Trying to sell home with solar loan

[Lily3477]

Hi guys! I'm desperate and need some advice, and you all seem like experts here! I'm hoping maybe someone has been in this situation before, and can offer some tips!

I own my home, about a year ago I got solar installed on it, and have a loan (its financed through Mosaic). To clarify, its not a leased solar, its owned, except I'm paying monthly on an installment.

I listed my property for sale, got an appraisal done.. and guess what? The appraiser cannot include the panels as part of the property value because there are no comparable in this area that also have solar. I find this incredibly unfortunate. Now I can't include the panels in the home sale price, because it wont appraise. Of course... If the buyer wants to pay for them in cash, they can but bank will only finance the appraised value obviously.

So, my realtor listed our house under the condition that the buyer would need to quality for and assume the solar loan when they purchase the house. So far, no-one is biting. In fact, I've had people wanting to see the home and then cancel the showing after they found out about the solar loan. Of course no-one would want it, I know I wouldn't! Don't get me wrong, I love my solar panels, I would do it again, but the fact that they can't appraise because there's no comparables with solar is just ridiculous!

So I thought OK fine...... I'll just take my panels with me to my new home! So I talked to Mosaic (the finance company for the panels) and they said under no circumstances can the panels be moved off this property until they are fully paid off. I tried negotiating.. no can do. No way no how.

I'm just stuck here! Anyone have any advice for me, I would appreciate it so much!!

Thank you!

Lily

[sensij]

If it helps you feel better, you aren't the only one who has run into this problem. I think your best bet would be to include the panels with the house, and hope that attracts an offer that you might not have otherwise gotten. Use some of the sale proceeds to pay off the loan.

I wouldn't worry so much about the appraisal... When the buyer has the appraisal done for their own financing, maybe the system will be handled differently, or maybe there is enough wiggle room in the number that a more favorable valuation of the rest of the house can make up some of the difference.

Not a lot of options, but that is the way it is, unfortunately.

[Lily3477]

Thank you! The only way that can happen is if the buyer is willing to bring cash for the difference of sale price vs appraisal. I think I just might try that!

[J.P.M.]

What you are finding out is that down at the bottom line, in many to most cases, PV systems can and do have little to add to the value of a home in terms of resale value. Sellers bitch and moan when I say that, but you're situation is common and typical of why I do say it.

After speaking with several of appraisers, a couple of them neighbors in my HOA, I doubt if different appraisers handle PV systems much differently, one to the other, and that they're pretty clueless about what a system is worth, partly because of their general ignorance about how PV works, and partly because leases/PPA's and other matters make a poor understanding about PV as well as the various ways to put it on a property harder to get their brain around. PV is still largely an unknown and unproven technology to such people. Any wonder they're skittish ?

The house will appraise for what it appraises for. For the majority of PV equipped homes, appraisers don't know what a PV system is worth and often use dart throw numbers like 20 times annual savings, whatever thay are, and which, BTW, varies with usage and more and more, usage patterns, or a flat number like $5K or some number/whatever pulled out of thin air because they're clueless. Lack of comps and the waters muddied by the own vs. lease vs. PPA do little to clarify things.

Reality is, what a PV system adds to the value of a residence is no more or less than a buyer thinks it will add, and savvy buyers will say "not much". Apparently mortgage lenders tend to agree, at least in your case. Another common reality is that sellers think or believe the salesperson's B.S. about PV adding a lot of value and are in denial when they find out some peddler was less than candid with them.

More reality is that while it's a very local and very fluid situation that's driven by customer perception of PV, most PV systems will probably add a lot less to the value of a residence than the seller or owner thinks.

FWIW, I'd never consider buying a home with existing PV on it, and I'm the biggest solar fan I know of. The fact that POCOs are making PV less cost effective only makes me more convinced of my opinions along those lines.

[Lily3477]

Thank you for your insight J.P.M. - I think you have an excellent point .. the solar adds only as much value as the buyer thinks it will add. So yeah it comes down to perception. I still don't understand why appraisers are incapable of calculating how much value this adds to the home. Its not like fringe science, I'm not asking them to believe in fairy tales! Solar works, I have no electric bill ! -- But yeah, ultimately I guess it comes down to what the buyer thinks its worth... and if they don't care for solar, its worthless to them.

[Lily3477]

What do you mean by POCOs? What is that short for?

[Mike90250]

PoCo = Power Company

To sell the panels with the house, you have to educate your sales agent, who then has to educate the buyers. Once they understand how it works, and what the payback period is, if your numbers are good, educated buyers will go for it. Average Joe on the street, wants a beer cooler.

[DanS26]

Find a different appraiser who is willing and able to do a professional job at estimating the value of your solar system even without comparables in your neighborhood.

[J.P.M.]

PoCo = Power Company

To sell the panels with the house, you have to educate your sales agent, who then has to educate the buyers. Once they understand how it works, and what the payback period is, if your numbers are good, educated buyers will go for it. Average Joe on the street, wants a beer cooler.

