Top 3 Reasons to Buy a Solar Home
Solar isn’t the trendy thing to do… it’s truly the future. And the sooner you get into the solar game, the sooner you’ll reap the benefits. In this blog post, you’ll learn about the top three reasons you should buy a solar home.
#1 Convenience
Buying a solar home is convenient! And who wouldn’t want a bit of convenience with everything else going on in the world right now? Purchasing a solar home is more convenient than deciding to buy a non-solar home and install it at a later date.
There’s a reason that two million homes in America have already made the switch to solar, along with millions of others around the world. Of course, most homeowners will tell you it was a long, challenging proces. Going solar involves many steps and requires a very high-level of coordination.
Many homeowners love the idea of having solar panels on their home but they don't want to go through the headache of actually implementing them due to horror stories and complaints. The reason we see so many complaints around solar installations is due to the complexity of the process.
A great solar company will shoulder most of this burden, but many don’t accurately convey to the homeowner how much work goes into the installation. We all love a good movie, right? But the process of making one is long and tedious. Of course, most don't think about that as their favorite silver screen actor is saving the day. Designing sets, writing scripts, and going over lines are all tiny footnotes to the end-consumer. We just want to enjoy the work of others– few people, if any, want to be bothered with the details.
Many homeowners sign up for solar because they understand it's a good idea and they want to save money. Finding a home with solar already installed is a blessing because it allows you to take advantage of the savings without going through the challenges of a major construction project.
You get to sit back and enjoy the film, rather than worry about whether to cast Tom Cruise or Tom Hanks. Someone else went to a lot of trouble to make it all happen for you. It is just like moving into a home that was flipped or renovated. The seller already took care of creating a better home for you.
#2 Eligibility
The second reason a person may choose to buy a solar home is based on their eligibility to do so. These are the seven criteria that impact someone's ability and desire to go solar:
Homeownership
Access to the sun
Time left in home
Credit worthiness
Tax credit eligibility
Energy usage amounts
Net metering availability
This eliminates the need for you to qualify to take advantage of solar programs. Solar is a solution to the energy crisis that has created so much movement behind it that not only have thousands of companies been formed to make it a reality for the general public, but a significant amount of funding – both private and government – has been allocated to ensure its success.
This goes back to the core of the problem we are facing today: as a society, we are trying to improve the way we generate and use energy. As with pretty much anything else in this world, the funds allocated to solar are limited and, therefore, there are qualifying parameters around them.
Many many people would love to go solar but cannot for one reason or another. There are seven criteria impacting someone's ability and desire to go solar. If a home has solar on it, that generally means the homeowner was able to access the funds and resources available to make the change.
#3 Affordability
The third reason to purchase a solar home is affordability. For many homeowners, electricity is the second-highest bill they will have for the home besides their mortgage payment. Solar gives the homeowner the ability to reduce or completely eliminate this expense from their recurring monthly costs. This solves a traditional problem with a non-traditional solution since most monthly recurring costs increase with time. Maximizing this affordability is our goal and we will discuss the best way to do so.
Let's look at an example of a home that goes solar; what the costs were prior to solar and what their monthly finance cost will be with the solar. Then, we will look at a home being sold and what the buyer’s monthly cost would be and their options to maximize the affordability of a solar home.
Monthly utility bill $240 = 100% of normal utility bill
Solar lease payment $190 = 79% of normal utility bill
Solar loan payment $170 = 70% of normal utility bill
If this solar is financed into the mortgage, then this would be the monthly mortgage payment:
Utility: Mortgage increase of $140 = 58% of monthly utility bill
Lease: Mortgage increase of $140 = 73% of solar lease payment
Loan: Mortgage increase of $140 = 82% of the solar loan payment
These percentages will vary from state to state but these generalities show a percentage of saving. These percentage of savings as stated above are why the homeowner of a solar home will have gone solar. The idea of saving 20-40% off of your monthly utility bill is an attractive perspective. If a home has solar on it and you know nothing other than the monthly bill of the solar, you can use these percentages as a rule of thumb as to the offset value of what that solar is going to do to save you monthly on what would have been the monthly utility bills.
In the example above, there is a hierarchy of savings demonstrated. There are good, better and best scenarios for solar homebuyers. The good option is if the solar home has a lease on it; the cost is 21% lower than what the monthly utility costs would have been. For the better option, if it has a solar loan attached to the solar system, the savings from what the utility payment would have been is 30% lower for having that solar system on it.
To create the best scenario is to have the solar system value tied into the mortgage payment. In other words, the system is paid off and has no ongoing cost besides a slightly higher mortgage payment because the cost of the system is rolled into the value of the home. In that scenario, the savings are 42% greater for having the solar on the home rather than paying the local utility. In the example above, we have a system that is offsetting an average monthly utility bill of $240 a month. If you buy this solar home and increase the home’s value to include the solar and then include the added value to the new mortgage payment, the savings enjoyed over a ten-year period will be around $34,000.
If that solar system was five years old, then the asset value added to the home was only $32,000 since it depreciated in value as an asset over the last five years. In this scenario, you are winning in the translation. You will get more value for the system than you paid for but since this is a system that will continue in value even when you sell the home in 10 years, it will still have that same $34,000 or more worth of offset value. The asset value, or what you will be able to add to the home value when you sell, will have dropped to $24,000 but that's $24,000 of value you will recoup in the home sale. The offset value will not have dropped for the person buying your home, therefore maintaining a very attractive position for you as the home seller. The offset value will at least include the original $34,000 if not more due to the inflation of the cost of electricity. You may see a $10,000 drop in system value as a loss but in reality it's still a $20,000 gain over those 10 years of living in that home without having to pay the local utility company for the electricity you would have used during that time. So, even with the depreciation of the asset, you're still winning by a healthy margin by buying a solar home.
The reason to buy a home with solar already on it is to know exactly what those savings will look like. The bonus is that a solar homebuyer will get the system at a depreciated asset value which is going to be lower than the initial cost of the solar home. They get it at this reduced cost without having to sacrifice the electricity offset value of what that system will do to reduce monthly utility expenses.
