Many home owners blame solar panels installed on their home roofs for shaving off a substantial chunk from the total value of their homes. The loss hovers around a startling 10 percent of the total value of a home.
The reason for the cut in the selling price of the house is not the solar panel but the way it is leased. The leasing company, SunPower Corp (NASDAQ: SPWR) requires the buyer to take over the contract, which may have a large number of years remaining before its expiry. Many buyers unfamiliar with this kind of arrangement, prefer declining the offer.
Lease and sale
Leasing is responsible for the spurt in solar panel sales as most of them need no money upfront when supplying systems, which actually costs a substantial amount of money – running into thousands. It has made solar power much more affordable to the general public, and helped to kick start a 38 percent increase in residential installations in 2013. As this business model gained traction only from 2012, the bite in the fine print is just beginning to emerge.
According to Sandy Adomatis, who appraises homes for a living, owners of homes tread unknowingly into unfamiliar territory when they sign for solar panels. Mr. Adomatis is responsible for creating the standard tool used by the industry when valuing a residential property. He says that getting a buyer for a house with leased solar panels is tougher. In short, leased panels only negatively influence home values.
Increasing or decreasing the value
For individuals owning power systems attached to the roof, the presence of solar panels definitely increases the value of the home. A typical value increase is about $25,000 in California for average installations. This statistic is found out by a study conducted by Lawrence Berkeley National Laboratory. The study was funded by the SunShot Initiative of the US Energy Department.
Leased systems, however, are considered as the property of the individual rather than a component of the house. For a number of would-be purchasers, any solar lease is considered a liability and not an asset. This may throw off a few buyers, opined Adiomatis.
The introduction of solar leases came in 2008 and began to be popular around 2012. An overwhelming majority (70 percent) of installed residential systems are financed via leases, as per GTM Research. A number of systems continue under the upkeep of their original customer, which suggests the difficulty of selling such properties.