Solar Panels – Money in Your Pocket? Maybe.
We all want to lower energy costs, and especially those of us in Metro Denver right now!
Yesterday I had a coffee meeting with a solar/insulation company. (Now that I think about it, we didn’t have coffee, or anything else to drink -- weird). We were vetting each other for recommendations for our different businesses and it got me thinking about buying/selling houses with solar panels on the roof.
Over the last 20 years, Colorado has become one of the leaders in using solar energy. Over 452,000 homes now have solar panels either on their roofs or in their yards and that number is growing. The new Inflation Reduction Act helps families with rebates for energy efficient appliances and tax credits for solar panels and electric vehicles. Additionally, Colorado also offers rebates and tax breaks along will a website that helps you make informed decisions about solar systems and helps you get quotes from knowledgeable advisors.
The cost for solar panels usually ranges from $14,578 to $19,722 per panel, but we’ve seen prices as low as $3,500.00 and as high as $35,000. If you pay per watt, it will cost you from $2.92 to $3.94. Yes, it is very expensive to install panels. One question homeowners need to ask themselves is how long it will take to recover their investment through electricity savings (called the solar payback period). In Colorado, the average solar payback period is 12 years.
If you’re thinking of selling and solar panels are installed on your house, your property value is probably higher than your neighbor without solar panels. According to most sources, solar increases a home’s value from 1.4 to 4.7% more than similar homes without solar panels.
According to the National Renewable Energy Laboratory (NREL), every dollar that a solar panel saves you on your electrical bills increases the value of your home by $20. If you own the panels outright they are part of the property unless you remove them. If you lease the panels, they are still part of the property but are subject to a lien if you default on payments.
Sellers, be ready to answer questions like these as well as the questions below:
· How much of your electricity bill was offset by the solar panels?
· Is net metering available?
· How many panels are on the roof (or in the yard)
· How much did you pay for the system? How long ago did you install the system?
· Have you had to replace inverters or the metering system?
If you’re thinking of buying a home with a photovoltaic (PV) system, ask:
1) Who manufactured the PV system? Are there any warranties available? How long are parts and equipment covered in the warranty? Are they still in business?
2) Who owns the panels? Does the homeowner own them or are they leased? Is there a lien? Can you take over the lease? What are the lease terms? If the homeowner has a loan, can you take over payments or will you need a new loan?
3) Who installed the panels? How long ago were they installed? Was it a do-it-yourself kit or did a licensed professional install them. Did they provide any workmanship warranties? Did the installation void the warranty? Was a building permit needed/issued? If you need a new roof, who will remove and reinstall the panels?
4) What is the condition of the roof? It is critical to have a roof that will hold the panels and is in good condition. What are the conditions of the panels?
5) How are the panels maintained and cleaned? You want your panels to last as long as possible and you want them to work properly. Does the homeowner have a current service plan?
6) What is their average output and the home’s average usage? You want the output to cover most of your energy usage needs. You need sun – check that the position of the panels are in a direct line with the sun. Check the homeowner’s previous electricity bills.
Additionally, you will need to make sure your mortgage lender knows the house you’re purchasing has solar. If the panels are leased and you need to pay that lease payment, it may impact your debt ratio. The lender will determine if you can qualify for a loan with the additional lease payments. It can complicate your financing and what you can afford.
Remember, every PV system is different, with different guarantees. Whether selling or buying, choose a REALTOR® who knows what questions to ask, how to work with the transaction team, and who can convey the value to sellers, buyers, agents, appraisers and lenders. Make sure you know what’s on your roof!