What Every Homeowner Should Know about Solar Panels!
For the sake of this discussion, these questions are related to photovoltaic panels (PV) only. National sites to do your own research are:
https://www.consumerreports.org/
https://www.energysage.com/solar-panels/
Green Certified Appraiser Link
Q – Is it better to lease or own solar panels?
A – While there are advantages to installing solar panels due to energy savings and carbon reduction capabilities, owning solar panels is better as they are classified as an owned asset. It’s possible for owned solar panels to have value on an appraisal and the buying public views them as an asset. Leased solar panels have no value on an appraisal (2015 Fannie Mae guidelines) and oftentimes cost twice as much as owned panels if paying the full lease. Leased solar panels may also delay a home sale and a home can lose value when selling due to the negative stigma of leased versus owned panels.
Q – Are older PV panels as energy efficient as new ones?
A – Solar panels lose efficiency/degrade each year. Newer solar panels are more efficient and cost less than older solar panels; however, older panels are still producing energy. The degradation rate of older panels may be more than newer panels. It’s always a good idea to check for those details when buying a home with solar panels. Newer solar panels degrade .3 to .7 % per year. I've seen industry professionals stipulate that 30 year old panels are still producing a LOT of energy!
Q – Is it better to buy a house with solar panels?
A – Yes, but as stated above, it depends on whether they are leased, financed or owned outright. If the panels are owned outright there are no future payments and you’re saving the energy produced by the panels with no payments. If the panels are financed, they have the capability of being owned if the panels are financed; solar panels can be negotiated in a purchase contract. If the solar panels are leased, find out if they have escalating payments and how much time is left on the lease then negotiate with the seller. Paying off leased solar panels does NOT make them owned, but you’ll get 100% of the energy savings without payments when a lease is pre-paid.
Q – Which solar vendor is better?
A – It’s best to research efficiency and cost. The panel with the best efficiency might cost more so there’s a tipping point. The best cost is not always the most energy producing panel. Research with consumer reports for authentic information versus a solar company. But ask what solar panels a solar installer carries as not every solar installer has every brand. Have them explain why they promote specific panels.
Q – What is the best rate of production for solar panels?
A – Generally the best production might be the highest cost solar panel. Decide which tradeoff you’re willing to make in cost versus efficiency.
Q – Do solar panels require maintenance?
A – That depends on where you live. If you’re in an area that has rainfall occasionally, then your panels may be clean enough not to reduce production. If you live in a snowy state, contact a solar association or solar company to determine the best way to clear snow from your solar panels. Solar panels don’t typically require maintenance, just cleaning. If your solar panels stop producing energy, that’s a whole ‘nother conversation. It's a good idea to have the solar system inspected periodically.
Q – What happens if a tree branch falls on solar panels?
A – First find out if the panels are still under warranty and contact the warranty company. If the warranty has expired, typically past 25 years, contact a solar association to find a reputable company to replace any cracked panels.
Q – What is the Return on Investment for solar panels?
A – In general, the newer the panel, the quicker the ROI because newer panels cost less and produce more energy. To calculate the return on investment for solar panels:
Example: If the system costs $20,000 and saves you $2,500 per year in electricity costs, its simple payback period will average about 8 years!
Q – Can HOA’s prohibit solar panels?
A – It depends on which state you live in, but most HOA”s cannot prohibit solar panels. Check with y our individual HOA to be certain.
Q – Does every solar array have a warranty.
A – Most solar companies offer a 20 – 25 year warranty. If you aren’t sure and are still making lease or finance payments, contact the company you are paying for details. If the solar panels are owned outright, check with the manufacturer.
Q – Can you return solar panels?
A – Solar panels are a contracted item and once you’re past the the recission period, depending on which state you reside, you are bound to the contract for the solar panels. If you are making payments on solar panels and selling your home, contact the solar company to ask if there is a way to remove the panels for the buyer. If the seller wants to keep the solar panels, they should ask the solar company if they can moved to the seller's new home. Contact an attorney for legal advice if needed.
Q – How does solar installation affect a roof warranty?
A – Solar companies should provide some type of warranty for their work installing the panels and for the roof itself. If you have an existing roof warranty, adding solar panels may void that warranty. Check with the roofing company before installing solar panels.
