongoing cost such as it complicates and makes hail damage much more expensive to do and insurance won’t cover solar panel damage and/or to work around the panels?

[escanlan]

Originally Posted by ChristieP

She decided that she was going to sell her home, and when she contacted a realtor to start the listing process, the realtor saw the solar panels, and asked if they were paid off. When she said no, he told her she needed to contact the company that was financing them. The company told her that the house could not be sold until the panels were fully owned/paid off. The realtor also told her that the panels did not add any value to the home.

That is interesting! Thanks for the information. I expect the finance contract had a clause the owner was not aware of? I would not doubt these type clauses are being added to solar system purchase contracts. However it surprises me that the contract for the solar system would not allow for a lien to be on the home which would need to be satisfied at closing by extraction of part of the sale price/money collected? Was it a hard "You can't sell" clause?


As for adding to the value of the home yes I would agree that until the solar system is paid off there is no real additional monetary value added to the home at least none that could be enumerated. It might increase the appeal to some buyers but IMO that would be it.

[Wittgenstein's Ghost]

Originally Posted by ChristieP

Just keep in mind that in order to sell your house, the solar system must be totally paid off, and the system does not add any value to the sale price of the home. A friend of mine got that very rude awakening when she attempted to sell her house while still owing about $40k on her solar system.

It's simply not true that a solar system adds no value. This has been studied several times, and in every case it has consistently been shown that an owned solar system adds value. Why wouldn't it? Free electricity is a valuable thing.

[Wittgenstein's Ghost]

The door-to-door sales people in the solar industry are often selling systems at absurdly high prices, and they are typically financed. These sorts of deals are undesirable for future buyers simply because they are bad deals. The people shouldn't have signed up for them in the first place. Solar debt can be paid off at closing just like every other bit of debt associated with the house, but if you owe $35,000 on a solar system, a lot of buyers are not going to want to sign up for that. That is when real questions of value coming into play. That is completely different from an owned system.

[ChristieP]

Originally Posted by Wittgenstein's Ghost

The door-to-door sales people in the solar industry are often selling systems at absurdly high prices, and they are typically financed. These sorts of deals are undesirable for future buyers simply because they are bad deals. The people shouldn't have signed up for them in the first place. Solar debt can be paid off at closing just like every other bit of debt associated with the house, but if you owe $35,000 on a solar system, a lot of buyers are not going to want to sign up for that. That is when real questions of value coming into play. That is completely different from an owned system.

I think you answered your own question there. I called her last night and got clarification, and she said the realtor told her the panels are considered personal property, not part of the home, since they can be removed. They are basically the same as an above-ground swimming pool. She was told that she could allow them to convey with the house, but since they were removable, a buyer could not include them in their mortgage financing, and their value could not be included with the price of the house.

[Wittgenstein's Ghost]

Originally Posted by ChristieP

I think you answered your own question there. I called her last night and got clarification, and she said the realtor told her the panels are considered personal property, not part of the home, since they can be removed. They are basically the same as an above-ground swimming pool. She was told that she could allow them to convey with the house, but since they were removable, a buyer could not include them in their mortgage financing, and their value could not be included with the price of the house.

I'm sorry, but this agent is wrong. There are a lot of baffling statements here. First, it's no easier to remove solar panels than it is to remove an electric panel or kitchen cabinet. In some sense, anything can be removed. But solar panels are as "attached" as almost anything else in the house. Second, individual items aren't "included" in mortgage financing -- mortgage financing is based solely on the appraisal, and owned systems certainly can and should be included in appraisals (https://singlefamily.fanniemae.com/media/23651/display). Finally, I don't know what it means for something to be "included with the price" -- the market sets value, and the market values free electricity. That's why the studies that have looked at this have concluded that owned systems do add value. Maybe this agent meant that it couldn't be included in the appraisal, but that's also incorrect (see my Fannie Mae link).

This agent is wrong, plain and simple.

[Threestep2]

Originally Posted by Johnhw222

I don’t see why it would not add value to the house unless there is some major ongoing cost such as it complicates and makes hail damage much more expensive to do and insurance won’t cover solar panel damage and/or to work around the panels?

It is like a pool - some like it, some do not.