Deal With Installed Solar Panels On A Listing

How do you deal with installed solar panels on a home sale and or purchase that Shana Acquisto, she’s a luxury real estate broker. She brought this topic up. We have a article to share.

Yes, we have some things to discuss, and we’re also going to go over what else is similar to this in a home transaction and is handled the exact same way. So Shana, go ahead.

We’re starting to see more more solar panels on the roofs of homes that we may be purchasing. Your clients might be purchasing or are selling OK, so you need to really not ignore them, but understand that they could come with some, some things that could really cause you an issue or, you know, not allow you to close on the property.

So this is an article out of the Texas Realtors magazine, and we’re going to have our slotted on over and we just want to make sure that you understand how solar panels will affect the transaction. So first, you know, I remember years ago when I had a client for the first time, purchased a home that had these solar panels, and it was a big rigmarole with the lease.

So there was like a 20 year lease, maybe even longer a 30 year lease on these panels. So you have to remember if they have a lease, if they have solar panels, they might have a lease and that’s got to be put on the fixture leases addendum of the contract, you know, that’s recently added. So we have to think about that.

The other thing is this article I was reading that they had to get information from the solar panel company and they were delayed like two weeks. They couldn’t get information and it just it caused a delay and it caused the deal not to happen. So that’s an issue. Ok. The other one was paid off panels.

So if the solar panels are fully paid off, they’re treated as the same as any other fixture. So not a big deal. It’s when they’re financed or leased. It’s really an issue because if your client now has to finance these or take over a lease, they have to qualify for that and that can add to their mortgage and maybe cause them to not be able to qualify any longer.

If this if this came up, so just please be careful. We’re going to chat this article in so you guys can read through it. But you know, you just want to make sure that you understand these fully because it could could really cause some delays or cause a buyer to have to terminate because they can’t get qualified.

Yeah, that’d be a bummer. So let’s go ahead and discuss a couple of things related to this, right? So the first thing is the idea when you install the solar panel right at your property. The theory, at the very least, is I’m investing in this fixed item here that’s going to be attached to my home and it’s going to save me money each month in theory.

And then it’s going to somehow work out mathematically. I don’t know that it truly does or more people possibly do it. But if you look at it, that’s the concept, right? Ok, so now we have that going on and what’s happening is, you know, it’s supposed to be lower to operate your home, but more up front. Ok. So it depends where you are in this process.

If somebody put all the money down and already paid for it and paid for all the improvements with the solar panels. Hmm. Ok. And it’s all paid off. Then you just need to. You would have the benefit of the property being cheaper on a monthly basis, correct? Allegedly. Right. So in that scenario, the home should be worth more if you were talking about values associated with it.

So that’s why somebody would do it because they made this extra investment that would be more affordable for you on a monthly basis. Ok, so that’s the first thing. So first you would find out are they owned or whatever?

Then you dive in a little bit deeper and if they’re financed and they’ve only paid a certain amount of it, then if they’re financed, there’s most likely a lien put on the property, right as it relates to this and said the lien would be paid off just like any other lien.

Yeah, in the contract, right? That’s part of it, that all liens will be cleared at closing. So Seller is going to have to if they say we won’t transfer it, you have to pay it off before you can sell the home. I mean, who knows, you’ve got to get with solar.

So yeah, you should really only be doing this on your home if you have enough equity in it to make it work after all these things take place, wouldn’t it be horrible if you didn’t have enough equity that you could pay it off when you sell and you’re like, I can’t close because I can’t pay off my solar panels that were supposed to help me and like whatever.

But that’s a real thing. It is, and then the third one which you discussed is leased, so it’s not paid, it’s not financed. Right.

But now it’s rather leased where somebody else owns it and it’s their property. Right, right. But it’s affixed to your thing to your property. So in that scenario, that’s where it becomes transferable. Yes, but qualifying and transferable in that scenario.

So in my mind, if it’s going to be, if it’s going to be leased, then what should end up happening is probably the sales price should be lower because you now have this obligation for what’s going on going forward.

Right. And that should be impacted on the price of the home, right? Because now you have this extra payment to be making for allegedly this benefit. But it doesn’t, might or might not work out based on where you are in the life cycle, how long they’ve been installed, what generation they are, how much, whatever.

I think they’re still fairly new. So there’s so many different ways that you can either finance or lease, and we don’t know everything about it. People just kind of look at it as, Oh, they’re solar panels, I’m going to save money and that you really want to check into that. And you know, when we close the client I’m talking about in particular bought a model home that had those currently on it, right?

So it was it was, you know, a lot of navigating through to understand how this was really going to work. But, you know, after you close, you probably just put that all that paperwork aside and forget about it. And then when you go to sell your home, that’s when it’s an issue.

