Will solar panels affect your real estate value?

Will solar panels affect your real estate value?

It’s almost fall and the Sox are hot. New Englanders have been Red Sox fans since the beginning of the franchise, and we will probably do so until the end of time. As a kid, the extraordinary season of the 1975 Red Sox cemented my allegiance. The Sox had a handful of colorful characters. One of my favorites was Bill “The Spaceman” Lee. A few years ago, a movie about this brash competitor hit the big screen, aptly named “The Spaceman.”

He was a human highlight film before, during and after ball games. Instead of driving, he jogged to Fenway Park on game day. He once threatened to bite off an empire’s ear. And he nicknamed his manager Don Zimmer, “The Gerbil.” He went to war against the New York Yankees. Always taunting them, he referred to them as “a bunch of hookers, swinging their purses.” In one epic brawl, Yankees jumped him and separated his shoulder.

Lee is definitely better known for his antics off the field and his counter-cultural political opinions. He’s currently running for governor of Vermont. His slogan, “So far left, he’s right.” He once ran for president of the United States as the head of the Rhinoceros Party and promised to bulldoze the Rockies so Alberta Canada could get more sun.

With promises like that, he sounds like a lobbyist for the solar panel industry. Regardless of the Spaceman’s promises, the rise of solar panel usage is on the upswing toward the cosmos. Before you get intergalactic on solar panels, there are things to think about before investing in solar panels for your home.

Terms like “net metering” and “SRECs” have become a regular part of our vernacular. The process of exporting power back to the grid when a system produces more electricity than can be used is referred to as net metering. SRECs (Solar Renewable Energy Certificates) are tradeable certificates sold back to electric suppliers. Electric suppliers purchase these certificates in order to meet their mandated renewable energy targets.

You can basically play solar in two ways; you can own or you can lease. If you purchase a system, you’ll own the panels and benefit from the electricity they produce for a couple of decades (typically 20 to 30 years). A home system in Massachusetts averages over $20,000 to install before any tax incentives or rebates. With the high cost of purchase, breakeven could take some time. Generous federal and state tax credits, as well as utility rebates, may make a purchase more appealing. But incentives like these can and do expire.

Leasing a system from a solar company is another option, mainly because you have no upfront costs and no maintenance. You “simply” enter into a long-term contract with a solar company. Solar leases are often referred to as power purchase agreements, or a PPA. PPAs are financial agreements by which a solar company sets up the design, obtains permitting and installs the solar energy systems on a customer’s property. The customer would benefit from the electricity produced, but the solar company receives the other benefits, such as tax credits, and ultimately owns the system. Most leases and power-purchase agreements include escalator clauses, which means your monthly payments increase yearly. Any long-term contract should cause one to move cautiously.

Are you thinking of selling or refinancing your home, ever? The challenge of selling a property with solar panels is a relatively new twist that the solar industry and real estate market are grappling with. I reached out to several people in the real estate industry for their insight and opinions on the subject.

Rita Gallant, president of Plymouth Village Realty, says they are being bombarded with inquiries about the impact of solar panel installs on the value of their home. Her advice: “Don’t do it.” Rita’s experience in the Plymouth region is that potential buyers may consider panels unsightly, especially in historic Plymouth. “There’s no doubt solar panels will reduce energy costs, but there’s other considerations when considering panels.”

Marilyn Murphy, a Realtor with William Raveis in Duxbury says, “Solar panels do not add value to a home unless they are purchased rather than leased. People either like solar panels or they don’t. Like swimming pools, some people may want solar panels removed just as some people want pools filled in. They are not always an asset.” Ms. Murphy also went on to say, “In antique neighborhoods unique to New England, solar panels are not necessarily aesthetically appealing.”

Brian Molisse, owner of Molisse Realty Group, says, “If you are leasing, read the contract. Make sure your mortgage company will refinance your home if there’s a lien from a solar company. There’s a lot involved; have your attorney review any or all paperwork before you sign anything.”

Sarah Valentini, president of Radius Financial Group, a mortgage company in Norwell, told us, “One of the biggest issues is how the panels are viewed by lenders. The value of the panels may not be considered in the appraised value of your home. Therefore, the cost may outweigh the benefit if you are not intending to stay in your home for the long term.”

Like any capital investment, the debate of buy vs. lease rages on. While solar technology is not new, the business models used to deploy them are nascent. Keep an eye on this sector, do your homework and move cautiously if you are considering an investment in solar. Even though we often intend to stay in a home for a long time, our professional experience has taught us that “life happens” (job transfers, death of a spouse, the need or desire to refinance or general downsizing) when you least expect it.

Go see The Spaceman movie, for Lee is a true “American original.” And, Go Sox! Let’s win another championship!

 

Helping widows rebuild their lives after the loss of a spouse. Love practicing yoga & golf. A connector. Strive to live by the Girl Scout Promise & Law.