Solar energy is HOT, pun intended. It's getting
lots of attention these days.
Solar is also COOL! A bit of a
status symbol & statement to
the world that you are "going
green".
We're big fans of solar, in theory.
We're sure that 100 years from now the
world will largely run on solar power. It's the wave of the future.
However, it may not be the wave of the immediate future. We
are having some issues when it comes to selling houses with
leased solar power installations. Here's a summary:
Issue No. 1: You are not going to get more money for the
house due to the solar installation when you sell it.
There is a big solar leasing company telling people that solar
increases the value of their home by 15%. We're pretty sure the
researchers that came up with that figure were taking advantage
of Colorado's new liberalized marijuana laws at the time they
were completing their evaluation.
A valid comparison involves looking at homes with solar
compared to nearby homes without solar. Let's look at one
example:
The property at 16437 East Hialeah Drive is a 2,021 square foot
2-story home with unfinished basement. It had solar and it sold
for $316,000 in September 2014. The house next door is also a
2-story home with 2,347 square feet and partly finished
basement. Being a little bigger and with some basement finish,
you'd expect it to sell for $10,000 to $15,000 more - and it did
just that with a sale price of $329,000 in July 2014. The solar on
the first house did not create any increased value for it.
We've done this for a number of paired home sales around metro
Denver and pretty much find the same result -- almost no value
can be attributed to the solar installation.
Issue No. 2: You've got to get the buyer of your house to
assume the lease when you sell it. No big deal, right?
Actually, it can be a big deal. First of all, the buyer has to qualify
to assume the lease. The buyer must also want to assume the
lease. This can be an issue due to the lease buyout provisions.
Every time the house changes hands, the seller risks paying a
huge buyout cost if the buyer will not agree to take over the
lease. The buyouts often run $10,000 to $25,000. We've seen
one where the buyout was over $30k!
Many buyers balk at taking on this liability. Even though the
buyout cost decreases with time, the leases run for 20 years and
buyout costs remain high during the first 10 years or more. Many
buyers are concerned about what will happen when they go to
sell the house. They wonder if their buyer will want the solar or
will they get left holding the bag. This leads right into Issue No.
3.
Issue No. 3: We're pretty sure that solar technology is going to
change and evolve rapidly. We worry that the solar cells being
used in today's products will be out of date in a few years.
After all, how much can you get for your five year old computer
compared to what you paid for? Probably nothing and you may
even have to pay to dispose of it since you can't just dump
electronics in your trash can.
We can imagine that the same may be true of today's solar
panels. They may be close to worthless in five years and yet
you'll still have a huge lease buyout cost. This should make you
and any subsequent buyer think twice about the advisability of
solar.
Conclusion: We are sure there is much more to solar than just
the three items listed here. We have not done extensive
research. However, we wanted you to be aware of some issues
that have come up.
Courtesy of Mike Cooke, Colorado Home Realty (c)
