With the new popularity of solar energy among home owners, there are a few things that people buying or selling a home need to know or at least think about.
Should you lease or purchase your solar panels?
How does either affect me if I am selling or buying a house?
The important point to take away about Solar from Fannie Mae’s Guide is this:
If you own a home with a solar system, the FHA requires (to your benefit) that its value be assessed and added to the total appraisal value of your home when you want to sell it. However, if you do not own your panels, whatever value that they may add cannot be included for an FHA assessment.
On top of this, there is more red tape if someone wants to secure a mortgage through Fannie Mae on a home with a leased solar energy system. Some of the additional requirements for homeowners who finance their solar panels with solar leases/PPAs include:
-The solar lease payments must be incorporated into the potential buyer’s debt-to-income ratio.
-The owner of the panels (i.e. the solar leasing company) must have third-party insurance to cover damage to the mortgaged property caused as a result of malfunction or faulty installation of the panels.
-There is also a UCC lien on your property usually when you lease.
But in addition the that, if you lease your solar panels you certainly can transfer that lease to the new owner,
A. If they qualify according to the dept to income ratio.
B. If they want it. The lease is long and it is very expensive to buy out of the lease early.
So as a buyer it is great on one hand to be able to save so much money on your energy costs, but you have to make sure you qualify. There have been circumstances where a sale has fallen through because of this.
As a seller, be aware that your buyers will be impacted especially on a lease. Some buyers may not qualify. And some buyers just may not want it, whether you lease or own the equipment.
Am I saying you should not get solar? Absolutely not. I believe in saving the planet and saving money on energy costs. It is a good thing. You just need to know what it means in the real estate world. Make sure you ask questions. Know what it will cost if you want out of a lease. Know what your break even point will be if you purchase. Talk to a real estate professional to find out how it could affect the purchase or sale of a home.
For the full article from Fannie Mae click the link below.