I'm a big solar fan. I was also a peddler for 10+ years. I "educated" people in all sorts of ways with varying degrees of success for the purpose of me making money. Notice that reality is a somewhat flexible and definable implied quantity in that statement, and not a required attribute of the education process. Same goes for the truth - neither truth nor reality being required. So much for education.

Some buyers can be "educated" into buying bridges.

On the other side of the table, educated and savvy buyers - whose PV knowledge will most likely be increasing as PV becomes more familiar - will know that there is some degree of uncertainty in the perceived value of a PV system, regardless of its actual value, whatever that means. And so, regardless of any value, and regardless of what those buyers think of PV or it's value, those savvy buyers can, and probably will use the uncertainty as a negotiating tool or technique in various ways and iterations to lower the perceived value of a property and thus the price (Parenthetically, that will also put downward pressure on the perceived value of all (residential) PV).

In simpler terms, even if I was the world's biggest tree hugging nerd, and even if I loved beyond reason the PV system on a property I was considering buying, if I had as much as one eye and one balloon knot, I'd badmouth and denigrate the value of the PV and what it does to lower, rather than increase the property value. It's just business.

People see what they want to see, hear and read what they want, and then believe what they want, usually and probably too often the last thing they had crammed into their brain.

A thing is worth what someone is willing to pay for it. No more, no less. That's the reality that counts. How to move the perception of value, either up or down, is what selling is all about.

On the appraisal, I'd hazard a guess and suggest that while the no comps part may have some truth to it, it may be a convenient red herring excuse for something else going on The appraiser works for the lender, not you, and banks are not noted for going out on a limb as PV or something else on the property may be viewed.

When it comes to PV, seems to me that few of the players, be they buyers, sellers, real estate peddlers, appraisers and everyone else, know much of the reality of PV beyond what they've heard from peddlers and/or those whose goal is to use all that ignorance to separate people from their assets.

As always, those who take time and put forth the effort at education will make out better financially than those who do not.

[J.P.M.]

Find a different appraiser who is willing and able to do a professional job at estimating the value of your solar system even without comparables in your neighborhood.

The appraiser the lender hires is the only one whose opinion on the property value matters. With no/few(er) comps., opinions from different appraisers will probably have more spread. So what ?

[Lily3477]

PoCo = Power Company

To sell the panels with the house, you have to educate your sales agent, who then has to educate the buyers. Once they understand how it works, and what the payback period is, if your numbers are good, educated buyers will go for it. Average Joe on the street, wants a beer cooler.

Thank you! I should've known.. thats so simple. haha

And yes, I have to sell the buyers on it.... Or rather, the realtor has to sell them if he wants a piece of the cake. I saw an old post on these very forums where someone was buying a house with leased solar and he was actually considering it, where is that person so I can sell them my house?

[Syberdog]

Play the cold numbers....accountant type understand that. The system cost vs depreciation vs how much the monthly electric bill is compared to what it was pre-solar.
If you have an asphalt driveway vs dirt & gravel vs brick they certainly can figure out a basis value. Solar is just hardware too, in that sense, so it does have value- they could compare it with other 'luxuries' like like a pool, tennis court or pond... they just have to figure what that is worth. Then there is the 'monthly money saving" component which will be different for each family based on consumption. If you get a buyer that is used to $500/mo bills and he sees your $10 bill laying on the counter he will not forget that.
Also, if you don't HAVE TO move (but just happen to want to) , you could take the approach... "That's my price and my deal - take it or leave it" and let the cards fall as they may.

[Sunking]

You just learned a hard expensive lesson. No better teacher than losing a lot of money. In your area like most, solar has net negative equity. You get to write a check at closing instead of receiving a check. Congratulations, you are happy happy upside down homeowner. So what do you think about solar now? Do you wish you would have known what you know now when you added solar?

[Lily3477]

@ Sunking. Yes I would get solar again, in a heartbeat. My beef is not with solar itself, its with the financing. When I do get solar again at my next home, I'm going to steer clear of having it financed, and try my damnest to pay it with cash. Still a great buy, still worth it. -- If the people who sold me the solar told me "this will never add appraisable value to your home", would I still have gotten it? Probably not. I think the main reason I went for it, is to try something new.

[J.P.M.]

@ Sunking. Yes I would get solar again, in a heartbeat. My beef is not with solar itself, its with the financing. When I do get solar again at my next home, I'm going to steer clear of having it financed, and try my damnest to pay it with cash. Still a great buy, still worth it. -- If the people who sold me the solar told me "this will never add appraisable value to your home", would I still have gotten it? Probably not. I think the main reason I went for it, is to try something new.

How much, if any value a PV system adds to a property is something only the buyer will ultimately determine. At this time, most appraisers are pretty clueless about how a PV system works, much less it's value - but they usually won't admit to the ignorance. Separating the value of PV from the rest of the property or it's features is a very subjective thing at best.

If you do it again, I'd consider a zero salvage (resale) value and run the economics from there. In the future, if a value added (or detracted) number can be established with some reliability or faith, consider it found (lost) money.

FWIW, I see a lot of derelict 10+ yr. old solar water heaters in my HOA that most owners believe are still functioning. Most are not, or need major service. I believe they add nothing on resale. 10 year old PV may well have the same fate, working or not.