Christina Mathieson, LEED GA
I’ve been in the Solar Industry on Long Island since 2010. The exponential growth that the industry has experienced in this short time is astounding. Because of the rapid growth and the lack of education and real knowledge on how solar and solar project financing actually work, there’s a great deal of misunderstanding.
The solar market grew so fast, in fact, that it wasn’t thought of to train real estate professionals on the different finance methods for solar and how they will arise in the sales transaction of a home. I started training real estate pros on residential solar in 2016 and what I didn’t expect was that they would train me on how solar affects them.
All solar is good solar – we want to see renewable energy everywhere and eliminate as much of our dependency on fossil fuels as possible. Going solar has tax advantages in most states whether it’s owned or leased and it allows the homeowner to have more control over his or her monthly living expenses. In a system that is owned, you lock in your monthly payment and it never goes up. In fact, at the end of the term of your loan, if there is one, the payment goes away but you continue to produce energy (that you’re not buying from the utility) for 25 years or more depending on the panel you chose and the warranty.
The big question everywhere is does it add value to a home? The short answer is that if the solar is owned (or financed to own) by the homeowner, there is a big added value. When you compare the cost of living in a solar-powered home to that of a utility-only powered home, the solar home wins hands down. You see, because a rooftop or ground-mounted solar PV system generates energy, you don’t need to purchase that amount of energy from the utility.
If you own the system and you’re paying it off through financing, you’re using the same dollar you would have used to pay your electric bill but probably less. Solar can be appraised on the value of the energy it will produce for it’s remaining useful life or the value of the equipment itself. This ONLY applies to owned systems.
When a seller’s solar system is owned by a third party, it can make a buyer uncomfortable. The lack of education and information on this subject is remarkable as there has been little to no education in the real estate community at large. Buyers may not understand the details and benefits of solar or even energy efficient systems in the home for that matter. Often times a seller with a solar lease or PPA doesn’t necessarily understand the agreement they signed. When a residential solar system is being transferred as part of a real estate transaction, there a few scenarios that we’ve seen. First, in the case of a third-party owned solar system, the current owner must transfer a lease or PPA to the new owner or completely pay off the contract in order to sell the house. Any UCC1 filings must be temporarily removed when the home’s title is transferred and then reinstated through a UCC3. This is as much for the protection of the seller as it is for the buyer. There are many little pieces requiring a bit of understanding. When a seller’s solar system is owned or bank financed, it is considered an asset not personal property therefore it can be included in an appraisal.
According to Sandra Adomatis, author and designated as an SRA Member (Residential Specialist) of the Appraisal Institute.
“Appraisers should be an unbiased arm of the real estate transaction, and they should also be knowledgeable of the property type and valuation tools. However, in the area of energy-efficient and green residential properties, we have challenges that can result in inaccurate appraised values.
Just as a poorly marketed high-performance property can leave money on the table, a flawed valuation and lending process costs time, money, and stress for everyone involved in the transaction.
The borrower has a “bill of rights” to expect competency from alI parties involved in the reaI estate transaction.
Fannie Mae, Freddie Mac, and the Federal Housing
Administration (FHA) all require lenders to hire appraisers who are competent in the property type and geographical area. An appraiser who lacks the required competency must decline the assignment.”
SO yes, owned solar is a revenue-producing asset and provides value to a homeowner in the form of energy. Every homeowner should read what they sign and in the case of the transfer of ownership of a home, it’s best to make sure the solar is a part of the deal or that the buyer will assume the lease or PPA if applicable. Solar is considered an asset by the Appraisal Institute only if the homeowner is also the owner of the system.
Christina “The Solar Specialist“ Mathieson, is the author of the first and only in-person “Becoming A Solar Specialist” course in the United States which Educates, Trains, and Prepares Real Estate Professionals on how to best represent the buyer and or seller in a transaction where an existing rooftop or ground-mounted solar system is present. The “Becoming A Solar Specialist” course provides Continuing Education Credits approved by the New York State Department of Sate (NYSDOS) for 3.75 Credits. “Becoming A Solar Specialist” is approved for Appraisers, Home Inspectors, & Real Estate Agents (Salesperson/Broker)
Christina has been in the solar industry since 2010 and is an authority on the effect a residential solar system has on a real estate transaction and is a LEED Green Associate with extensive knowledge on energy efficiency and green building practices, In 2018, Christina was honored as one of the “Top 50 Women In Business” by Long Island Business News and most recently was appointed by Legislator Kevin McCaffrey to represent the 14th Legislative District on the Suffolk County Women’s Advisory Commission. Christina Mathieson is approved as a Full Instructor by the New York State Department of State, who is focused on the Real Estate community to Educate & Empower Real Estate Professionals with the information they so desperately need.