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7 Must-Dos for Realtors Selling a Home with Solar Panels

Florida’s sunshine means real estate agents are bound to work with a seller or buyer of a home with existing solar panels. Here’s what you need to know.

The question of the solar panel system value and whether it is functional or not is unique to each situation. That’s why there are precautions and steps you should take to better help and protect your customers and yourself.

Here are some must-knows about selling a home with solar panels:

1. Determine if the system is owned or leased.

Before marketing a listing, it’s vital to determine if the solar system is owned by the homeowner or leased. The ideal situation for both the seller and buyer is if the homeowner owns the solar system, but that’s not always the case.

Since most solar leases are for 20 years, it’s likely the lease will still be active when the home is listed. If the system is not paid off, then both the seller and buyer must determine their best course of action when negotiating the transaction. Major items to consider are lease terms, monthly fees and pay-off amount. Taking on a leased solar system could cause an increase in a buyer’s debt-to-income ratio, making them ineligible for a home loan.

2. Have a legal or solar professional review the lease.

If the solar system is leased, be sure the lease is reviewed by a professional prior to entering into any agreement to list or purchase the home. A lawyer or independent (third-party) solar professional who has a good understanding of solar leases and solar panel systems in general is ideal.

3. Have the system inspected by a professional.

Whether the solar system is owned or leased, it should still be inspected to determine its functionality. It’s recommended that an independent solar company be hired to complete the inspection, making sure the chosen company is doing an in-depth inspection of all parts of the system.

4. Engage an outside expert to determine the system’s value.

After the inspection is complete, have the independent inspection company do an objective and comprehensive valuation of the system. There are numerous items that need to be considered, including system performance, panel brand, age, inverter types, monitoring software and hardware, and warranty. After completing the inspection, the third-party company will provide you with an accurate valuation of the system. This will help in determining the total solar home value.

5. Work in tandem with the solar company.

Throughout the process, the real estate professional should be working with the solar company to ensure they understand everything that is going on, and that their customer understands, as well. Anything that could have damaged the roof in the past should be inspected and taken into consideration.

Most solar installers either work with a roofing company or do roofing themselves. So, this should be something that the real estate professional and solar company work through together. Electrical connections, permits and other details involving the function of the system should be verified with the solar company and the real estate professional, and then shared with the client before moving forward.

6. Confer with the title company.

Work with the title company to ensure there is not a Uniform Commercial Code (UCC-1) financing statement or filing lien on the solar home property. Some solar companies file this type of lien in the land records to put third parties on notice as to their rights in the system. The UCC-1 lien is against the solar system. Many title companies do not search for residential solar system UCC-1 liens because they are primarily used for business purposes and thus are regularly missed.

7. Understand marketing a solar home.

You and the seller should discuss how to market and list a solar home in the MLS. Setting accurate expectations with your listing will help attract the right buyers and minimize issues down the road. Your listing should state more than, “The home has solar panels.” Clarify that the system is owned or leased. Look for the “green information” section of the residential listing data entry form to accurately describe the home’s solar system.

It’s extremely important to follow these steps when listing or purchasing a home with solar panels. The only way to ensure a fair deal or valuation is to work with an independent solar company throughout this process. There can be real legal jeopardy and significant financial liability for the seller or buyer when one or the other fails to address issues associated with solar power. So, no matter your position in a solar home transaction, do your homework. Due diligence will be your friend.#

Clarence Zarnes is a real estate instructor, land professional and broker-associate with Real Estate Pros in Central Florida.