Hey team, question on solar panels and their impact on resale value. Essentially, is it worth it? I had a consultation with a solar panel salesman today and he quoted me 29k for 18 panels, however the final price would be 13k after New York and Federal tax credits plus a holiday discount. At 13k, I would be paying about $100 each month for electricity. There would be no up-front cost either. They would fix my $100 for the next 18 months as a grace period so I have time to put the tax credit money "back in" the full cost of the panels. If after 18 months I don't do this, then the loan is re-amortized and the monthly payment would increase. It seems like a good deal, and an easy selling point to a potential buyer - "hey, your energy bill will be $100 each month even in the winter, and then once you've paid off the panels you've got free energy!" but I'm just not sure about the tax credits. Like, I understand it comes off my taxable income, but it's also not like I'm getting a check for 14k that I can throw at the panels. I feel like it's more likely I would just have a lower taxable income, but still have to pay mostly the full 29k, which would make the monthly payment closer to $200. For context on the property - it's my house hack I've owned about 1.5 years now and plan is to sell in May of next year once I hit my 2-in-5 rights. I'm strictly concerned with ROI and how it looks to potential buyers. If anyone can provide some insight it would be appreciated. Thank you!

This is literally asked monthly if not weekly. You can click on the magnifying glass in the upper corner to search for previous discussions. TLDR: You will be asked by the buyer to pay off the solar as the seller. They want nothing to do with it. While it may get your home chosen over an identically priced one it won’t add value. As a potential buyer of 7 homes with solar last year 5 of the deals were outright killed by the solar. (They were leases with escalation clauses without a buyout option.) These people were screwed over hard by solar salesman. The other 2 had balances in the $13k-$25k range. I had the seller pay them off before closing and purchased the homes at the same price as non-solar homes. And this is in Vegas. We have some sun. Ps. There is ZERO chance on a solar purchase they will guarantee your total electric bill. The only solar people who even talk about electric costs are the lease people with escalating costs. Avoid them at all costs. As has been the case for 20+ years. You add them to make a statement about how virtuous you are, not to make money. Pps. I always love the statement “They’ll pay for themselves in 10 - 15 years…”. Do people not understand that’s a guaranteed 0% return for 10-15 years? Give me $10k of your money, I guarantee you’ll get it all back in 10-15 years. (If I can earn just 5% I’ll have $20k in 15 years. Give you your $10k and walk with a $10k. So even if they last 30 years and could have produced double their cost. Now I could have had $40k from a 5% bank investment.)

The typical experience that I have had flipping homes with solar and also helping buyers/sellers on sales with solar is that the seller ends up having a request from the buyer to pay the remaining balance off from the solar debt on the home without increasing the value. There were some years ago when buyers would just take over the lease and that is it, the value stayed the same and it was transferred in escrow to the new buyer if they qualified. The times have changed on this though, the buyers have become very skeptical on solar, and have demanded that the balance be paid off by the seller at the close of escrow. This is without increasing the sales price either. There are some reasons for this and why it is happening, the solar payment/bill increases incrementally each year until it ends, the company of the solar panels does not have great support, and the last thing, it is not a massive savings in eyes of the buyer with these burdens that they have to go through with an intense contract to sign too.

This is highly market, and even location specific. Some markets solar panels may increase your value....others it has no affect...and in others it will drop your properties value. It is important to consult with a real estate agent with knowledge of how panels affect your properties value.

Generally NO. For all the reasons listed above. If you look at true ROI (especially without any Govt tax help) It is an even bigger NO. Their time has not yet come IMO. And without getting battery backup, they really aren't comparable to your basic Elec power supplied by the power company......I.E. you have a power outage, what do you do at night? Although I am generally a fan of the concept and would love to see them in more widespread use, their time has not yet come IMO......they are just too dang expensive and we have to solve the problem with back-feeding. I have personally installed a medium sized system on an Off-Grid vaction home I have and it is a real life-saver. But I did the install myself, not everyone wants to or can, do this. But in answer to your original question.....it is a solid NO.

We're in sunny Florida, buyers want the loan paid off and there is a $0 increase in home value.

One thing I have run into as a real estate agent, is to be mindful of the age of the roof when installing solar panels. To replace the roof on a home with solar panels, to maintain the solar panel warranty, you will need to use their company to remove the panels, store them safely during roof work, and then use their company to replace the panels and make sure they are working again. Some solar companies offer one free removal/replacement, but if the company goes out of business or is aquired, this will be difficult to use. Here in Austin, TX I had this situation happen this year, and it cost about $6000 for removal/replacement of the panels on top of the cost of the new roof.

Are Solar Panels Worth It?

Bruce WoodruffPro Member

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

1y

Quote from @James Hamling:

Ok @Griffin Malcolm, ready to "Nerd-Out".....

I was involved in R&D program with O.C. on "solving" a solar-on-the-roof solution that (a) worked and (b) was scalable.

You might notice today, it's discontinued. Yup, there's a reason for that.

Firstly, the real item is only a question of Point of Production. Because the grid is getting feed via solar, a person in many markets can get solar power, the question is via a privatized system or via the utility provider.

Solar panels start diminishing in production from the first minute there installed. This is the science of how a solar panel works. It's shedding material from impact of sun's rays, that's how elec is produced. So, that is a key item to keep in mind when doing an analysis is what the slope is of diminishing production.

Next is install impact. Does it improve the roof itself, or does it bring increased maintenance. It varies a lot depending on install method, regional area, heck even a specific properties weather exposure.

Now the biggest impactor is often the least spoken on which is energy storage. Batteries wear out, that's just reality, and were talking batteries for a house, yeah, that's $. Personally, I am a big fan of the "alternative" storage systems such as water pumps, sand etc. because the battery method is honestly not all that efficient on a cost to operate measure.

Often today the systems make no sense in a standard urban/ suburban deployment, they just don't, this is why we have solar farms going up instead of the old point of use focus. BUT for certain rural areas it's worth it's weight in gold because of the reliability factor vs an unreliable or expensive existing utility structure.

In my opinion, the only one's who should ever consider or who it may be viable for in urban/ suburban settings is MFH. Where it can have a significant ROI in the immediacy, were talking 100% ROI in less than 5yrs.

For SFH, I find it makes more sense if it's a location where Starlink is also best internet option.

I agree. Although solar is a fun idea and a cool concept, it has yet to really be 'figured out'. Similar to Elecric Vehicles in my mind......sounds great but way too many issues.....

I have an off-grid house where I personally installed solar, but the nearest power poles were too far away, and the cost to me to bring power in would have been a huge deal-breaker.

And as you say, the battery issues is one of the big ones. Getting solar without having battery backup does just not make sense. I've been through 2 sets of more tradional batteries (Deep Cell and AGM) before the cost of a lithium battery became affordable.

Not to mention the inital product costs to begin with.....and even though I had no labor install costs since I did it myself....it was still pretty costly. But if I wanted lights and refrigerator etc, I had no choice but solar, this is why you're correctly alluding to the rural aspect....

1 Reply

James Hamling

Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes

1y

Quote from @Bruce Woodruff: