We get a lot of sun in Colorado. A lot. And as one might expect the market for solar powered homes has really increased over the past decade in our great, sunny state.  We are seeing many home owners investing in the installation of solar panels on their homes. These home owners are enjoying the benefits of energy efficiency, resulting in lower monthly bills.  Many of the companies who offer solar panels do so with no upfront cost and successfully pitch to home owners the significant savings on electricity bills. It can be hard to resist because it sounds like a no-lose proposition, with the appeal of “going green.”  Especially in Boulder County, I might add.

But how will a decision to invest in solar panels on your home's rooftop affect your ability to sell the home in five, ten or fifteen years from now?   Since the installation and the panels themselves are expensive,  many lease agreements between home owners hold and solar panel companies last for 20 years or more.  When a homeowner wants to sell their home before the lease ends, there are additional factors that I think are important to consider. 

According to Joanne Poole, Candidate for First Vice-President of the National Association of Realtors, "If the current owner signs a 20-year lease for the solar panels, the (solar) company may file a security interest creating a lien on the home. In the lease documents, the owner probably agreed that the lease must be assumed by the new owner. Therefore, the buyer is bound by the terms of the original lease. Also, the solar company has to approve the new owner.  It is a credit approval and they likely require a minimum credit score. "

Alas, and now a third party vendor is now involved in the sale, which may result in some potential questions such as:

  • Does your prospective buyer have the required credit score for approval by the solar company? 
  • If the buyers do have the credit score, will are they close on their qualifying ratios so that the the added lease payment disallows them from qualifying for the mortgage?
  • Do buyers even want to assume the lease? 

Apart from the lease arrangements, there are other considerations, such as the inevitability of replacing or repairing the roof. If solar panels are installed onto a roof that is ten or more years old, the roof may be due for replacement before the solar panels have run their course.  According to SMA America, because solar systems have no moving parts, they very reliable and require little maintenance. Solar modules come with a manufacturer's warranty for a lifecycle of between 20 and 25 years. Depending on the quality, the installation can last up to 30 years. Okay, so that's the good news.  But if your solar installation timing is not in sync with the age of your roof, and you require a new roof before the solar panels expire, you will likely face the added expense of removing and re-installing the solar panels in the event of a new roof installation. 

Whether you are a seller who finds or a buyer in this situation,  it is important to work with an agent who understands about the lease transfer and buyout options. That way you’ll be fully informed and prepared for how the sales transaction will work with the added complexity of solar panels. 

If you would like to see housing data for Boulder County, there are plenty of statistics to check out in such as "Days on Market", "Total Inventory" and "Newly Listed Homes".  We track all these market statistics for Single Family Homes (SFH) for most of neighboring towns on a monthly basis, including Louisville, Erie, Lafayette and Superior. Check out latest market statistics here. You can reach me anytime at cory@louisvilleassociates.com or at 303-961-6031.