Negotiating a new home sale
for a property with solar?
As a Hawaii real-estate agent you might be wondering whether your client is getting a fair deal
on the solar aspect of the sale and what the decision will mean for the property value,
your clients’ ownership costs, and maintenance commitment down the road.
There are over 83,000 homes in Hawaii with rooftop solar and all solar systems are not
equal! So if you’re a real estate agent involved with a solar energized property and want to wow
your client with your solar knowledge, here’s what you need to know:
Highest Adoption Rate Of Solar
As solar technology and costs have improved over time and Hawaii continues to have the highest electricity prices in the nation, our State has seen the highest adoption rate of residential rooftop solar in the United States.
Homes With Solar Sell For More
A 2019 report by Zillow indicated that homes with solar sell for an average 4.1% more than homes without solar. This report’s findings are a US nationwide average taken from data in several real estate markets. We would expect this home price premium is even greater in Hawaii due to our high electricity prices and year-round access to sunlight.
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All solar energy systems are not equal, so if you’re a real estate agent involved with a solar energized property and want to wow your client with your solar knowledge, here’s what you need to know:
The size of the system measured in kilowatts (kW) has a significant impact on the energy cost savings that the system will provide. The current homeowner may use power differently than your client for various reasons (size of family, daily habits, air-conditioning usage, etc.).
Ask the current homeowner for a copy of a recent HECO bill and consider asking the for access to their online monitoring system to see how much energy is being produced. This will help your client plan for the future by forecasting their energy production, savings and assess the potential need for adding to the existing system.
This will determine who you should first contact if you have a problem with your PV system.
If the original installer is still in business, there may be some time left on their workmanship warranty. This will protect a new homebuyer should there be any problems with the physical work that was required to complete the solar installation, most importantly the penetrations done to the rooftop to attach the system. This provides important protection for any leaks in the rooftop.
If the original installer is no longer in business, you will want to contact a qualified technician experience to service your solar equipment. You may want to ask about a Sunspear Protection Plan which provides 24/7 monitoring and access to a US based call center for any maintenance and repair issues that may arise in the future.
In a mature market which has existed for over 20 years, there are dozens, if not hundreds of solar panel manufacturers and it’s wise to understand represents the equipment for several reasons:
Warranty – is the manufacturer still in business? Do they still honor their product and performance warranty? Most manufacturers offer a minimum of a 10-year product warranty and a 25-year performance warranty. The terms and value of that warranty varies by manufacturer.
Performance & Durability – not all solar panels are created equal. Lower-tier panels can degrade more quickly over time, which results in higher monthly electricity bills due to lost power output.
Efficiency – solar panel technology has improved over time, resulting in higher efficiency meaning power produced per square foot. Lower efficiency panels could limit the amount of remaining available roof space should a new home buyer want to add to the existing solar energy system with a Phase 2.
Aesthetics – some solar panels & racking systems just look nicer than others. The roof is the “crown” of the home, and you want your client to be excited with the architectural design of their new property.
The year the system was installed will affect what warranty’s may still be in place. Often the installer’s workmanship warranty may have expired, or the installing company may no longer be in business, but the manufacturer’s warranty for the PV panels and inverters may still be in place.
Ask the current homeowner for any documentation received from the original installer, ideally they should have a homeowner’s manual which provides information including the system design drawings, product information including serial numbers (needed for future warranty claims), and most importantly login credentials for the online monitoring platform which allows you to track the performance of the system.
Hawaiian Electric has changed the rate programs offered to its customers over the last 10 years (NEM, CGS, Smart Export, CGS+, NEM+, etc.). Each program has a different impact on the calculation of your monthly electricity bill, so it is important to understand so that you can plan your monthly home ownership expenses accordingly.
For an explanation of each of the HECO rate programs please visit:
If the current homeowner financed their solar energy system with a loan, in most cases, the loan will always remain the current homeowners responsibility even if the property is sold. Solar loans vary in terms and conditions and some may be transferrable to a new home buyer, similar to the transfer of a solar lease. If your client is considering taking over a solar loan, follow the steps outlined above for a solar lease system to ensure you and your client understand the deal thoroughly.
The asking price for the property may reflect the loans held by the previous owner which means in most cases the price of the home also factors in the cost of the originally installed system and the long-term benefits it provides.
If the property your client is interested in has a leased solar energy system, it means that the current homeowner sends a monthly payment to a financing company that owns the system on the home’s rooftop. Before you advise your client to proceed with the home purchase, you’ll want to do some additional due diligence and gather some more information about the solar lease terms so that you can provide knowledgeable advise and show an understanding of the deal.
Some general questions to have answered by the lease contract and current homeowner:
Is there a purchase or ‘pay off the remainder’ option?
Some solar lease agreements will allow the current homeowner to purchase the system for a fixed dollar amount as specified per the terms of the contract. Depending on the age and condition of the system, this may be a desirable option if your client does not want to assume the monthly lease payments. The terms and conditions for this option can vary depending on the lease provider, contact your Sunspear Energy Consultant for assistance with understanding the fine print of the lease contract. Purchasing the system or ‘paying off the remainder of the lease’ could be baked into the home sale transaction.
What are the monthly fees?
Most lease and PPA’s have a monthly payment, and if you take over the lease from the current homeowner those payment responsibilities will be assigned to you. You want your client to understand what those payments amount to and what percentage of savings they provide relative to purchasing power from HECO (the utility).
Are the lease payments escalating?
Most solar leases have an escalator where the monthly payments increase by 1-3% year-over-year. There are cases in Hawaii where solar leases were sold 6-10 years ago with a higher escalator and solar prices and regular electricity prices were much higher than they are now. It is important for your client to know how the payments they are taking on will change over time so that they can forecast their cost of home ownership.
What is the term of the lease?
Solar leases are typically 20-25 years in length; depending on how far into the lease term the existing system is, your client can forecast the timeline left on their payment responsibility.
Final Considerations for Leased Systems:
Before your client assumes the responsibility of a solar lease make sure they understand their own financial situation. Lease providers will typically require that the new home buyer meets their credit requirements before approving assignment of the lease. It’s also important to be aware that leases can raise your debt-to-income ratio, which could affect a new home buyer’s ability to qualify for a mortgage and other potential long-term financing needs in the future.
The most simple & straightforward situation is when the system is owned outright by the current homeowner. Systems that are purchased up front are owned entirely by the seller, which means that they don’t’ come with any strings attached (apart from potentially paying a little more for the property due to properties already with solar have an increased home value which comes at a premium). This price premium for the home is justified as the long-term ownership costs will be much lower because the house will have a lower monthly electricity bill.