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For Real Estate Pros -

Myths vs. Facts about Working Solar Homes

With the rising popularity and easy availability of adding solar to a home, many homeowners have opted to go that route and enjoy all the benefits solar power has to offer.  But, when it comes time to sell - what is the best way to market their listing?  Or, maybe you're representing the buyer who is interested in a home with existing solar.  As a real estate professional your client looks to you to have the answers, but finding those answers can be very confusing.  Here are a few Myths and Facts that we've come across in our dealings with agents, mortgage brokers, and homeowners that can help.   Of course, if you have any questions don't hesitate to contact us - and don't forget to get our free Solar Home Worksheet for agents delivered to your email inbox as a valuable future reference!

MYTH:  It's a real pain to sell or buy a home with solar panels.  I'm just going to avoid listing those homes and tell my buyer to avoid them as well.

FACT:   Recent studies show that homes with solar power not only sell for more money (great for your seller) but they also are a huge attraction for buyers.  Solar is definitely a "perk" when selling or buying a home!

Don't shy away from a solar home!  A recent study by Zillow revealed that homes with solar panels sell on average for 4.1% more than the average market price of similar homes*, plus the demand is much higher.  In fact, Zillow even added a "Sun Number" rating to their listings to attract more buyers interested in energy-efficient homes.  Truth is, with rising utility costs having a home with solar is considered a major perk to the potential buyer.  Sellers who purchased their solar installations outright, or have a low-interest rate loan that can easily be assumed by the buyer, can advertise their home more successfully and realize a faster sale.  

* National average across the United States - some states report even higher averages.   For example, New York, California, and Florida report average sale price increase of up to 5.4% on solar vs. non-solar homes.

MYTH:  You can't sell a solar home because most systems are leased and need to be paid off at closing.

FACT:  You need to find out if it's a leased, owned, or under a Power Purchase Agreement.  If it's owned, then it's usually super simple to sell without having your buyer to pay extra at closing.

When listing or recommending a home with solar panels,  the first and most important facts you need to find out for your client is:  is the system leased (or under a Power Purchase Agreement, which is basically a lease), or is it owned outright or owned via financing?

 

The ideal situation for both the seller and buyer is if the homeowner owns the solar system.  Some sellers own the system outright (having paid cash or by using their home equity to pay for it upfront), and those situations are definitely more attractive to buyers.   Even financed solar can be easily negotiated as most finance companies will allow the buyer to easily assume the existing financing or apply for new financing for the remaining balance of the contract.  Of course, this could increase your buyers income-to-debt ratio so consult with your mortgage professional before entering into this type of agreement.

 

Unfortunately, though, not all solar installs are owned.  Some systems are leased under either a direct lease through the solar provider or a Power Purchase Agreement.  If the system is not paid off, then both the seller and buyer must determine their best course of action when negotiating the transaction. Major items to consider are lease terms, monthly fees and pay-off amount. Taking on a leased solar system could cause an increase in a buyer’s debt-to-income ratio, making them ineligible for a home loan.  If the solar system is leased, be sure the lease is reviewed by a professional prior to entering into any agreement to list or purchase the home. A lawyer or independent (third-party) solar professional who has a good understanding of solar leases and solar panel systems in general is ideal.

So, obviously any sort of a leased system can be a real pain when it comes to selling your client's home.  That's why at Renew Solar Group we do NOT deal with leases.  All of the companies we represent offer attractive financing terms that make sense to homeowners, and won't put them in a pickle if they decide to sell their home further down the road.    We offer zero down, zero out of pocket financing at low rates, or your client may also consider simply taking out a HELOC or home equity loan to cover the cost of a new installation (we recommend this route as most homeowners have more than enough equity to cover the cost, and that way it's paid in full upfront).  Either way, we work with them every step of the way to make sure they get the best solar panels at a price that works with their budget.

 

MYTH:  Older solar installs are antiquated and should be replaced prior to selling.

FACT:  Solar panels have a long lifespan, but have them inspected to make sure they're working right.

Whether the solar system is owned or leased, it should still be inspected to determine its functionality. The average lifespan of a newer system is 25-30 years.  If the system was built more than 20 years ago technology has advanced greatly, so maybe time to consider replacement (not to mention aesthetics have improved GREATLY during that time).   It’s recommended that an independent solar company be hired to complete the inspection, making sure the chosen company is doing an in-depth inspection of all parts of the system.   We are happy to recommend many professional solar installers that we work with to inspect the existing system and see if it needs to be replaced.

MYTH:  Solar is expensive.  I won't recommend my client add solar to their home to help it sell.

FACT:  Homes with solar actually sell on average for 4.1% more and are in high demand.  Also, there are big savings available with Federal Tax Credits and other incentives for your seller to install solar now.

