Solar panels on a flipped project

[Dylan Tran]

Has anyone in this forum ever put up solar panels on a flipped property? What are the advantages and disadvantages when it comes to selling the house? Does it generate more buyers or sway them away because you're factoring that in the price of the house? Thanks in advance.

[Charlie MacPherson]

@Dylan Tran I recently installed 48 solar panels (13 KW peak) on one of our barns at our home in Plymouth.  We purchased them outright with a low cost loan through DCU / Mass Save.  My main motivation was to reduce the cost of baseboard electric heat, though we eventually plan to install mini splits.

We have a 10 year, guaranteed fixed price contracts to sell SRECs, which is based on the size of the system, not the actual production.  Between that and the reduced cost of electricity, we should be cash flow positive from day one - though we have yet to receive our first SREC check.

With a "free" leased system (Solar City and others), the provider will most likely put a lien on your property for the cost of their equipment that's attached to your house.  I'm told that not everybody does this though, and certainly not with the system we purchased outright.

Further, with a leased system, I'm told that the solar company will have to approve the buyer when you sell the property.  That means a credit check, which will reduce their credit score with a hard pull.  If the buyer is on the edge credit wise, that extra pull can lower their score enough to kill their loan approval and prevent them from buying the property.

I also spoke with two appraisers about our system and how it would effect the valuation of our home.  Both said that even though there is $50,000 worth of hardware that is attached to the property (making it real property, not personal property), they would not add any value to the home based on it.  Both said there wasn't much in the way of clear guidance on the subject.

So that means that you can spend, say $30,000 on a smaller system, and expect to recover that in the sale of the property - but the lender won't show the system as adding value to the property. That means that either your buyer will have to bring that much extra cash to closing, or the sale will fail based on the appraised value. That's especially risky for low/no down payment loans, like FHA, USDA and VA.