Central Florida realtors and even Florida’s Chief Financial Officer are warning about a new twist in the ongoing debate on rooftop solar panel systems and the true cost vs real benefit.
While many homeowners are happy with solar systems, enjoying clean energy generation and largely reduced power bills, others are struggling to sell their homes - namely those who never thought they’d sell.
Florida CFO Jimmy Patronis said life changes and a growing number of solar panel system owners don’t know what they’re in for if they have to sell their home.
“Well people don’t realize they’re putting a ($50,000), maybe $60,000 liability on their house,” Patronis said. “And now let’s say they want to downsize, maybe they want to move into a retirement community where they don’t need their house anymore because they’re going to downsize and scale back. Now they’re going to pay off this depreciating asset, that really, in my opinion, they didn’t give the full disclosure. What they got themselves into is a financial liability.”
Veteran realtor Kim Coburn of RE/MAX Town & Country Realty in Winter Springs has represented buyers and sellers continuously for 42 years in Central Florida. Coburn said the problem she and other realtors are running into more and more is potential buyers can’t qualify to borrow additional cash to purchase the house and the loan on the solar panels.
Coburn showed News 6 a home in Winter Springs she’s trying to sell that came with an $89,000 solar energy system second mortgage. The seller purchased the solar system several years ago, agreed to the $89,000 second mortgage, which placed a lien on the house, and accepted a five-year warranty on the panels.
The seller had a choice: pay off the second mortgage to have the lien removed to complete the sale or transfer the loan to the buyer. But the buyer must be willing and able to assume the loan.
“And if it’s assumed by the buyer and the buyer is getting a loan, then that debt is figured in for their qualifying,” Coburn said. “So, many buyers, especially first-time buyers, which this neighborhood has plenty of, first-time home buyers cannot qualify.”
Coburn said she struggled to sell the home because any interested buyers walked away as soon as they discovered they’d have to assume the $89,000 loan. Other potential buyers couldn’t qualify for a mortgage for the price of the home ($500,000) and the solar panels ($89,000) when the home appraised for only $475,000.
Coburn said the banks’ appraisers placed zero value on the solar system declaring the panels added no value to the home. Appraisals can be disputed, but banks are not obligated to review them.
The Solar Energy Industries Association (SEIA), based in Washington, D.C., said panels do add value to a house. However, valuation is complex and subjective.
Wendy Parker, Executive Director of the Florida SEIA, recommended finding a realtor “who has experience selling solar homes and/or knowledge of how to value solar” and an appraiser “who has taken the Appraisal Institute’s Residential and Commercial Valuation of Solar course.”
“The Appraisal Institute sets the national appraisal standards and procedures for the country,” Parker said. “Provide your buyer with information about the savings you’ve achieved with your system. Sometimes the proof is in the pudding, and providing a utility bill can make all the difference. There’s also nothing wrong with a little bragging. If you financed your system, your realtor will discuss any additional documentation needs with your lender and title company. Usually a really easy process.”
But Coburn said selling a home with solar panels is not easy at all.
“So there are some courses that have come up that are great, but you can’t force appraisers to take them,” Coburn said.
Most appraisers follow Fannie Mae guidelines which offer vague guidance on solar panel valuation, Coburn said.
And a buyer can’t choose an appraiser.
“The bank picks the appraiser,” Coburn said. “And they don’t even pick it, they put it through a pool and then it kind of goes on a rotation and an appraiser comes up and that’s the appraiser you have to use for the loan.”
How many appraisers has Coburn dealt with that have taken the Appraisal Institute’s course in solar panel valuation?
“None,” Coburn said. “Absolutely none.”
News 6 asked Coburn what appraisers typically do when they evaluate a home with solar panels.
“They say, ‘We can’t put any value on it,’” Coburn said. “On this one [the home in Winter Springs], they [the potential buyer’s appraiser selected by the bank] didn’t put any value.”
Patronis called the solar panel industry “highly predatory.”
“I tell people all the time, solar sounds great, but it’s built for a specific customer who truly has the resources to have the budget to pay it off,” Patronis said. “I’m very skeptical when it sounds too good to be true. It always is. And the solar market right now is not ready for primetime in a way where it’s looking out for the best interests of the consumer. We get some of those complaints, but some of them will go to the Attorney General’s Office, some of may even make it to the Agg Commissioner’s Office.”
Parker said solar panels and storage of solar energy (batteries) “are a beneficial technology and for those who understand it the benefits are extensive.”
“A typical solar home in Florida will harvest nearly $50,000 - $120,000 worth of energy while costing only $20,000-$45,000,” Parker said. “Therefore, a well-installed solar system is an asset to the home. Solar homes sell for more than homes without solar, and also sell faster.”
Coburn said a solar system can be an asset to a home but a burden upon selling.
“I think a lot of people listen to the salesperson and maybe were a little misled, maybe not intentionally but they didn’t quite understand what they were signing,” Coburn said. “The people who have these houses with solar or are going to get solar, they really, really need to understand the agreement, read every word of it. Talk to an attorney, perhaps even a financial planner.”
Coburn said a seller can pay for a second appraisal done by an appraiser who is familiar with the Appraisal Institute’s course but the bank doesn’t have to accept it. Still, a seller could present the second appraiser to a potential buyer to show an estimation of the value of the solar system.
Parker said there is a lot of “miseducation and misinformation regarding solar on homes.”
“All of this highlights the need for more education for homeowners and realtors,” Parker said. “We will continue on our path to create these programs.”
Parker said the FlaSEIA has compiled a Florida Solar Buyer’s Guide “for homeowners considering adding solar to their home.”
Patronis advised homeowners to be cautious.
“I tell people, you’re taking a depreciating asset that is losing efficiency every single day,” Patronis said. “It is penetrating the integrity of your roof. All those things lead for, you know, a challenge down the road. So just do your homework. And you know, unless you’re buying it where it’s signed with Elon Musk’s name on it, I probably think you need to just, you know, hold back on going into it. There’s other ways to lower your power bill.”
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