An increasing number of homeowners are installing solar panels to save money. Better for the environment and capable of generating around half the electricity needed to run an average home, solar panels have obvious benefits. But when buying or selling a home, solar panels can add some complexity to the transaction.
As a buyer or a seller, you should be aware of both the benefits and problems related to solar panels as you enter the market to buy or sell. The more informed you are, the easier it will be to make decisions that are sound both over the short and long-term.
One question real estate agents often get is, do solar panels increase property value? As much as solar companies would like you to believe otherwise, this is not a yes or no answer. If you ask any solar power company, they will tell you without question that solar panels do increase a home’s value. Not so fast! The answer to this question depends on some factors including:
- Whether the solar panels are leased or owned.
- What part of the country you live in.
- The type of home you own.
- What the starting value of the home already happens to be. (Higher- priced homes tend to receive more value).
- How much energy you will be saving.
Understanding solar power when selling or buying a home is not difficult, some of the nuances, however, may surprise you. Keep reading to learn what you need to know about solar powered homes.
The Benefits of Solar
There is no doubt that solar panels can be beneficial under a lot of circumstances. For instance:
- Solar panels can produce a surprising amount of electricity. The amount of electricity generated can vary depending on several factors, including the type of solar panel, the number of panels in the system and the amount of sunlight available. Generally speaking, a typical solar panel system can produce enough electricity to take care of at least half your home’s energy needs. When adding a solar panel system to your home you get bids from multiple companies and compare the results. The solar company you interview should provide an estimate of how much power their system is going to produce based on annual statistics the company knows from some different factors: the weather in your area, the angle of your roof, and its orientation to the sun. These factors will determine the size of your system and how much electricity, on average, it will produce each year.
- Solar panels can help you save on energy costs. Electricity is not getting any cheaper. A solar panel system that takes care of half your home’s energy needs will mean you pay around half your average electricity bill – for as long as the system is functional, which can be decades. The more energy you save, the quicker the solar panel system pays for itself. Believe it or not, it is possible you will not have an electricity bill at all when you have solar panels. Read here for more energy saving tips around the home.
- Biggest benefits tied to how expensive energy costs range in your area. Not surprisingly those homeowners who have the largest current electricity bills are going to reap the most significant benefits for adding solar power to their home.
Solar Panel Systems – Buying vs. Leasing
As exciting as it can be to imagine cutting your electricity costs in half and reducing your carbon footprint, the costs associated with installing a solar panel system can be sobering. The same average solar panel system that brings all the above benefits also tends to cost $15,000 – $20,000, an expense that not every homeowner has the money for.
Many solar panel companies have introduced a way for homeowners to get the solar panel system the way without needing to come up with the money up-front. Instead of buying, you can lease a system. You sign an agreement that you will pay a regular fee for the use of your solar panels for the next 15 years or more.
The Trouble With Leasing For Sellers
While leasing a system can seem like a perfect arrangement, doing so can create an awkward situation when you decide to sell the home. Breaking your lease with the solar panel company will usually result in you being charged the full bill for the 15 years of usage you agreed to, which can come out to $15,000 or more. You are selling the home, so you obviously do not want to continue to pay for the use of the solar panels. You also don’t want to be stuck with a $15,000 bill. The only option left is to see if you can transfer the lease to the buyer of your home.
As you can imagine, many consumers are hesitant to take over a 15-year lease. They may be worried about the credit requirements of the solar panel company, or they may just not feel comfortable committing to such a long-term agreement on top of all the other stresses of purchasing a home. There have been numerous deals that have fallen through over solar panel lease transfers, and there are likely to be much more. As an owner and a seller, you want to be aware of these issues before you lease a solar panel system, or attempt to sell your home after you have signed such a contract. One thing that must be emphasized is an appraiser will not add any value to a property that has a leased solar panel system! Appraisers cannot increase the value of something that is not permanent to the structure.
How Solar Panels Affect The Market Value Of A Home
Will solar panels increase or decrease the value of my home?
As mentioned above, there are plenty of articles written by solar panel companies that talk about the way their products increase the value of a home, but in the real world, the growth in value is not nearly as clear-cut. A solar panel system may add value to your home, or it may be an addition that fails to increase the price of your home enough to make it worth the initial investment.