What happens when a home with leased solar panels is sold?

Recently I encountered one a situation with a home that had a leased solar array, and a common question I get from both home buyers and sellers: What happens when a home with leased solar panels is sold?

This home was beautiful. Great layout, open kitchen, fantastic backyard...and a leased solar system already in place on the roof. The seller had entered into a solar lease agreement a few years prior for a 20-year term. The solar array had generated power to offset their cost of their monthly utility bills, which the seller had loved...and at the time of sale, the solar lease was transferable to a new homeowner.

Sounds good, right? Almost.

The buyer loved the home. They were especially excited about the idea of lower energy bills and sustainability. But once they got their hands on a copy of the actual solar lease agreement and dug into the fine print, the mood shifted.

The terms weren’t a dealbreaker on the surface, but the buyer had some questions. The monthly solar lease payment increased slightly each year. The agreement required the new owner to formally assume the lease through the solar company’s process, which involved a credit check and added paperwork. At the conclusion of the 20-year term, the homeowner did not actually own the solar panels...instead they had the option to extend the lease, or have the panels removed, or IF they wanted to buy those panels there was a balloon payment option at the end of the term. The buyer wasn’t thrilled about the idea of being locked into a third-party agreement they hadn’t chosen. On the upside, not owning the panels meant they did not have responsibility for maintaining the panels. The buyers were torn...

Rather than walk away, the buyer made an ask: they loved the idea of having a home with solar panels, but only if they could own them outright. After a little back-and-forth, both sides reached an agreement: the seller agreed to pay off the solar agreement at closing, which converted the system from a leased asset to an owned one and gave the new owner full ownership of the solar array from day one.

So many homeowners in Sacramento are now installing rooftop solar systems (and rooftop solar is actually required on new construction homes!), but not everyone realizes how it can affect a sale. The reality is that many buyers will happily assume a solar lease from a seller, while other buyers will not love it and want to negotiate with the seller to pay off the solar to own it outright. 

Leased Solar vs. Power Purchase Agreement Solar vs. Owned Solar: What sellers and buyers should know...

Leased Solar Systems are owned by a third party. Homeowners pay a monthly amount for the use of the solar system. These leases often last +/-20 years and are usually transferable, but buyers need to qualify and agree to the lease terms.

Often confused for a solar lease is a "Solar Power Purchase Agreement" (PPA). A solar lease charges you a monthly fee to use the solar panels, while a solar power purchase agreement (PPA) charges you based on the actual electricity the system produces. With a lease, you pay for the equipment; with a PPA, you pay per kilowatt-hour of energy. In both cases, the 3rd party solar company owns the system and typically handles maintenance.

Owned Solar Systems, whether paid in cash or financed and paid off, are treated like other fixtures. They generally add value to a home and are simple to transfer because there’s no lease to assume.

What to do if you are selling a home with Solar...?

Pull out your solar contract before you put your home on the market...buyers will want to review it. They likley also will ask for copies of your energy bills...be prepared and download 12-months of your bills so buyers can evaluate the seasonal fluctuation of power production and utility billing, AND so they can look at your "true-up" bill if you have one. In California, you will also want to complete the "Solar Advisory and Questionnaire" Disclosure.

Be upfront about whether the system is leased, on a power purchase agreement, or owned (with or without a loan). And be prepared to discuss options: Are you willing to pay off the lease? And how much does it cost to pay off the lease? Can the lease or power purchase agreement be assigned? Will the buyer need to apply to assume it?

In my case, the seller closed the sale, and the buyer got a great home and a fully-owned solar system. But it was only possible because we had the right conversations upfront, read the fine print, and stayed flexible.

So yes, you can absolutely sell a home with solar in Sacramento. But whether it’s smooth and seamless or unexpectedly sticky depends on many factors.

I have added the NAR GREEN designation to my credentials...

I am happy to have added the National Association of REALTORS “GREEN” designation to my credentials — this one will help me provide resources to clients to improve the performance of their homes— from low-cost fixes and DIY projects, to retrofitting and replacing systems, to big budget remodeling projects, etc.

