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Solar panels have been showing up on the roofs and in the yards of more and more homes in recent years. So naturally, more homes with solar panels are hitting the market.

But this raises several questions — practical and financial — that must be addressed whether clients are interested in buying or selling a home with existing solar panels.

First, let’s start with some general awareness.

Solar panel salespeople and installers will insist that solar panels add value to a home and save on energy costs. They back this up with stats from the National Bureau of Economic Resources claiming a nationwide 3.5% increase in value. CNBC quoted Zillow findings that ranked Maryland in the top 10 solar premiums with a 3.8% increase or +$11,000 for the median home value.

However, the real value — or lack thereof — can depend on many factors, such as type of ownership, cost of electricity in that area, location and mindset of buyers in that market, as well as the age and productivity of the system itself.

From there, it all boils down to three key items that agents and title professionals need to keep in mind to help buyers and sellers make smart decisions during the sales process.

Are the Panels Owned, Leased or Under a Power Purchase Agreement?
Some systems are owned outright. This will ultimately provide value to the homeowner as long as the system is in working order. However, in Maryland, most home solar panels are under a lease or power purchase agreement (PPA).

The agreements are recorded as lien/easement/agreement and can be found at www.mdlandrec.net. Under these agreements, the solar company owns the panels and sells the electricity they generate back to the homeowner. In theory, the homeowner will purchase electricity at a rate that is lower than the rate offered by the local power company.

Yet, many times, a solar company may actually be charging a higher rate.

Determine Whether Production and Rates are Favorable
The official electric shopping website of the Maryland Public Service Commission offers a look into the current price per kWh for electricity (https://www.mdelectricchoice.com/shop/). This price must be compared to the price in the agreement obtained from the solar company to determine potential savings. In some cases, the agreement price per kWh offers little to no savings. In this scenario, the seller should be advised to consider the cost of terminating their agreement and purchasing the system at the current fair market value.

If the rates are favorable, now it’s time to show potential buyers why the solar panels are a great addition to the total package.

Accurately Communicate the Value
Regardless of whether the solar panels are leased or owned outright, always be clear and direct about the arrangement and what it means for the new homeowner. It’s also important to accurately state the benefits in terms that the consumer can understand.

A great example: “The solar system currently saves the owner approximately $500 per year.”

The bottom line is that selling a home with solar panels requires a bit more research and responsibility to understand and communicate the benefits of the additional investment. But as long as you do the work and know the numbers, solar panels could prove to be an asset that helps sellers find a buyer faster — and at a higher price.

Learn more about how solar panels increase property values: