DAILY REAL ESTATE NEWS | THURSDAY, MAY 25, 2017
Homes with solar panels tend to sell for higher prices than comparable homes with conventional energy, studies show. One study, released two years ago by Lawrence Berkeley National Laboratory, found that solar homes sell for a 15 percent premium. But selling these homes can require extra preparation on the part of real estate agents.
The biggest issue is how the panels were financed. If the owner simply bought the panels, there shouldn’t be any problem for buyers. But if the panels were financed or leased, some hurdles can arise. Agents can provide the greatest value by understanding these hurdles.
If the panels were leased, then agents will need to make sure the lease contract is in order and the panels transfer properly to the buyer. That shouldn’t pose too much of a problem if the seller has the contract in place. But if the panels were financed using public assistance, the hurdles can be higher.
There are different forms of public assistance for solar panels but the one agents need to be the most aware of is PACE, a federally funded state and local program that stands for Property Assessed Clean Energy.
The challenge with PACE is the lien that’s placed on the home. Homeowners use the assistance to finance the purchase and installation of the panels and pay the money back over time, typically through their property tax bill.
If the borrower defaults on the PACE loan, the lien that’s placed on the home is in a super-priority position, which means it must get paid back first, just liked a tax lien. That can pose a problem for homebuyers trying to obtain mortgage financing. Loan details differ, but under some programs lenders aren’t able to make new loans as long as that lien is in place.
This is where agents can help, because knowing what loan programs allow funding to go forward when PACE funding attached is a time- and money-saver.
However, the potential for financing hurdles in some loan programs shouldn’t obscure what’s good about homes with solar panels. First, the home’s energy bills can be lower, because each kilowatt of power the panels generate is one less that has to be paid to the utility company. Second, homeowners can get a federal credit each year on their taxes. The state might offer its own credit as well.
Currently, about 1.2 million homes have solar panels and the trend is pointing steeply up. According to data from the Solar Energy Industries Association, the cost of solar panels and their installation has dropped 70 percent over the last decade or so and the growth of solar panels has risen by a similar percentage during that same period.
More homes will have solar panels in the years ahead and that means the chances agents will list or sell a solar home are increasing every year. The panels pose a challenge, but they are also a big business opportunity. Homes are more valuable with them and many people want them because they like the idea of using renewable energy.
The opportunities and challenges are detailed in the latest Voice for Real Estate news video from NAR.
—Robert Freedman, REALTOR® Magazine