Property owners who have solar panel leases on their homes are killing the sale of their home. As interest in solar continues to grow in Colorado and across the country, buyers and sellers need to be forewarned. It is more and more common to see disputes, and this problem will get worse. Let’s look at some reasons why.
Solar companies sell solar panel leases based on a premise of “locking in” energy costs for 20 years – the typical time period for a solar lease. Recent research by the National Association of Realtors (NAR) says the average time most people stay in their home is 13 years. A lease is binding to the property, not with the property owner. The lease doesn’t go away. A buyer has to be willing to take it on, or a seller has to break the lease.
A new buyer has to additionally qualify for the lease as part of their lender package. Payments go onto the credit report. This extra payment can change ratios so they no longer qualify. And what if the buyers don’t want the old, antiquated panels currently on the roof? Technology continues to improve and they want the best available.
It can be very expensive for sellers to break a solar lease. Sellers need to visit the fine print in the contract; it is possible for up to $20,000 to be due to end a lease before the 20-year term. Thinking to add this buy-out cost to the sales price? Think again – the market won’t support the higher price. The standard sales pitch is that solar panels add significant value to a home. Statistics don’t bear this out as appraisals continue to get a handle on this, but consensus is that actual value is but a fraction of the cost.
We all know about the promise of savings in the sales pitch—no money down, energy savings (even money to the homeowner for “selling” energy back to the power grid), the locking in of energy costs over time, a federal tax credit (sorry-only applicable if you buy). Take the time to run the math of savings vs. the long term cost of the lease—both the known and unintended consequences. Chances are it is not a win. Click here for more information.
Still convinced you want solar? Then buy the system and service plan. Get a loan, be in control.
Contact me for a free 20-page guide for consumers considering solar.