Announcement

Collapse
No announcement yet.

Caution against solar panel loan / lease

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • J.P.M.
    replied
    Originally posted by nwdiver View Post

    Yes... there are market based factors that effect how much you can sell your home for. That's how a run down shack worth maybe $10k can go for $1M because it's located in SF. But there is a TANGIBLE value as well. If I have a solid gold sink in my kitchen we can quibble over the market value of a solid gold sink but it's at least worth the value of the gold its made of. Solar PV is similar. There's a tangible non-market value of solar PV. API has determined that to be 12 years of production. If a home is appraised for $300k and the solar PV is calculated to produce $10k worth of electricity over the next 12 years the appraised value is $300k + $10k. It's that simple.

    Whether the next buyer is willing to pay the appraised value or if there's a bidding war or... this or that or... or... or... is another matter. The APPRAISED value is the APPRAISED value and solar adds to the APPRAISED value.
    I appreciate your points and understand the concept of appraisals. Still, and as anecdotal information only, I've spoken with more than my share of appraisers and I'd honestly say that probably half of them openly admitted they had no idea of how to value PV system. Speaking with them, I believe what they're telling me. The rest seemed to try to hedge their answers. Such experiences don't tend to inspire my confidence in appraisals as they may relate to PV systems.

    If I was a savvy buyer and knew I will spend maybe $5K/yr. on electricity over the next 12, and in any case less than that n$10K you use, why would I pay for something I won't use or at least not use that a negotiating tool to garner a lower overall price ?

    BTW, one other point: Who says the appraised value is an absolute number that sets an and inviolate number on the value of a property. If it does, that would make negotiating a price meaningless. I thought one big reason for appraisals is to help set an upper l limit for a mortgage.

    Leave a comment:


  • nwdiver
    replied
    Originally posted by SunEagle View Post

    The difference is if the PV system is leased or owned by the homeowner. A leased system is more than likely looked as a liability then an asset.
    Sure, I think leases are almost universally seen as a bad idea. If 12 years of lease payments add up to $15k and 12 years of production is $10k then your PV system has 'negative' value. Of course if you leased the system you also didn't pay anything upfront....

    Leave a comment:


  • SunEagle
    replied
    Originally posted by nwdiver View Post

    Yes... there are market based factors that effect how much you can sell your home for. That's how a run down shack worth maybe $10k can go for $1M because it's located in SF. But there is a TANGIBLE value as well. If I have a solid gold sink in my kitchen we can quibble over the market value of a solid gold sink but it's at least worth the value of the gold its made of. Solar PV is similar. There's a tangible non-market value of solar PV. API has determined that to be 12 years of production. If a home is appraised for $300k and the solar PV is calculated to produce $10k worth of electricity over the next 12 years the appraised value is $300k + $10k. It's that simple.

    Whether the next buyer is willing to pay the appraised value or if there's a bidding war or... this or that or... or... or... is another matter. The APPRAISED value is the APPRAISED value and solar adds to the APPRAISED value.
    The difference is if the PV system is leased or owned by the homeowner. A leased system is more than likely looked as a liability then an asset.

    Leave a comment:


  • nwdiver
    replied
    Originally posted by J.P.M. View Post

    A PV system may or may not add value to a property.
    A couple of reasons:
    1.) The biggest one might be that a thing (e.g., a home) is only worth as much as someone is willing to pay for it.
    2.) The value in savings in electric bills, which seems to be what most dart throws of what if any value a PV system may add to a property's value, is highly dependent on how much electricity a resident uses. An existing system that's oversized with respect to the next owner's electric bill will be worth less than if the next owner is a conservative electricity user. So, for example, a PV system that generates 20,000 kWh/yr. will, and somewhat but perhaps logically, at best, add only half as much value to a potential owner who uses only 10,000 kWh/yr. Sooner or later that factoid will become more common knowledge.
    3.) Believe it or not, for several reasons some potential home buyers do not like or want PV systems on their home. They may like the home but not enough to ascribe any value much less added value for an attached PV system. If nothing else, that will lower the size of the pool of available buyers.

    I appreciate that reasons 2 & 3 mean little to the average buyer due to buyer's mostly utter ignorance with respect to PV, but that situation may be coming to an end. Besides, savvy buyers will jump on any actual or perceived negative aspect of a home as a negotiating tactic. Not everyone likes PV.
    Yes... there are market based factors that effect how much you can sell your home for. That's how a run down shack worth maybe $10k can go for $1M because it's located in SF. But there is a TANGIBLE value as well. If I have a solid gold sink in my kitchen we can quibble over the market value of a solid gold sink but it's at least worth the value of the gold its made of. Solar PV is similar. There's a tangible non-market value of solar PV. API has determined that to be 12 years of production. If a home is appraised for $300k and the solar PV is calculated to produce $10k worth of electricity over the next 12 years the appraised value is $300k + $10k. It's that simple.

    Whether the next buyer is willing to pay the appraised value or if there's a bidding war or... this or that or... or... or... is another matter. The APPRAISED value is the APPRAISED value and solar adds to the APPRAISED value.

