Home Selling in Temecula>Question Details

Marie, Home Buyer in Temecula, CA

My husband wants to get solar energy for our house, but we plan on moving in only 5 years. What value to the selling price can we expect to realize?

Asked by Marie, Temecula, CA Thu Nov 7, 2013

The system costs $30,000 and the ROI in 5 years would be $12,000 so unless we can get an additional $18,000 on our selling price, we'll be loosing that amount when we sell. Of course the Solar companies all say that we can recoup most of the cost for the equipment, that the value of the home goes up that much, but I don't believe it! Realtors, what has your experience been?

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12
Carl is right.

J.R. Thrasher
http://www.SanDiegoRealEstateVeterans.com
619-929-0105
0 votes Thank Flag Link Tue Nov 12, 2013
I would call Ken Amaradio solar dealer with Provident Solar because he has a program where the buy out is almost nothing in 5 years his number is 951-213-1968.
0 votes Thank Flag Link Fri Nov 8, 2013
The correct answer is that you will not get the money back at the point of sale, even though the sales persons insist you will. I’ve sold a number of homes with solar equipment and not one of them got their money back. In fact, it added extra levels of complexity to every transaction.

Jeff Evens below nails it for equipment that is leased over a specific period of time. Imagine this:

1. You get a fixed lease rate based on the value of the equipment over a number of years, projected savings AND government incentives. If the lease is terminated early, then the government incentives disappear and the cost to buy out the lease increases dramatically. As in, ridiculously. We had an amortized “payoff” amount of approximately $8,000 escalate to over $20,000 when we tried to pay off a lease early.

2. Certain types of loans will not allow any lender or lessor to subjugate behind them – FHA is a prime example. In other words, FHA will not allow a lease to subjugate behind their loan. Which means the lease has to be paid off. See #1 above.

3. Solar companies are willing to transfer their leases, BUT, they have to subjugate to any other existing loans. Which means they have to release their lien on the property so that the mortgage can record in first place … and how many leasing companies do you know that will release – even for a second – any liens that give them security for their leases? See #1 above.

4. The irony here is that a federal program – FHA – will not work with another federal program – subsidies for solar equipment.

Let me add one more thing just for giggles: although a buyer is not going to be willing to pay extra for solar equipment, I can guarantee to you that they will insist it is in full working condition at close of escrow – even if you have to cough up additional funds to get it working at capacity.
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0 votes Thank Flag Link Thu Nov 7, 2013
All good points - thank you!
Flag Fri Nov 8, 2013
Hi Marie,

This subject touches on the exact conversation we had at our meeting this morning. Adding solar paneling may bring more buyers in but will be another financing loophole for the buyer to go through when trying to get funded. Not only will they need to get approved for the home but they will need to be approved through the solar company as well. This is a turnoff for many buyers. Solar pays off if you plan on staying in the home. Unfortunately it will not increase the value of your home more than 10 percent of the cost of equipment and installation. In this case you may realize an increase of possibly $3,000. It's important to weigh out other more important factors in selling a home such as updated kitchens and bathrooms if you are trying to increase the resell value of your home. There are tax incentives for installing solar energy systems in California but it is very important to contact your County Assessors Office for exact details and information before you make the big decision. I've attached the link here for Larry Ward which would be your contact point for Riverside County. I hope I was able to give you a little more insight on the subject and would love to help if you have any further questions.

http://riverside.asrclkrec.com/
0 votes Thank Flag Link Thu Nov 7, 2013
It does help - thank you!
Flag Fri Nov 8, 2013
How big is your home? How big is your bill now? Do you have a pool? Chances are solar doesn't add much if anything to the price of the home at this time. However, if prices for electricity skyrocket, it could be valuable. If you are looking for the biggest bang for your buck in the house, solar isn't it. Depending on the size of your home, the upgrades already in the home, your neighborhood, and the current selling trend in the market, your home value will be directly affected by these items. These items will dictate whether spending $10,000 for granite was a great value or $25,000 for new kitchen cabinets.

A true Realtor sales pro will be able to advise you on what will give you the best bang for your buck and help you forecast a projected profit from a future sale. (Note: I have a crystal ball, can't find the switch to turn it on or I would provide this information for you). It's important to note that solar, as trendy as it is, is not an improvement to value unless the home itself is an energy hog.
0 votes Thank Flag Link Thu Nov 7, 2013
Thanks Greg. We average $200 / mo over the year (4100 SF, no pool)
Flag Thu Nov 7, 2013
Be careful with a lease. When you go to sell your home the solar company may have a higher criteria to assume the lease than the mortgage lender does on making the loan. I am fighting with SunRun right now on a deal where the buyer has qualified for a mortgage loan, but SunRun states the buyer doesn't meet "Their Criteria". They will not allow the buyer to assume the lease.
0 votes Thank Flag Link Thu Nov 7, 2013
Don't expect much more from your buyer than a big THANKS PAL!! If you're going to be moving in 5 years I'd personally disc the idea of solar and reconsider on your next home providing you plan to live there long enough to amortize the solar out.

Additionally, solar technology is changing as fast as Apple goes from the I-4 to the I-5. Remember when the first HDTV cost a few grand and now you can buy then for a few hundred. That will eventually happen to solar as well. My opinion but just watch.
0 votes Thank Flag Link Thu Nov 7, 2013
It is a personal preference issue
0 votes Thank Flag Link Thu Nov 7, 2013
Some solar companies are offering a no money down, lease option where you pay for it over 20 or so years. We have this and payments are still considerably less than our electric bills were. When you sell your home you have a couple options. Include the payoff amount in the price you are asking and then pay off the system when you sell the home or you can turn the lease over to the new buyers. They most likely would have to qualify with the Solar Company or whom ever is responsible for the lease.

Paul
0 votes Thank Flag Link Thu Nov 7, 2013
Hi Marie,

I am in the middle of putting solar on my home right now and have met with 4 companies and have heard every sales pitch out there. Your situtation is very similar to mine and we elected to do the 20 yearr solar lease, with no money down. Our bill goes from $335/mo to $194 and the balance of the lease transfers to the new buyer when you sell the home. Just another option if you aren't planning to stay in the home 10+ years. Let me know if you need any additional information.

Have a great day.
0 votes Thank Flag Link Thu Nov 7, 2013
Hi Marie, this is not a good idea. Residential solar energy in our area does not add enough resell value to offset your LOI.
Please wait until you are in a more permanent setting before adding this feature to your home.


Sincerely,
Jory Blake
Web Reference: http://www.JoryBlake.com
0 votes Thank Flag Link Thu Nov 7, 2013
Jory, thank you for your insight
Flag Thu Nov 7, 2013
Depends on the buyer, I wouldn’t pay extra, sounds like you wouldn’t either. But even if a buyer is willing to pay extra, that doesn’t mean it will appraise for extra. Could be in your area, but not in mine. Ask your Realtor to give you a couple of names of local appraisers.

If you owe money on your home I would look into paying an extra $30,000 on your mortgage.

Jim Simms
NMLS # 6395
JSimms@cmcloans.com
Financing Kentucky One Home at a Time
I answer questions about financing real estate based on my decades of experience dealing with mortgage underwriters. This answer is my personal opinion, has not been reviewed or approved by the company I work for. I do not offer legal or tax advice, if you need answers from an attorney or CPA find one knowledgeable in your local market.
Web Reference: http://jamessimms.com/
0 votes Thank Flag Link Thu Nov 7, 2013
Thanks, Jim - I like the idea of calling an appraiser! If any appraisers in So. Calif. happen to read this, please chime in!

Thanks, Marie
Flag Thu Nov 7, 2013
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