TLDR;
This video discusses the potential downsides of buying a house with solar panels, particularly focusing on leased systems. It highlights issues such as lease complications, potential loan approval problems, roof damage, increased insurance costs, and the importance of asking the right questions before buying. The video also touches on when solar panels can be a good investment, specifically when they are owned outright and the system is relatively new.
- Solar leases can lead to complications with loans, debt-to-income ratio, and appraisal value.
- Potential roof problems and repairs associated with solar panels can deter buyers.
- Homeowners insurance costs may increase to cover the replacement of damaged solar panels.
- Owning solar panels outright is the best-case scenario for buyers.
- Buyers should ask key questions about the ownership, lease terms, monthly payments, repair responsibilities, and roof replacement implications.
Introduction: Solar Panels - Not Always a Bright Idea [0:00]
Many buyers are hesitant about homes with solar panels due to potential complications and hidden costs. Solar panels became popular in the 2010s because of the promise of lower electric bills, government incentives, and aggressive marketing by solar companies. While a Rocket Mortgage study in 2022 indicated that 67% of non-solar households were interested in solar panels, and homes with solar panels tend to sell faster and sometimes above asking price, problems arise when these homes hit the resale market.
The Problem with Solar Leases [2:25]
One major issue is solar leases, which typically run for 20 to 25 years and involve payments to third-party companies like Sunrun or Vivint. Some leases include clauses that allow for annual increases in monthly payments. These leases can cause problems with FHA or VA loan approvals due to Uniform Commercial Code (UCC) filings that act as a lien on the property. Lenders require the lien to be satisfied or subordinated to ensure their first lien position. Additionally, assuming a lease can complicate loan processes, and the monthly payments impact the buyer's debt-to-income ratio, potentially leading to loan denial. Leased panels are considered personal property and do not increase the home's appraised value, unlike owned panels.
Roof Problems and Repairs [4:28]
Solar panels can cause damage to roofs, leading to leaks and costly repairs. Removing and reinstalling the panels adds to the expense, deterring potential buyers who don't want to deal with these issues.
Homeowners Insurance Implications [5:22]
Homeowners insurance costs may increase to cover the replacement of damaged solar panels. While some leasing companies insure the panels, if the homeowner is required to obtain separate insurance, it adds to the overall cost.
When Solar Panels Are a Good Idea [5:57]
Buying a house with solar panels is only advisable if the panels are owned outright, the roof is in good condition, and the system is relatively new. Assuming a lease can lead to extra costs and potential loan approval problems.
Key Questions for Buyers [6:28]
Buyers interested in homes with solar panels should ask: Are the panels owned or leased? What is the remaining lease term? What are the monthly payments? Who pays for repairs? What happens if the roof needs replacement? Sellers should readily provide this information, which they would have gathered when installing the panels. Buyers can also ask the seller to buy out the remaining lease term or remove the panels before closing if they don't want them. Removing solar panels costs around $1,000, but potential roof damage repair costs should also be considered.
Conclusion: Solar Panels - Proceed with Caution [8:13]
Solar panels are not inherently bad, but they are a growing concern for buyers due to the added costs. While they can save money on electricity, lease payments and increased insurance costs can make them financially unattractive.
