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What do rooftop solar panels do to the price of a home when you sell it?

  • ReVision Energy employee Jared Cobb carries a solar panel to install at a Concord home in August. ELIZABETH FRANTZ / Monitor file

  • Andres Quiroz, an installer for Stellar Solar, carries a solar panel during installation at a home in Encinitas, California, U.S., in 2012. MUST CREDIT: Bloomberg photo by Sam Hodgson.



Monitor staff
Monday, May 30, 2016

When it comes to being spotted in the wild, solar panels in New Hampshire are roughly at the stage that wild turkeys were a decade ago: They’re still rare, but I no longer pull the car over and gawk when I see one. 

But just as the growth of the turkey population has led to unexpected complications – I haven’t run over one yet, but I’ve come darn close – the spread of rooftop solar panels raises complications about buying and selling homes, the biggest financial decision any of us will ever make. 

First the good news for those with PV on their roof, according to Judi Farr, an agent with Keller-Williams Realty Metropolitan in Bedford, who teaches the state’s first Board of Realtors-approved class on selling homes with solar panels. “If you have two identical houses, same features, same time, etc., the one with the solar system should sell faster and for more money,” she said. In general, she said, the extra money will cover the cost of installation.

Solar wins! Well, mostly: There’s a cautionary note regarding home financing and leased panels, which I’ll get to in a moment. 

Farr compares rooftop solar to high-end granite countertops in kitchens.

“A granite kitchen used to be a supreme adder, a premium adder; now it’s almost expected by the buyers. Solar’s going to go the same route. People will expect it,” she said. “If houses have a south-facing roof and this one doesn’t have solar but that one does … buyers will use that to make a choice.”

“We may be 10 or 15 years away from that, but it will happen,” Farr said.

Normally I’d be trotting out data at this point, but there isn’t any good data about the effect of solar panels on home prices and sales in New Hampshire. There just haven’t been enough sales partly because there aren’t that many rooftop panels and partly because there just haven’t been that many sales of photovoltaic homes yet.

“Most people who are putting on solar panels, they plan on staying in their homes a long time,” pointed out Farr. 

You can find studies out there that claim to quantify the effect of rooftop solar on home values, but I don’t trust of them because they’re done by solar-power firms or advocates. The best I know of was done in 2014 by U.S. Department of Energy’s Lawrence Berkeley Laboratory and it agreed with Farr’s assessment: Rooftop solar, it said, added an average of about $15,000 to the value of a home during 2014 sales in eight states, roughly covering the cost of installation, depending on incentives.

But New Hampshire wasn’t one of the states in the study – although Massachusetts was – and housing markets are variable depending on geography, so I was dubious.  I went to Farr on the recommendation of the New Hampshire Association of Realtors because of her expertise, which includes energy efficiency technologies. 

When I talked to her, a couple of weeks back, she had just put a rooftop-solar house in Bedford under contract. Farr said the buyers had no concern about the complexity of this novel-ish technology on the roof, which was a worry back in the early days of photovoltaics. 

Of course, in a high-end market like Bedford – probably the richest town in New Hampshire, depending on which measurement you use –it is easier for buyers to pay more up front in expectation of reduced costs down the line. Perhaps the same panels on a home in a low-income neighborhood would have a different effect. 

Now, how about that cautionary note on financing that I mentioned earlier? 

Up to now the discussion has assumed that the homeowner bought the solar panels and owns them. But a major driver in rooftop solar these days involves leased systems, in which homeowners pay little or nothing up front but take advantage of the electricity, while the panels are owned by another company such as SolarCity or a number of local and regional companies, via what’s known as a power purchase agreement.

Farr warns that this can complicate home financing, partly because of the way banks handle payments for electricity generated by panels, which can reduce the amount of loan that a given down-payment generates, and partly because of concern about having something attached to the house that isn’t owned by the resident.

“SolarCity makes it sound really easy but it’s not going to be,” she said. “Each bank has a tolerance for the people buying their homes, and they may shy away lending from any property with a third-party leasehold improvement on it.”

She expects this problem will eventually go away as lenders get used to power purchase agreements, but “in the meantime if you’ve put a (leased) solar system on and need to finance or sell your home, you may have a more difficult time. … (Homeowners) aren’t going to know until they sell their home, or refinance, or get a reverse mortgage, what the impact will be,” Farr said.

So there you have it: Solar panels reduce your electric bills and you’ll probably get enough extra when the sell the house to cover the expense of installation, but you might face a nasty surprise with financing if you’ve leased panels.

To put it another way, they’re not a turkey.

(David Brooks can be reached at 369-3313 or dbrooks@cmonitor.com or on Twitter @GraniteGeek)