If you are buying a home with solar panels, always have an inspection performed on the panels by a different company than the manufactured panels so you receive independent information. A home inspector can verify if there have been roof leaks in the past.
Q – What happens if your roof leaks?
A – Immediately contact a roofer to assess the leak to determine where the leak started. If it is from the solar panel racks, contact the solar company as they should warranty installation. A thought - buying panels from a solar company that partners with a roofer is a two-fer!
Q – Is solar panel maintenance risky?
A – Depending on the climate/state where you reside, solar panels don’t need much maintenance. Any risk associated with maintaining solar panels would involve having the solar panels clear of snow, debris, falling limbs, golf balls, or any other object that hits the panels.
If your solar panels become dusty, they will produce less energy, so it’s a good idea to monitor the energy production from the app or whatever reports you have regarding performance. Hire someone with a good track record of washing solar panels and compare prices and reviews with other companies before hiring them. If you live in a snowy state, ask your solar company for the best method for removing snow. Check to see if there is a Solar Association in your state and ask the question as well. There may be companies as members of the Association that can assist.
Q - Do solar panels produce energy on cloudy days?
A – There is new technology in the works that will allow solar panels to produce more energy on cloud days. Currently, cloudy skies will lessen solar production. Monitor your software and compare energy production to understand the difference in sunny vs cloudy days.
Q – What happens when you want to sell your house with solar panels?
A – It depends on whether your panels are leased, financed or owned outright.
If the solar panels are leased, the homeowner should first contact the company receiving the lease payments for instructions. There are solar companies that have gone out of business and will not allow solar leases to be transferred, so ask if the solar company will allow a lease to be transfered to a new buyer. If the lease can be transferred, the homeowner must provide those details from the solar leasing company to their listing agent to relay to the buyer’s agent but the onus is on the seller to transfer the system to the new homeowner. Leased solar panels can never be “owned.” They will remain as a pre-paid lease with no value on an appraisal.
If the solar panels are financed, same instructions apply. Negotiating a payoff for financed solar panels means that the buyer will become the owner of the panels. There is no value on an appraisal for financed solar panels, UNLESS the financing is paid and the UCC filing removed from the Secretary of State's office BEFORE THE HOME IS LISTED FOR SALE. Once that is complete, an appraiser can add value during a home sale for these panels as they will be considered “owned.” Appraisers with the capability and knowledge of adding value on an appraisal will use PvValue.com to calculate the value. Listing agents should interview appraisers before they arrive at a home and ask if an appraiser how they calculate the value. If they don't use that website for the calculated value, they are not familiar with the education available on the Appraisal Institute website. There is no other method currently available to calculate the value of owned solar panels.
If the solar panels are owned outright, the buyer shares the new deed in their name to the solar company for warranty purposes.
Whether the solar array is leased, financed or owned, a new deed is provided to the solar company after the close of escrow is complete. This typically does NOT occur at the title company as the new deed has to be recorded, which takes place after all funds are received. The solar company will transfer a warranty after receiving the new deed in the buyer's name.
Q – Are there ways to receive data about solar production?
A – Yes! There are apps and software programs provided by the solar companies that share that data. Each solar panel is displayed with the energy production shown for each panel. If you are buying a home with solar panels, ask the seller to provide information so the software can be made available to you.
Q – How much can a homeowner save with solar panels?
A – It depends! There are several variables to consider as everyone has different habits, temperature settings on a thermostat, different appliances including water heaters and even a pool pump influences total energy needed besides the solar panels. Total cost of energy must be considered and varies between each household.
To provide one example, I currently save about $2500 a year in electricity costs because of my newer appliances, NEST thermostat and eco settings, sealed ducts, spray foam, and the solar array which is a 5.25 kw solar system. If you’re considering solar, start with an energy audit and find the least expensive fixes first before adding solar panels. You can save $ and reduce the size of a solar system by starting with the least expensive energy reducing methods first before collaborating with solar company to size a solar array. My system is 14 panels, smaller than most because I reduced my electricity usage first, then added solar panels.
Q – Is it wise to install a battery wall? And what do they cost?
