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Buying and Selling a Solar Home

Buying and Selling a Solar Home

January 30, 2019
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Selling your Solar Home 

Did you know you can heat your flooring with Solar technology? Yes, radiant heating is an actual technology that utilizes solar to heat the floor of your home. Over the years, we’ve seen a number of changes not just in the price of real estate but in the industry as a whole.

These days, we’re in the era of green energy and the solar panel technology. In fact, we’re in the infancy of this generation which means that various states are in different stages of accounting for solar panels and green homes when buying and selling.

Today, a home can receive a Pearl Certification to increase the value of their energy efficient home. With that in mind, we have a short guide with all the advice you need for valuation, their effect on transactions, and more!

Solar Systems and Their Valuation

Solar Energy

When investing in solar power, many homeowners do so in an attempt to boost the selling price…but how does this work? According to research from the Berkeley National Laboratory, almost 7% can be added to the valuation after adding a 7.5kW system.

However, this is very much a loose guide and there’s no magic formula that will allow you to calculate the amount you’ll gain from the solar system alone. Not only are all systems different, but there are also other factors to consider too;

  • Size
  • Age
  • Condition
  • Power Output

The beauty of appraisals and the process of valuing a home is that it’s subjective; of course, the appraiser is trained and knows what to look for but you can still refuse a valuation you think is incorrect. Essentially, appraisers abide by the Uniform Standards of Professional Appraisal Practice which means every feature of valuation must have the support of credible evidence.

Before moving on, feel free to utilize the two resources below, you can search the internet for information about this;

  • PV Value Photovoltaic Energy Valuation Model
  • Residential Green and Energy Efficient Addendum

Impact on Transactions  

Transations from Selling your Home

Will a solar system automatically add a certain percentage to the home’s value? No, and it all depends on who actually owns the panels. Consider the following when buying or selling a solar home.

Cash – If the seller has bought the system and owns it completely, it can be appraised much the same as a conservatory or any other permanent fixture.

Loan – If the system was bought with a loan, the same rule from above applies here assuming the loan has since been paid off. If payments are still being made, the valuation process will depend on the terms of the contract with the lender. While some lenders allow the homeowner to claim ownership, others will create a UCC-1 filing which is essentially a lien – in that the lender can claim the solar panels as their own when selling or if the homeowner defaults on payments with another lender. Ultimately, it’s best to talk with the lender and communicate at all times.

Lease/PPA – Finally, solar panels these days can be leased or obtained through a Power Purchase Agreement (where the homeowner pays to use the system). There will typically be a UCC-1 filing on the panels so the seller needs to transfer the contract to the buyer or else purchase the panels (and recoup the cost through the increased valuation).

Buying Tips

  • Always work with experienced professionals (including title companies, agents, solar realtors, and lenders).
  • Ensure you buy a home with the right system if this is your desire.
  • Ask your agent if there’s a UCC-1 filing on the solar panels.
  • If you’re ever unsure or have questions, ask your agent.
  • If taking over a loan or lease, you’ll need to qualify for this as well as the mortgage.

Selling Tips  

  • Work with professionals, keep a folder containing all important paperwork, and collect six months’ worth of utility bills.
  • Consider buying out a PPA contract or loan and have the valuation-adjusted, if there’s a UCC-1 filing on the system.
  • Remember the resources above and ensure the valuation is correct; if the system has a $0 valuation, it must be supported by credible evidence.
  • Explain the value of solar panels, if a potential buyer is unaware.

Making a Deal on Your Home

Whether you are buying or selling a solar home, having the advice of an experienced solar realtor to help you navigate the process is highly recommended. Realtors without solar experience may miss out on the fine details and actually end up costing you money.

Energy efficient homes that have been given the Pearl Certification have been known to resell for 10-15 percent more, which is substantial when selling a home for six figures. Having energy efficient appliances, insulation, and replacing your windows are all things you can do to increase the value of your home.