Going solar? Great! Installing a solar photovoltaic (PV) system can reduce your home energy usage, improve your carbon footprint, and earn you street cred among the neighborhood Greenies (my admiring self included). While green features are marketable, when it comes to PV installation it is crucial to gather your facts before jumping on the bandbicycle, and to anticipate potential problems that could affect resale or refinancing of your home. Here at Red Cedar we’ve identified some T’s to cross as you conduct your research, so that you can determine the approach that will work for you in the short term and over the long run.
Buy the Cow
Leasing solar panels to avoid the bulk cost of purchasing seems like a good idea, because it makes the upfront investment less daunting and the returns more immediate. However, leased equipment can be a detriment when the time comes to sell your home. Potential buyers may not wish to take on lease payments for the next decade, may not qualify on credit, or simply may not agree to the contract terms that you’ve established with the provider. You could end up needing to buy out the remaining contract before you can close the sale of your home. A planned investment or an unexpected balloon cost? Three guesses what we recommend… However, if leasing is the only option for you it’s not necessarily a sun-stopper. Just read through the contract stipulations carefully, and make sure that the return on the investment is favorable and sufficient to outweigh a potential buyout at the end. If it’s apparent that a company just wants to use your roof for the energy and “give” you a paltry percentage of the profit, you’d be wise to look elsewhere.
Lenders’ opinions vary widely when it comes to solar panels, so you should always contact your mortgage lender before going for the green gold. Some lenders approve all mortgages for homes when PV systems are purchased, some allow leased equipment if installed by approved providers, and some consider all applications on a case-by-case basis. Long story short, ask before you commit.
We spoke with a few of our clients who have considered going solar, and a few who have begun or completed the panel installation process. For most people the main motivators are going green and saving money, so when there’s a sales representative in your house promising both benefits, it’s tempting to sign on the spot. One of our clients said that his family had at least 4 unsolicited door-to-door sales calls at their home, and that all the pitches were identical. He stated that while they could have purchased panels outright for their small roof, they were sold on the idea of leasing so that, according to the sales rep, they would not be liable for maintenance, and to cover obsolescence of parts. Their sales representative contradicted that it would affect resale or refinance, which remains to be seen.
We spoke with another family who sought out a few competing bids for solar panels on their own, and experienced very different approaches among the companies. Two companies provided immediate quotes for leasing as well as purchase, even though it was clearly stated that the intent was to purchase. The third sales representative provided a careful assessment of the house, the roof, and the surrounding area, and informed our clients that they would not get enough sun in their location to make the investment worthwhile. As with all businesses, in the solar world there are the good, the bad, and the ugly. Do your due diligence when determining with whom to contract. Listen carefully for slanted information and red flags that favor the company rather than the customer.
While these hurdles may seem daunting, do not be discouraged altogether. Renewable energy resources are the wave (or ray?) of the future and will likely become the norm rather than the exception. Doing your homework will benefit you, and it will also benefit the industry by rewarding good practices and sustainability.