    Leave a comment:


  • J.P.M.
    replied
    Originally posted by nwdiver View Post
    Solar Panels absolutely do increase the APPRAISED value of your home. There's an approved metric by the API. They add the value of 12 years of production.
    A PV system may or may not add value to a property.
    A couple of reasons:
    1.) The biggest one might be that a thing (e.g., a home) is only worth as much as someone is willing to pay for it.
    2.) The value in savings in electric bills, which seems to be what most dart throws of what if any value a PV system may add to a property's value, is highly dependent on how much electricity a resident uses. An existing system that's oversized with respect to the next owner's electric bill will be worth less than if the next owner is a conservative electricity user. So, for example, a PV system that generates 20,000 kWh/yr. will, and somewhat but perhaps logically, at best, add only half as much value to a potential owner who uses only 10,000 kWh/yr. Sooner or later that factoid will become more common knowledge.
    3.) Believe it or not, for several reasons some potential home buyers do not like or want PV systems on their home. They may like the home but not enough to ascribe any value much less added value for an attached PV system. If nothing else, that will lower the size of the pool of available buyers.

    I appreciate that reasons 2 & 3 mean little to the average buyer due to buyer's mostly utter ignorance with respect to PV, but that situation may be coming to an end. Besides, savvy buyers will jump on any actual or perceived negative aspect of a home as a negotiating tactic. Not everyone likes PV.

    Leave a comment:


  • azdave
    replied
    Originally posted by nwdiver View Post
    Solar Panels absolutely do increase the APPRAISED value of your home.
    Not true when I had my home appraised. The appraiser assigned no value to my 1-year old 6.63kW grid-tie system even though they were paid for in full and I could prove that they saved enough in utilities to make an extra house payment each year for the next 19 years. I showed them I had 19 years remaining on a grandfathered contract with the POCO that was transferable at no cost to any new homeowner for the life of the contract. The appraiser and his supervisor both said they could not assign any value to a residential PV system as a matter of company policy.

    When neighbors ask me if they should go solar too I tell them if they can't afford to purchase the system outright with cash they should not bother. The payback and entanglements are way too risky if you go solar on a lease or a loan.

    Leave a comment:


  • Paul Land
    replied
    The one big down side on residential solar is always the same whether you lease, finance or purchase out right. The average home owner stays 5-7 years in that home and moves on.

    Leave a comment:


  • RichardCullip
    replied
    Thank you for your cautionary tale about leasing solar panels. I'm sorry to read about your sad situation.

    Leave a comment:


  • nwdiver
    replied
    I've never understood this idea that solar panels are separate from a home. ~70% of the cost of the system is the installation. Economically they become as much a part of the house as the windows or the roof. You weren't able to find a buyer to assume the loan on the panels? The weak point here is educating realtors. A home with PV should be a huge selling point if people weren't so ignorant....

    Solar Panels absolutely do increase the APPRAISED value of your home. There's an approved metric by the API. They add the value of 12 years of production.

    Leave a comment:


  • bcroe
    replied
    Thanks for the info. My take is stay out of debt. Bruce Roe

    Leave a comment:


  • angelgz2
    started a topic Caution against solar panel loan / lease

    Caution against solar panel loan / lease

    Perhaps like most of you, I strive to reduce my carbon foot print by installing a 9.6KW (max I could get) system. I was sold on this "beautiful" solar panel loan that was underwritten by a seemingly reputable company, Dividend Solar Finance, which had a 20 year term with $147 a month for payment. I did my math (present value calculation) that after all incentives, I would break even in 7.2 years. I got an EV and used electric powered lawn mowers and tools -- it was a dream come true that I was achieving close to "net zero".

    However, only after three years the nightmare begun. There was a mass layoff at my company and we were forced to relocate. The property value at my town was negatively affected and we had to sell our home at a loss. I tried to be honest and in good faith to work with the the solar lender, potentially removing the solar panels and continue using them in my new residence, or potentially sell them as used to pay off my loan (much like a short sale). The lender refused -- they said if I don't have enough equity in my home, I'll have to take out a loan / borrow additional money to payoff the panels or else I won't be able to close on the home sale (they have a UCC lien on my home). Already in a financial strain, how do they expect me to pay an additional $18,000 to close on a sale? Despite there's no provision barring me from removing the panels, the only option they gave me was "pay it off, or you are stuck with your home". I had a my real estate attorney look at my loan contract and he said to me, "if I were you, I'd never have signed this -- you are being put in a significant disadvantage, to the point of almost being abused":

    1. They can take away your house if you can't pay -- they don't educate you on the consequence of a UCC Lien
    2. You are not allowed to remove the panels, despite there's a non-fixture provision
    3. They can do anything they want to you, and you pay for their legal expenses
    4. If there isn't enough equity in your home, you are stuck until you come up with the money to pay off the panels
    5. They will not allow you the opportunity to make a short sale or mitigate your loss otherwise
    6. They'll stab you in the back as soon as they find out you are selling the home. They'll record the UCC lien with your local county records office so that all your potential buyers can see it. As a result, I lost the interest of potential buyers in this already bad local housing market.
    7. Solar panels increase your property value is largely a myth -- only a handful of cities with good incentives maybe, but many factors come into play. For me, it negatively affected my selling price in many ways so, I'd do some research before taking the sales person's word for it.
    8. Lender / Sales are often less truthful than they appear -- do your own research and don't make emotional decisions. If you have to get into debt to do it, don't, don't be like me.

    I'd encourage all of you to think twice before investing a large sum of cash into solar. It is true that over a long period of time, it is a worthwhile investment. However, the moral of my story is that unless you are totally financially secure, none of us can say we'll stay in our present home forever. We are at the mercy of our circumstances often beyond our control. The last thing you want is when you try to do the world justice, but instead your good deed brought you to financial ruin.


Working...
X