If your seller is having a hard time moving his home, maybe it's time to talk to him about adding solar.  As mentioned before, Zillow found that homes with energy-efficient perks like solar sell on average for 4.1% more than the market price, plus your seller can enjoy a 30% Federal Tax Credit (available on all solar installs up until 2033.  Just to do some simple math here's an example:

Average Market Value:  $400,000

Market Value with Solar:  $416,400 (based on 4.1% increase)

Cost of Solar Install:  $20,000

Less 30% Federal Tax Credit:  $6,000

Net Solar Install Cost after Credit:  $14,000

Difference between increase in home value vs. solar cost:  $2,400

Even though that's just a rough estimate, that's actual CASH back in your seller's pocket!  And that doesn't include any local incentives offered by your state or municipality.  Something to think about when talking about adding solar to your client's home.

Regardless of how you or your client decides to go, whenever you are thinking of listing a solar home here are three valuable tips you can use:

THREE ESSENTIAL STEPS FOR LISTING A SOLAR HOME

1.  Understand how to market a solar home.

You and the seller should discuss how to market and list a solar home in the MLS. Setting accurate expectations with your listing will help attract the right buyers and minimize issues down the road. Your listing should state more than, “The home has solar panels.” Clarify that the system is owned or leased. Look for the “green information” section of the residential listing data entry form to accurately describe the home’s solar system.

It’s extremely important to follow these steps when listing or purchasing a home with solar panels. The only way to ensure a fair deal or valuation is to work with an independent solar company throughout this process. There can be real legal jeopardy and significant financial liability for the seller or buyer when one or the other fails to address issues associated with solar power. So, no matter your position in a solar home transaction, do your homework. Due diligence will be your friend.

2.  Describe the solar benefits properly in your listing.

The next step in the process is to determine the size of the system, the production of the system, and the savings from the system.  For this particular step, we recommend using our Listing A Property With Solar Worksheet.  You can get your free copy of this by filling out the short form below, or simply call us and we'll be happy to email it to you.  The best way to capture this data is from the paperwork received from the company that installed the solar system.  The original solar installer should have included the size of the system, the projected annual production in kilowatt-hours, as well as the avoided cost of electricity per kilowatt hour.  If this information is unavailable, you can calculate the size of the system by multiplying the number of solar panels by the wattage of each panel.  For example, a solar system with 30 panels that are 300 watts per panel will be a (30 x 300 = 9,000) 9,000 watts or a 9-kilowatt system.  The next step in would be to calculate the annual production of the solar system.  There are many variables that go into calculating production, such as the amount of shade, the orientation of the solar panels, the tilt of the roof, etc., which make calculating the production more challenging.  As a general rule of thumb, assuming little to no shade, the solar system will generate approximately 120% of the total watts of the system.  For example, a 9,000-watt system would generate approximately 10,800-kilowatt hours (kWh) per year.  Once you know the projected annual production, it is relatively easy to calculate the annual savings by multiplying the kilowatt hours by the avoided cost of electricity.  For example, 10,800 kWh X $0.14 = $1,512 in annual savings.

Of course, this can all be pretty complicated and you have enough on your plate with your listing and marketing.  If you need any help, simply contact us!  We're happy to help.

3.  Compose the right message in your listing for optimal disclosure.

The third and final step in the process is to make sure that you have the correct messaging in your listing to make sure that potential buyers have a complete understanding of the solar system.

Here is the recommended message:


"This property includes a 9 kW solar system that generates over 10,000-kilowatt hours per year.  The current utility bill for this house is $12 per month.  This solar system saves the current owner approximately $1,500 per year.  (If applicable):  The solar system is still under warranty, and all warranties transfer to the new owner.   The system is: choose one:  (paid off in full and included in the asking price of this home) (financed with XYZ Financing Company and can be assumed under the terms of XYZ, please contact me for details) (requires a full payoff upon purchase at a current payoff amount of $14,272, please contact me for full details)."   

 

Note:  this is suggested wording only and may be differently worded to meet the requirements of your particular area - please have a local attorney review for full compliance.

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Do you know of anyone - a client, friend, family member, or neighbor - who is interested in solar?  We pay you $1,000 (or more) for every referral!

Renew Solar Group works with professionals all over the United States helping their clients decide if solar is right for them.  Through one of our companies, Powur Energy, we can offer you many income-producing opportunities:

STRAIGHT REFERRAL (Ambassador Program):   All we need is a name - we do all of the heavy lifting for you!  Get paid $1,000 upon the successful installation of your referral's solar system.  Our exceptional products and service will make you the hero!

- or - 

BECOME A SOLAR CONSULTANT:  Interested in expanding your professional title to include "Solar Consultant" and attract more sellers and buyers?  With a powerful company like Powur you get training, marketing, a CRM, and much more.   Earn upwards of $6,000 or more* on average with your solar sales.  Supplement your income and get into the fast-paced and growing solar industry now!

Just fill out the form below - we'll contact you with more details.

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