Things to consider before getting solar

Solar is become popular over the past 10 years, especially in AZ. If you look around you will see there a lot of homes that have it. The question is solar right for you? As a realtor I have dealt with 100’s of homes with solar & wanted to share a few things you should consider before making the decision to get solar.

 

Age of your roof – What happens when your roof needs to be repaired or replaced? The solar on your roof will need to be removed, stored while the repairs/ replacement takes place & then reinstalled. This will likely add $1,000’s to your bill.

 

Should you get solar right after buying a home? Personally, I suggest living in the home for at least 1 year before considering solar. That way you know approximately how much power you will use throughout the year so when meeting with the solar company you can more accurately gauge the size of system you may want. You will also know how much you’re paying in electric bills to compare what you future payments may be with solar.

 

What happens when you sell your house? Well, it depends if the system is owned, leased or has a loan. Many times if you have a lease our loan on the system you will be asking the buyer of your homes to take over the existing loan/lease. Depending on the company you go through there will be different qualifications that have to be met. Typically, the buyer must meet certain qualifications (higher credit, lower debt/income ratio, etc). Unfortunately, I’ve experienced many transactions where a buyer could qualify to buy a home but did not meet the requirements to assume the solar lease/loan. At that point the seller had to either pay off of the remaining lease/loan or find a new buyer for their home. So before signing a contract ask them what is required when you sell your house in the future?

 

Does solar increase the value of your home? If the solar is leased or has a loan an appraiser will not give it any value, therefore it does not increase the value of your home. If the solar is owned it does add value to your home. The issue is that it is up to the appraiser to give a value so it’s not black & white how much value a solar system will provide. In my experience appraisers typically give you about 50% of the value of the cost of the system. I had a client who paid just over $40,000 solar & the system was just 2 years old. The appraiser increased the value of his home $20,000 for having it. So yes, it did increase the value of the house but not as much as my client had invested into the system.

 

Do buyers prefer to purchase a home with solar? If the solar is owned (no lease or loan) I would say yes, it is a selling feature. Who doesn’t love to reduce their power bill? However a buyer is going to take some things into consideration such as (age of the roof, age of the solar system, etc.) to make sure there aren’t liabilities they are taking on. If the solar is leased or has a loan it is not a selling feature that buyers like. I have seen many buyers not make offers on homes with solar or cancel real estate contracts because they didn’t like the details of the solar. Many people don’t want to take on a loan/lease that the prior owner took on. If the seller can show that the solar is saving them money prior to having solar then it can help (I haven’t seen this except for old systems where they are grandfathered in using credits with the power company in AZ).

 

Will solar save you money? Probably not. If you like the green aspect of solar that is great. However as of 2024 the cost of solar vs the energy production typically doesn’t make financial sense in AZ. One of the major issues is that in Maricopa County we have 2 power companies (APS & SRP). Previously when your solar would generate more power in the winter than you were using you would then get a credit with the power company that you could use in the summer when you would use more power than you were generating. It was an even trade which made sense. That is no longer the case. Now when you produce extra energy in the winter you will sell it to the power company at cheap wholesale prices. When you need extra power in the evenings or summer time your pay retail pricing. It’s not the even trade that many people think. You could get a battery to pull your stored power when it is needed but they batteries are so expensive that they also don’t save you enough to recoup the large cost to purchase them. I am hoping in years to come the price of solar & batteries will come down to make solar a better investment as I like the idea, just not the cost.

 

Other things to consider:

 

Warranty – The good thing about the lease option is that they typically maintain the system for the life of the lease. However a lease may cost you more than buying the system. When buying the system with cash or loan you will typically have manufacture warranties on the panels, invertors, etc. So there shouldn’t be a lot to worry about the first couple years (like a new car). However, as the system gets older the warranties will start dropping off & things will need to be replaced/ repaired. You should know the approximate life expectancy of your equipment & how much it might cost to replace in the future.

 

Are your payments fixed? – Many times when getting solar with a lease or loan you won’t have to put any money down which looks great. You’re getting a brand new system for practically no cost! (for now). Then after year 1-2 they payments will typically jump up a significant amount. For the remaining 18-23 years or so you will typically see a payment escalator which means your payment goes up by 2%-3% per year. That doesn’t seem significant but if your payments started at $100/month it would be $209/month by the end of your lease/loan. All of this should be broken down in your contract but many people overlook the details. So make sure to ask if there is a payment escalator & look at the breakdown.

 

What happens at the end of the loan/lease? With solar leases sometimes the contract says the solar will be removed at the end of your lease & your roof will be patched. Other times it will say there will be an optional renewal or they may allow you to purchase or keep the system. When you have a loan typically the system will be yours once the loan is paid off (similar to paying off your car loan).

 

This article wasn’t written to bash solar, I actually like the idea. However, I have seen too many people end up in a bad position because of solar contracts they signed & didn’t understand. This article was written to give homeowners things to think about & ask when considering putting solar on their home. This was written from a realtor’s point of view based out of AZ (Maricopa County). I do own a home with solar & homes without so I’ve experience some of this personally (not just from a client’s perspective). Things will vary by state so do your own due diligence.