Buying and selling a home is an exciting and very stressful experience. There are so many questions and details to sort out during the process.
Now, enter a home with a solar energy system and things can get a little more tricky. A whole new set of questions need to be answered.
To help you through this process, Warren Miller of Paradise Energy Solutions interviewed Roger Sansom, a real estate expert with over 20 years of experience. Roger is an agent with the ERA Martin team on the Eastern Shore of Delaware and Maryland. He’s sold a number of homes with solar and owns a solar system himself.
Below you will find a video of our webinar interview with Roger and a recap of his expert thoughts on the questions prospective buyers and sellers need answered during the home buying/selling process.
What questions should people be asking when buying a home with solar?
Roger Sansom: “The first question I want to know for my buyers and sellers is to understand if it's a system that’s owned as part of the real estate with the house… which is not uncommon as compared to say a deck or that brand new firepit or a swimming pool. It’s an optional feature. So, is it owned or is it something that their leasing and [it’s important] to understand the details of that."
What are the differences between an owned solar system and a leased solar system when buying and selling a home?
Roger Sansom: “Other than the location of a home and the price of a home, what are my utility costs and my taxes. The taxes are what they are, so the utility costs can vary quite a bit. It’s exciting when someone who has had a professionally designed system and a system that fits well with their energy usage. It’s nice to hear that an owner has minimum utility costs usually with an owned solar system
Then to understand the age of the system. I find solar to have a long life to it. So, it’s just very comforting and it adds a lot of value to a buyer who is interested in a home.”
Can you get more money for a home with solar?
Roger Sansom: “You will! You will see a lot of the cost of a solar system being recouped by an increased value of the home. As well as a quicker sale which is going to happen because it’s more attractive to a buyer.
When I think of a home with an owned solar system, I can not imagine and have not run into a negative aspect.”
What should buyers and sellers know about a leased solar system?
Roger Sansom: “For the seller and the buyer, other than learning from the seller how long they’ve had the system [and] on how it’s performing for them, then what are the terms of their leased situation. Have they thought about buying out that lease for someone who may not be interested in leasing their solar panels?
Many more questions do come up. It’s more involved when it’s a leased system. Then the owner of the home and the real estate agent have, for a lack of better words, have a little of a burden to try to be an educator to the buyer of this leased system and what’s involved. How they need to be approved by the lease company. Along with being approved to buy the home financially."
Warren Miller: “The new buyer would need to assume the [current] lease that’s there according to whatever terms are in the lease?”
Roger Sansom: “Yes.”
Warren Miller: “When you have a buyer who might be in their retirement age. They are looking to pay cash for a home and they’re not looking for additional debt obligations. Sometimes lease systems are a hindrance in these situations.”
Roger Sansom: “Yes, I have clearly run into that. It’s a lesson to be learned. I did have buyers who like the home and the location but chose not to purchase. There was psychology for them that they did not want to be held to a lease for a number of reasons. So, we went to plan b.
Owners of homes I feel often believe they can buy out that lease or take it with them… Which they can, except that we then learn that it’s really not financially feasible to do that. It’s just so costly.”
What information is helpful when I’m selling a home?
Roger Sansom: “First, foremost, because this is what buyers want to know about first, is understanding the numbers. What are your utility costs? How much is being covered by the solar? Those are fun facts that a buyer is eager to learn and the realtor wants to learn. It’s a strong selling point for the home and the agent
The next components are understanding the age of the system. What company installed it? Is that company still in business and local? There is some comfort food there for everyone to understand.
Then [it’s important to know] how has it been maintained. How has it been checked on? What warranties? Really similar to other items out there - the age of the pool liner in a swimming pool or the age of a pool pump. Common items like that.
It’s [also important] if the seller is happy with the system, which typically what I’ve run into is that they are happy.”
Should a buyer have the solar system inspected before they buy the property?
Warren Miller: “Do [standard home inspections] cover the solar system?”
Roger Sansom: “Very good question. I wish they did but the answer is no. For a good reason. The home inspectors typically do not have expertise in some of the optional items like solar. I do like to work with buyers and once again know I’m talking about swimming pools, retaining walls that were built as part of landscaping… A good home inspector will often encourage a buyer to resource additional experts to investigate certain systems... that are not his expertise.”
Warren Miller: “That’s a great tip. When you considering selling your house or buy a house that has solar on it that at the time of the transaction or before, have it evaluated by a solar company that’s familiar with it.”
Are you seeing a trend that solar owners are able to sell their homes for more money?
Roger Sansom: “They are able to sell for more, and fortunately, I feel that what drives a lot of that for 95% of our buyers who are getting a bank loan to buy their home, is will the appraiser add value for that system… In comparison to swimming pools and landscaping and that $15,000 paved driveway that I just put in that the appraiser really only wants to give $5,000 value for, what I’m finding for myself with solar is the return on investment for what you spent for your solar installation [is] your going to get a higher percentage of that back than other items... And the good reason is that solar is producing money for you, basically. It’s continuing to produce for you and give back to you. Take care of your utility cost versus these other items that have value but it’s for your pleasure. You're not getting a financial return.”
How do you show buyers the financial return of a solar system?
Roger Sansom: “Sometimes we have a seller that is talented in the accounting field that can produce that and show the reason why they went with the solar system… Other times we really want to rely on the help and expertise of an inspection of the solar system. With that inspection, being sure the panels are producing what they’re expected to produce...At that point, [we] are trying not to be the experts with that but are helping a buyer obtain that information."
Have you seen a shift in how people embrace solar on their homes? Are they seeing it in a more positive light?
Roger Sansom: “You're taking my memory back to the days when solar was a mystery and a real unknown. Oh, would my HOA allow me to put these panels on my roof?
In my recent experience over the past several years that has all gone away in our geographic area… Solar has become a more desirable and exciting item to be part of the home.”
Watch the full interview for answers to all the questions Warren asked as well as questions from the webinar attendees.