Keep records to determine real value of a solar home

Solar energy systems are becoming increasingly popular. Many factors are driving the trend: lower system costs, improved performance, environmental awareness and new options for system acquisition. I’ve received a ton of calls and emails about the issue lately, especially regarding the topic of solar leases.

People want to know whether they are making the right decision and it is not always easy. For people who can tap savings, purchasing a system with cash can provide a safe, reliable return on the investment. Whenever a financing option is introduced into the equation, homeowners can still benefit, but the financial rewards are split with a third party.

If you are considering a lease, take your time, read the fine print and think it through. Solar leases can be challenging to understand since there are many variables to consider.

Not all solar companies are equal. Try to work with those that are well-established. Get references. Lease agreements can run 20 years or more, so be sure you are working with a company that has solid financial resources and staying power so it will be there to support your system as time goes on.

Pay careful attention to the fine print. I recently reviewed a “solar lease agreement summary” provided by a leasing company to a potential customer. It clearly listed “next year solar savings” being well over $600. Wow, sounds great!

The item was linked to a note in small print that read partly, “The energy usage and savings referenced herein are for discussion purposes only and should not be relied on.” A cautious homeowner might apply the last five words to the company and walk away from that offer immediately.

A careful analysis using the leasing company’s own numbers revealed that the lease would likely result in significantly higher monthly payments, but a typical homeowner might never catch the discrepancy. Good leasing companies do not do that.

Another issue to consider is your home’s resale value if you decide to sell. Unfortunately there is a lot of ambiguity about the added value of solar energy systems.

Home improvements can add value to a home, but many are subjective. Some, like swimming pools, actually add considerable ongoing maintenance, expense and liability. Only those who “perceive” an added value will be willing to pay extra for something like that.

Solar is different in one very important way. It produces a tangible, measurable and essential commodity that has real value. Maintenance is low, longevity is high and the value of the energy it generates can not only be documented to the penny, but is likely to increase over time.

An energy-efficient solar-powered home has a significantly lower operating cost than an otherwise equal but grid-powered home. Thus, it is more valuable.

If the photovoltaic system is completely paid for, the benefits will be fully realized by the new owner and should be factored into the home’s price. When systems are leased or financed, the financial impact for the new owner will be different and must be carefully calculated.

The best way to prove value is to keep meticulous records, including a “before and after” energy bill history. No one can argue with real numbers.

Since the real estate industry relies on “comps” to fairly estimate the value of a home, one would think it would be a simple equation in the appraisal process. The industry is making progress regarding green homes, but there is still a need for further education.

That leads me to the best part. Homeowners can get some solid practical knowledge about residential solar resale value from the best study I know on the topic. The report, “An Analysis of the Effects of Residential Photovoltaic Energy Systems on Home Sales Prices in California,” was done a few years ago by Lawrence Berkeley National Laboratory. Nevada is not California, but many of the same concepts apply here and some are even more favorable. I’ve posted a link to the full report on my website, www.greendream.biz.

Real estate professionals have an even better option. On Monday and Tuesday, real estate and financial professionals can obtain a Green Specialist Designation as part of the Home &Building Education Series produced by the Green Alliance.

I cannot overstate the importance of this training since it addresses a vital area of education that is lacking in the real estate industry.

Don’t be left behind. Make sure you have the skills and knowledge to properly represent the growing number of green homebuyers and sellers. Visit www.greenalliancenv.org for details.

If you know anyone who is a lender, inspector, real estate agent or appraiser, alert him to this opportunity. The cost is quite reasonable and the first 50 registrants will receive a significant discount.

It’s important that we all place the proper value on efficiency and clean energy. It is so much more than amenities like granite countertops. If we look at the overall impact of the fossil and nuclear sources that still mostly power the grid, homes with solar energy would be worth their weight in gold.

Steve Rypka is a green living consultant and president of GreenDream Enterprises, a company committed to helping people live lighter on the planet. For more information and links to additional resources relating to this column, or to reach Rypka, visit www.greendream.biz.