A – It depends on the brand you choose and the size of the battery wall! For specific metrics, contact a battery wall company, which might be a solar company. Battery walls are most often installed in conjunction with solar panels. You’d need to create energy in order to store it in a battery wall. Is your electrical grid reliable? Homeowners install a battery wall in order to use power at night, during storms, or during power outages. Personally, I don’t have a battery wall because I sized my system for my specific usage and rumor has it that my electric company does not want to continue net billing (maintaining roll-over production throughout the year.) You’ll need to know how much electricity you require a year by totalling your electricity usage on your electric bill. Once you decide how how much power you use and want to store. Solar companies can help with those calculations. Battery walls in general start at about $8,000 each and different companies produce different batteries at different costs.
Q - What happens when a solar company goes out of business?
A – If you are making payments to a company that goes out of business, another company will most likely take over the payments. Reach out to them for further details. If not, find out if anyone is assuming the warranty on your solar panels. If you still can’t get answers, another option is to reach out to a law firm specializing in solar panels. In Phoenix, one such firm is the Rose Law Group.
Q – What happens if a homeowner forgets about solar panels and wants to sell his house? Or more than likely, what happens if a homeowner dies and there are solar panels on the roof?
A – First, the agent who oversees selling the home SHOULD BE knowledgeable about solar panels. If not, interview other agents. During the listing process when a real estate agent orders photographs for a home for sale, the solar panels will be visible in photos. This would cause any real estate agent to ask more questions about the home. I highly recommend drone photos be utilized so the number of panels is visible. If the seller is not alive, it would be in the agent’s best interests to get a solar inspection. Contact the utility company and find out if there were any agreements for a lease, financing, or owned and if net metering or net billing is in place. There are 2 agreements when a homeowner leases or finances payments. These are between the solar company and the homeowner; and the homeowner and the utility company. The utility company will offer a specific rate plan most likely for a solar homeowner. Check your utility providers' website. They should have historical information. In Phoenix, email [email protected] or [email protected].
Q – Why won’t a solar company talk to a realtor who is trying to help a homeowner?
A – The solar company is contracted with the homeowner and the realtor is not the homeowner. Have the homeowner (or a beneficiary with a Power of Attorney) ask if they can give permission for the real estate agent to speak directly with the solar company. If not, have the homeowner forward every email during a sales process.
Q – How do I find answers about solar panels?
A – Search for a solar association in your state. Oftentimes, there are a variety of members who can help answer questions without a sales pitch. Consider using Ai for answers.
Q – Is it wise to update a roof before installing solar panels?
A – YES! Thoroughly inspect a roof, fix issues, or replace the roof before adding solar panels. Find out if there are roofing and solar companies that work together as they may have unique abilities to install racking and have the roofer inspect the roof before adding solar panels to racks.
Q – What information needs to be provided if selling a home with solar panels?
A – If the solar panels are owned outright, provide the engineering specifications (drawings provided by a solar company at initial purchase), the contract, list of annual utility bills, information about the software and app for running the system. All contract data should be shared. Green Certified Appraisers use this data to calculate value for owned solar panels.
Q – Do solar panel leases need to be paid off when selling a home?
A – Solar leases can be transferred when selling your home, but that depends on the offer to purchase your home and which company offered the lease. As stated above, if a solar company has gone out of business, they may not allow a system to be transferred. Oftentimes buyers don’t want to inherit a lease payment that resembles someone else’s credit card payment. They didn’t sign the initial lease and may be unwilling to pay for a system they didn’t order, even though they will experience energy savings due to the solar panels. Buyers need to understand all the math involved as there are benefits to having solar on the roof. Understanding the cost/benefit of solar panels is very important in buying a home with leased or financed solar panels.
Q – What is the cost of maintaining solar panels?
A – Maintenance costs depend partly on where you live. States with a lot of dust on their solar panels will experience lower energy output so panels must be cleaned periodically. States with snowfall will need to remove snow to get full efficiency from solar panels. If your solar array goes out of service, immediately contact an electrician or a solar repair company in case there are electrical issues with the array. Costs vary by location and the above weather events. Research this before contacting anyone for service.
Q – How are leased or financed solar panels transferred when your home sells?
A – When a homeowner wants to sell their home they should contact their solar company for a “transfer department.” They will be provided with documents to share with a buyer and/or real estate agent to effect the transfer. Documentation is provided before the home closes, but the actual transfer doesn’t occur until a new deed has been created. The new deed may be created the day the home closes, but since the new deed can’t be provided to the solar company until after the home closes, the actual transfer may take place the following day.
