Solar panels or Nah?

[Richard Kelly]

Hello Bigger Pockets Family!

I have a property I am flipping and the home has solar panels on the front part of the roof. It’s not the best for curb appeal but it will help lower energy cost. I wanted to get feedback on keeping them or removing them. Do you think buyers would see them as a potential savings or would they see it as an eye soar that may deter them from buying even with the completed rehab.

Thanks in advance for any input!

[Steve K.]

That looks like about a 5kW system. Rough numbers here but it’s probably producing about 7,000-7,500kWh/yr., which is worth about $1,000. There may also be some sort of production payment contract that comes along with it where the utility pays a certain amount for any electricity the system puts on the grid, so there could be some income from the system on top of that $1,000 in energy savings. It would be a selling point for me personally, as I’d much rather get paid than pay. 

You should have gotten some info about the system along with the home, including the documentation about the system like the permit, paid invoice, warranty info, equipment manuals and data sheets, net metering agreement, production payment contract, name and contact info for installer etc. I would look into all that info so you can talk about the value of the system with any potential buyers. There also may be some negative implications with the utility if you were to remove the system, as most net metering agreements are for 20 years and the utility may require you to keep the panels operational until the net metering agreement is over. A call in to your utility, whoever installed it, and/or the previous owner should answer any questions about the net metering agreement, production payments, warranty etc. that buyers may want to know (and you should know as well). 

I’m guessing it’s not leased, because if it is there would have been a lease contract you would have assumed when you bought the house. A lease can be a negative as the buyer would need to qualify for and assume that lease (or buy the system from the leasing company, or have them remove it). Leases can be a hassle when selling the home but if it’s owned, most buyers will probably see it as a benefit to have lower operating costs through a reduced or eliminated electric bill. The Appraisal Institute has conducted studies that have shown a 5kW system adds $20k in value to a home. Zillow data shows that homes with solar sell for an average of 4.1% more. Also, if you remove them you will end up needing to replace the roof. So I’d leave them.