As solar in real estate becomes more popular, real estate agents need to be well-versed in how these systems impact transactions. Whether you’re helping a buyer or seller, understanding the specifics of a solar system can ensure a smoother, more transparent transaction. Below, we’ll answer some of the most important questions you need to address when a property has solar installed.
What’s the Value?
The value of a solar system lies in its potential to save money on electricity bills. Systems that are still under warranty, have good production rates, and are well-maintained offer substantial long-term savings. It’s important to look at the system’s age and whether warranties still cover it. Also, a properly functioning solar system can be a big selling point, as homes with solar often sell for more than comparable homes without it.
How Much Warranty is Left?
Knowing how much warranty remains on a solar system is crucial for buyers. Most solar systems come with warranties that cover the panels, inverter, and other components for a specific period (often 10–25 years). When it comes to solar in real estate, buyers often want to know how much time is left on the system’s warranty to avoid unexpected repair costs. If the warranty is nearing its end, the need for potential maintenance or replacement parts could impact the property’s value.
Additionally, it’s important to verify whether the warranty is transferable to the new owner. Most solar manufacturers and installers offer transferable warranties, but it’s always wise to confirm. A transferable warranty increases the property’s appeal, as the buyer will have peace of mind knowing they are covered. If the warranty is not transferable, buyers may hesitate, which could affect the system’s value during the sale.
Is It a Lease, PPA, or Purchase?
Understanding the ownership structure of the solar system is vital:
- Lease: With a lease, the homeowner doesn’t own the system but pays a fixed monthly fee to use it.
- Power Purchase Agreement (PPA): In a PPA, the homeowner buys the power generated by the system at a set rate, often lower than utility rates.
- Purchase: If the system is purchased, the homeowner owns it outright, which increases the property’s value.
This information is important because it impacts how the system is transferred during the sale, and whether the buyer will assume a lease or PPA, or gain full ownership of the system.
Is It NEM 1, 2, or 3?
Net Energy Metering (NEM) is the program that compensates solar customers for the excess electricity their systems produce. It’s essential to know which NEM program a property falls under, as this affects the financial benefits a buyer will receive.
- NEM 1: The original program with the best rates for selling excess energy back to the grid.
- NEM 2: A more recent program that provides reduced compensation but still offers substantial savings.
- NEM 3: The newest program, which focuses on rewarding homeowners for using their own solar energy, rather than for selling excess power back to the grid.
It’s important to note that NEM is tied to the system and the property, not the owner. However, with the proposed changes in AB 942, this could affect how NEM agreements transfer. Soon, it is possible new property owners will no longer inherit the same NEM 1.0 or 2.0 terms as the original owners. Instead, they will be required to switch to the less favorable NEM 3.0 terms. This shift could reduce the financial benefits the new owners receive from the system, particularly if they are relying on exporting excess energy to the grid for compensation. However, nothing has been set in stone yet. This still needs to be passed on to the Senate.
Knowing which NEM program the property is under is still crucial, but now it’s also important to consider how the transfer of NEM agreements will change after 2025. Buyers need to understand these potential impacts to make informed decisions about the solar system’s value, as the compensation structure may change once the property is sold.
Was it Installed Correctly and Does It Work?
Proper installation is critical for the solar system’s effectiveness and longevity. Agents must ensure that the installation meets local building codes, is compliant with safety standards, and was done by a certified installer. A system that was installed correctly will be more reliable, require less maintenance, and function at its optimal efficiency.
When assessing a solar system’s functionality, ask for production reports, which provide data on how much energy the system has produced over time. This allows you to verify that the system is working as intended. Solar systems that aren’t performing as expected might need repairs, which could be a potential cost for the buyer.
Can You Access the Monitoring and Run a Report?
Monitoring tools are a key part of solar in real estate—buyers should have access to real-time performance data, energy savings reports, and system health. This transparency ensures confidence in the value and functionality of the solar system during the transaction.
Partner With Us
Understanding these key aspects of a solar system is essential when dealing with a property that has solar installed. At DC Solar Electric, we partner with real estate professionals to simplify the solar side of every transaction. We provide quick, accurate information to support both buyers and sellers. From system performance and warranty coverage to helping with financing and system evaluation, we’ll ensure your clients are informed and confident in their investment.We also offer a rewarding referral program for realtors! When you refer a client to DC Solar Electric who proceeds with an installation, we’ll pay you a $1,000 referral bonus. It’s easy, with no extra work on your end—we handle everything from start to finish.