Buying A House With Solar Panels | DroneQuote
By DroneQuote | Posted April 22, 2019
Buying a house with solar.
5 Things To Consider When Buying A House With Solar Panels
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Buying A House With Solar Panels: 5 Things You Need To Know.
Residential solar power continues to grow in popularity and since its also being implemented into new construction homes in greater numbers, so it is likely you may one day consider buying a house with solar panels. It is important that you as the potential new owner of the house are fully aware of everything you need to consider before buying a house that already has solar installed on the roof.
In most cases, a homeowner buys a house with a pre-existing solar system that is in great condition and installed with remarkable workmanship backed up by a solid company, but there are enough examples out there that highlight the importance of full revelation of the system details and installation work. The vast number of solar installers lends itself to varying degrees of workmanship. What this means for you is that it pays to make sure your home inspector has an understanding of solar system components, their functionality, and proper installation methods or that you hire somebody specializing in these systems to inspect on your behalf.
Some of the things that you should consider when buying a house with solar are also things you should consider when selling a house with solar panels. For that reason, we put together this cheat sheet that will give you some of this information but from the seller’s perspective, which you can still use even if you are on the buying side.
#1 Buying A House With Solar Panels: The Workmanship
The level of care and regard for longevity that was taken to install the system will reflect in the workmanship left behind by an installer. Things to look out here for are the durability of components like a conduit ran in plastic vs steel, or shortcuts like running conduit over a roof gutter. Other telltale signs of poor quality are unorganized conduit runs or junctions. Do the components bunch up at the inverter or main service panel, or does everything looked like it was installed according to a plan? If you see bunched up components and haphazardly placed conduit at ground level where it is easy to do things the right way, then take that as a sign that greater shortcuts were taken on the roof where the installation process is a bit more arduous.
Workmanship should be very important to you as the potential owner of the house because the outgoing homeowner may have cheaped out to get the lowest possible price at the cost of quality workmanship, and if you don’t know to look for it, you may be buying some less than desirable issues in your future.
An installation crew that was cutting corners during invisible parts of the installation may also have taken shortcuts on the integrity of the roof penetrations to protect against rain. Furthermore, the solar panel warranties may be contingent on how the system was installed and the workmanship used.
#2 Buying A House With Solar Panels: The Installer
As solar adoption has grown, more companies have come into existence to offer their services, and unfortunately, some companies go out of business every year. This is very important to be mindful of because it relates directly back to the warranties that come with a system.
It is not uncommon to see warranties range in length from 10 to 25 years for solar components, production values (how much power the system produces), and workmanship warranties, so there is a lot of value that comes with the solar system if the company that installed it is in business. If the home you’re buying has a system installed by a company that is no longer in business, that puts your future electricity production and system functionality in jeopardy if you have nobody to turn to for help.
#3 Buying A House With Solar Panels: The Hardware
As the new homeowner, you will want to know the kinds of components that you are buying with the house, including the names of the manufacturers and serial numbers if possible. Typically at the close-out of a system’s installation, a homeowner will be provided with documentation stating all the system details. This is like an owner’s manual containing important information about the system and sometimes even the sales contract that spells out installer warranties.
Since you had no say in what system options the previous homeowner purchased, it is beneficial in at least having the correct understanding of the technology used for your home’s solar installation and how it should work to save you money and run efficiently.
#4 Buying A House With Solar Panels: The System Functionality
This is by far the biggest thing to look for when buying a house with preexisting solar panels; does the system work? Is it producing the amount of electricity it should, given the system’s age and site conditions? To smoke out functionality issues consider getting an inspection completed to confirm everything works or diagnose things that don’t work.
Functional issues include component failures, structural failures, installation errors, or drops in production due to shading.
- Solar Component failures – These issues are more often the case as systems begin to age, especially for older systems installed in the early to mid-2000s. In time, it will be more common for there to be issues as time passes. In some cases, warranties coverages may still be in effect and offer some level of protection for the incoming homeowner.
- User Errors – Electricity-producing solar panels are installed with means of interrupting the flow of power either at the inverter, at the main service panel, or on an AC disconnect switch. Sometimes when a system is not fully functional, the issue may be resolved by flipping a switch somewhere in the flow of electricity. This is where the system close-out folder mentioned above would come in handy, though these disconnects should also be labeled
- Roof integrity – Confirming the integrity of the roof is part of a good functionality test. See to it that the components used to cover up roof penetrations are intact and useful. If water damage from rain is of concern, looking underneath the roof at the structure’s beams that were used to mount the solar brackets gives insight into the integrity of leak protection. Also, the home inspector can check in the attic to confirm that there are no water stains underneath the roof where panels are installed.
- Shade issues – Since solar panels have a very long life span, it is possible that vegetation will have grown such that it may now interfere with solar power generation. After installation, homeowners forget about tree heights and this causes shade to creep up and significantly decrease production. In most cases, this is an easy fix and may even be lower in cost than most other repairs or fixes.
- Monitoring – When you take ownership of a house that has solar on it already, you will more than likely gain access to the system’s production monitoring tool. In most cases, this is a mobile application or a web login portal that shows electricity production values over different windows of time. The functionality of this should be tested and may sometimes show up as not functional due to a lack of internet if the home is vacant.
5# Buying A House With Solar Panels: How Were They Acquired?
How the previous homeowner chose to pay for the installation should warrant your attention, and honestly, it should also factor in how you negotiate the purchase of the home.
- A cash purchase – This is the most straightforward approach to solar and has by far the fewest, if any, strings attached to it. Now the only thing that matters is who installed it and are they still in business, and if not how does that impact the future ownership for you. Assuming all things are GO, a free and clear solar system is a significant benefit.
- A financed purchase – Depending on how the financing was structured, the system’s debt may be the responsibility of the previous homeowner and have no burden on you owning the solar system along with the house. In some cases, the debt of the system stays with the house and may be assumed by the incoming homeowner or paid off at the time of the transaction.
- A fixed lease or Power Purchase Agreement (PPA) – In this case, you may have two options as the incoming homeowner which are typically not favorable to you but may give you more negotiating leverage. You may be able to assume the remainder of the lease term or you can buy out the remainder of the lease.
- A lease or Power Purchase Agreement (PPA) with an escalator – If the lease or PPA is under an annual escalator, the cost of electricity generated by the solar system will increase every year by a pre-set value, usually by a factor of .9% to 3.9% per year. The escalator model is very attractive at the start of the lease but grows considerably towards the latter part of the term. Also, systems with a lease may increase the debt-to-income ratio of a prospective homeowner, thereby potentially having an impact on the purchase of the house.
- A PACE loan – Property Assessed Clean Energy loans are an interesting thing and pose their own sometimes significant challenges. Liens that may be on the home as a result of the debt may hinder close of escrow if they are discovered late or may pose a challenge when a property is being refinanced, depending on how the PACE lien subordinates. Pace loans also typically come at a higher interest rate since they are not secured with a person’s credit, sometimes 3% to 5% higher in interest. Also, most PACE loans have pre-payment penalties. If the home you are considering to purchase has a PACE loan of any kind, sit down and discuss with your realtor what this means for you.
Buying a house with solar panels
In most cases, if you are a new homeowner considering a house with solar, chances are you’re setting yourself up to live happily ever after. The cost benefits of solar are excellent, especially if the home you are buying has an already-paid-for system. The savings of solar are real and the comfort of running the AC unit during the summer without having to pay an arm or a leg is a very attractive feature of a home. Just do yourself a favor and ask the right questions and make sure everything with the system is an asset and not a liability.
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