So if you know of anybody that might be considering solar panels, maybe reach out to them, find out what they have discovered. And, you know, tell us, because I think getting this out there is really important. You know, I’m starting to see more and more of them in communities.

Yeah, I mean, in theory, I’m for trying to do this. Yeah, right. And I kind of like the idea of an investment to pay off. But the math has to work and then it has to like, look reasonable. So I’ve been wanting to have success with the Tesla roof and have it actually make mathematical sense.

It’s just still not there yet, even with the newest of technologies. Hopefully, eventually they do. And then, you know, that becomes a better thing. But states like California are requiring that every new construction.

80 percent, yeah. Has a large percentage that had to be solar powered come from solar at their property, so they’re not tapping into the grid with so much.

So it could potentially become a thing. And we’ve met a couple of clients recently that will look in for totally green homes or 100 percent eco friendly and wanted to do that with solar, and they wanted wind and geothermal. And those were words that were actually used based on a couple of recent clients at the upper end.

So and to top it off, your highway has to improve. So if somebody installed them and didn’t get HRA approval, that could be a whole other can of worms.

It could be. It could be. So what is this similar to? Ok, so I would ask the same thing because it’s something that could potentially be purchased, leased, financed, paid for and attached, but then ongoing. So I bring security systems like those could be, you know, security systems.

They have the satellites, the direct TV could be something like that could also be I’m specifically thinking about a whole home generator that has a big cost. A lot of people are looking into them now, right, because we had issues with our power grid winter. And so there were some problems there.

So I think this is going to fall into relatively that same thing because there’s a price, there’s a value associated with it. Sure. And you might finance it. You might have paid for it, but you have to transfer it. There might be some type of service agreement that goes with it for a period of time. Right. So there’s a couple of different things related to that one.

So ask the questions Are you putting solar panels in? How long are you going to plan to live in your home? You need to figure that out upfront before, because that’s going to play into it. It’s not just how much you’re saving on a monthly basis, if you are. I kind of question that honestly, I don’t know.

Well, what it comes down to as well is there’s a secondary cost or item that is most likely here in the state of Texas, also associated with the solar panel. And that is the power bank of where it’s stored, right? Because now we have this huge power bank.

So think of the Tesla Powerwall that could potentially be in the garage and we have that item there that stores the power. So. That you can use at a different time, if not if you just have the solar on your roof, you have to immediately use it right, you have to store it. There’s nowhere for it to go right, right? You have to like use it, wipe on the lights or whatever is going on at this moment.

So the secondary cost for sure is the battery technology to store it. Yeah, because in the state of Texas, we can’t sell it back to the grid, so we have to store it, which makes it a real challenge. So the idea is that you generate it during the day. Store it, use it for whatever it is.

And then, you know, so the that would be the same thing for like a Tesla battery for when you’re filling your car would also have an expense in a lease and or something.

So if you’re you’re saying if you had that installed in your garage, if you’re going to plug it in, if you’re going to plug in your car because there’s this adapter that goes from this, from your power to the plug in to make electric and there’s a cost and that’s would be handled the same way as well. That’s a fixture power to. Yeah, exactly.

One more thing to that I thought about is, well, I’ve been hearing people having the water filtration systems because we have such hard water in our area and it really causes. It’s caused a lot of issues for us. It dries out your your plastic pieces of your pool and different, you know, other mechanical in your home and it’s a problem.

So a lot of people are moving towards this. And everyone I’ve asked is like, Oh yeah, we just paid for it. It’s nothing right. We just installed it and it works. But those also come with some leasing options, so you got to know that too.

So don’t if somebody just says, Oh, we bought this, well, did they finance it like what happened with it, right? Because they can get pretty pricey.

So if you’re a listing agent and there’s one of these items in the property, then make sure that you discuss it. Make sure you understand what it is. Make sure you know all the paperwork. So in theory, this paperwork should have been. So the article is written and it says it cost them the sale.

I would argue that the unprepared agent should not have listed the property without the proper paperwork. And so what they’re doing is they’re blaming the power or they’re blaming the solar company for this.

I read through who? Huether No, I blame is no what? You have to be proactive, just like everything else, you know. I know that we harp on that. A lot around here is paperwork, paperwork, paperwork. But you see, it could cause a big problem.

Yeah. And clearly, if you had the paperwork in advance, if you already had the picture there, if you had it there, it wouldn’t. It would be.

You would have already been able to look at it just like any other disclosure. So if you have any of those installed items, that’s the paperwork that you do need to go and ask for the paperwork because they may think one thing and it could actually be something different.

So to know that was an amazing topic. Nice job

Episode Links

Tesla Powerwall , HRA approval, California, Texas Realtors magazine, solar panels , Mike Acquisto , Shana Acquisto , TNT 

Episode Recorded Live on YouTube 10.05.21

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