MVP's perspective comes from clients who have purchased solar, both several years ago and more recently. Word is, the prices the solar sales companies have been quoting have increased significantly and they have incorporated unique financing terms into their pitches. Surely the price and sale pressure has increased lately because homeowners have gained significant equity in their homes over the past 5 years. The home improvement industry in general is looking to cash in on it.

What Are the Cons?

Solar is not yet common enough to be able to say that a homebuyer would be willing to spend more on a home with a solar system than a home without. None of our buyer clients are currently specifically requesting homes with solar. In fact, I would argue that home buyers might be intimidated by a solar system; not understanding the benefits or the long-term maintenance or complexities such as, "how much is it going to cost when I have to replace my roof?"

In consulting with a trusted home appraiser, he concurs that the professional appraisal community is struggling to meet seller expectations of the value in their solar systems. To value a home with solar higher, an appraiser must find another recent comparable sale of a home with solar that presents a higher value than those without. That is hard to do with so few solar panel systems out there. As a result, many appraisers, whom the banks rely upon to verify the fair market value of a home before granting a buyer a mortgage, can sometimes only justify about $8,000 added value to a home with a solar system. This reality can be quite disappointing to a seller who spent $20K+ on solar.

So, any claims of a solar system adding significantly to your home's resale value in general is unfounded. In fact, most home improvements (work that is beyond repairing defects) do not return 100% of the cost in resale value. Because solar is still such a novel concept, a homeowner adding solar is a pioneer in the technology.

Ask yourself these questions and do the math:

• How much do you aim to save per year in power, especially if things like your heat, hot water tank, or even your fireplace, cooktop or clothes dryer are fueled by gas?
• What is your total investment, not only in the purchase of the system, but the maintenance you can expect, interest you might pay on another loan, and the extra cost you will incur when replacing your roof?
• How many years of saving $XXX in power must you have to first recoup all the costs above?
• By then, will your system still be in good operating order, or will you need to replace some panels or other components?

These are all questions to answer for yourself. Don't rely upon a solar sales representative for these answers.

And, because solar is not yet a fundamental value addition to your home, you should consider if harvesting the equity out of your best wealth-building asset for this improvement is wise. If it is something you really want to do, before you pursue financing through a solar company, I would highly recommend you inquire with a local, trusted home equity mortgage lender about a home equity line of credit (HELOC) or second mortgage. The terms will likely be more favorable and, if a mortgage lender would hesitate to grant you a home equity loan, borrowing for this type of improvement is probably not a good idea.

BOTTOM LINE

Solar power systems might be a good way to decrease your carbon footprint and give you some energy savings in the long-term. They are not, however, common enough to derive reliable resale value data. Therefore, investing in or using your home equity toward a solar system comes with great risk, especially if you do not stay in the home long enough to realize a financial benefit. We would only recommend adding solar to your home if you determine for yourself that the benefits outweigh the risk.