Q – Do solar panels emit EMF’s?
A – To answer this question, I researched with a national non-profit for unbiased information. In general, the level of EMF's for inverters compares to a toaster. The answer can be found here:
Q – Can EMF’s be mitigated?
A - Based on the location of micro-inverters on the roof and a single type inverter in a garage or outside of the home, the risk is reduced and there isn’t enough EMF to mitigate.
Q – How much does a utility company pay for over-production of solar energy?
A – This is a regional discussion. Utility companies may or may not pay for over-production, which is called net metering or net billing. Check with your utility provider to know if they pay for over-production and what the rate would be if you over-produce energy from your solar array. It's typical that if an electric company offers net billing or net metering, the cost of energy you use is not the same as what an electric company pays you for over-production.
For instance, currently my electric provider offers net billing. When I over-produce power, it stays in the account as a credit and is used in other months when more energy is needed, typically summers in Phoenix. Once credits are used, a bill is created - again summer! My electric bill has on and off peak rates for electricity that range from 10 cents to 17 cents a Kwh. The payback is about 6 cents, so it's doesn't pay to over-produce, which is another reason I don't have a battery wall. The payback does not necessitate a battery wall and especially at a cost of $8,000. But my experience isn't the same as others in areas where there are frequent power outtages.
Q - What if my utility provider doesn’t pay for over-production of energy?
A – Good question! If they don’t pay for over-production and you want to cover all of your electricity, consider installing battery walls. When you over-produce power, the overage can be stored in your battery wall and used at night when the sun doesn’t shine. Research battery walls for the best production and lowest price to know which company to purchase battery walls and if the additional energy is worth buying a battery wall. Consider the cost versus your needs before making that decision.
Q – Is the solar array connected to the grid?
A – In most cases yes. If your city requires you to be connected to a grid in order to receive a certificate of occupancy for new construction, you have little choice. However, if your home is located on county land, there may be an option available to you to get a C of O, and then unplug from a grid. Research the city/county and utility company in your area for answers.
Q – What is the lifespan of solar panels?
A – Newer solar panels are more efficient and produce more energy than previous versions. It makes good sense to compare purchase costs and energy production on 25 - 30 year old solar panels. Contact a solar company for a bid to research costs (after comparing companies of course.) They will require 12 months of electric bills and the solar specs of your current system to give you a full analysis. For more information, visit: https://www.energysage.com/solar/how-long-do-solar-panels-last/
Q – What do solar panels cost?
A – Costs vary depending on which company you choose and the type of panel. And the total cost of a solar array depends on how many panels you install. For a guide, visit:
https://www.energysage.com/local-data/solar-panel-cost/
Q - What are inverters? Do I need more than one?
A - Inverters are utilizesd with every solar pv system to convert power from Direct Current (DC) to Alternate Current (AC) so it can be used in your home. Some systems have a single inverter that typically lasts about 7 - 10 years and has it's own warranty. Other systems have micro-inverters which are placed underneath each solar panel. These are smaller and typically have 25 year warranties. Costs vary so research these before purchasing and contact the solar company for their recommendation. It's always good for a listing agent to ask a home seller which they have so they can disclose this to a buyer.
In summary - in my opinion, solar panels are a great way to lower or eliminate an electric bill. They last decades and most solar homeowners are happy with their purchase. As you’ve read, leasing solar panels is not a good financial choice as you’ll pay almost double the cost of the panels over the life of a 25-year lease. Financing options depend on current interest rates. If you utilize a home equity line of credit, your panels are instantly considered as "owned" because they are not third party financed. If financed with a rd party company, they are not owned but can be once that debt is fully paid. Owned solar panels have value. When you add solar panels, make sure to contact your insurance company to add them to your homeowner’s policy.
Being a solar homeowner, I am 100% satisfied with my purchase. I financed my solar panels at 2.99% in 2021 when rates were low and will pay them off probably at the 9 to 10-year mark when I’m at parity with the cost that includes interest. If I hadn’t financed, my ROI would be 7 -8 years! Keeping money invested and paying a 2.99% rate is a good financial choice as I’d have lost money by cashing out $20,000 that has been earning on average 10% in the stockmarket. Part of my energy savings is attributed to adding energy saving features to my home before adding solar panels. In the last 5 years alone, I've saved $12,500 in total electricity savings!