New Listing - 2701 Bronco Creek Way, Sacramento, CA 95835

Stunning, better than new 4 bedroom, 2.5 bathroom, 1,838sf Natomas home! You will love the open layout, recessed lighting, tile flooring downstairs, kitchen with cherry cabinets, granite counters, and stainless appliances, formal dining room. Large loft/separate family room area upstairs, large master suite with walk-in closet, separate tub and shower, dual sinks and granite counters. Owned solar lowers utility bills! 2-car garage with epoxy flooring. Low maintenance yard. Adjacent to brand new charter school under construction. Low $60/month HOA dues covers front yard care. Don't wait! Offered at $339,900. For more photos and information please visit 2701 Bronco Creek Way, Sacramento, CA 95835.

Got a residential electric vehicle charger for my own house...pretty affordable and pretty awesome!

This is pretty cool. Nearly 2 years ago my husband and I got a Nissan Leaf electric vehicle. He drives is primarily to work downtown and back, and mostly charges his car in the parking garage. A company called Chargepoint just came out with an affordable residential charging unit, so we took the plunge and had one installed in our home. This thing is awesome. The unit we purchased was the Chargepoint 25 32-Amp hard-wired model and cost about $500. They do make other less-expensive units as well...we purchased this one because it charges more quickly. We had an electrical contractor professionally install it for us. SMUD and PG&E both offer incentives to installing residential charging stations. We are loving this so far.

May is Bike Month in Sacramento!

May has been dubbed "Bike Month" in the Sacramento Region! Pretty cool...occasionally I can be seen riding my pink cruiser bicycle around town, or my sweet significant other and I can be seen riding our tandem bicycle. My sweetie is a hard core cyclist, having completed the California Triple Crown, and he was invited to compete in the 2012 Furnace Creek 508...but for those of us who are not cycling gods and goddesses, for the month of May we are all challenged to ride our bicycles more, and drive our cars less.

Want to challenge yourself or a friend to ride a bike more during May? Visit the Sacramento Bike Month website here. I have signed up to ride 100 miles this month...should be a little challenge. While I am an avid runner, my bike cruising is mainly for pleasure and not for commuting or exercise...yet.

There are several events for Sacramento Bike Month -- and you can view their calendar here. A few notable events;

May 1st "Sacramento Bike Month" Kick-Off event from 11am - 1pm at Fremont park: You can enjoy a few short presentations on topics like how to pick a bike, how to properly lock a bike, how to fix a flat, basic smart cycling skills and more. Local bike shops will be there to provide free bike safety checks. As a bonus it's the first day of the farmers' market at Fremont park so you can stock up on locally grown fruits and veggies while you are there.

May 10th -- Capitol Bike Fest from 11am - 1pm on the West Steps of the Capitol. Hosting organizations include the Sacramento Area Council of Governments (SACOG) and its outreach partners, the regional Transportation Management Associations (TMAs), and the Sacramento Area Bicycle Advocates (SABA). This annual event promotes bicycling and other clean air transportation and celebrates Sacramento's "May is Bike Month."  Check out information tables on transit and transportation-related services in the Sacramento region and outlying areas serving downtown Sacramento, booths for bicycle advocacy groups, bike clubs, safety experts and retail shops, walking advocacy groups, walking clubs, and retail shops, commuter buses and shuttle service, enjoy music and more! Free valet bike parking will be available.

So...I will see if I can ride my bike 100 miles...can you?

Sacramento Energy Upgrades - reduce your energy consumption and locate incentives, rebates, contractors!

Looking for ways to reduce your energy consumption, conserve water, or utilize renewable forms of energy?...and lower your utility bills?...and maybe even finance the improvements? Wouldn't it also be nice to be able to research different rebates and incentives for making such improvements to you home?

Well thanks to an alliance among California counties, cities, non-profit organizations, the state's investor-owned utilities (Pacific Gas and Electric, Southern California Edison, Southern California Gas Company, and San Diego Gas & Electric Company), and publicly owned utilities -- now you can find programs, financing, rebates, and incentives available in your area (Sacramento and surrounding areas included)! The alliance is known as "Energy Upgrade California."

You can check out the website http://www.energyupgradeca.org and search by county and zip code to find different programs your home may be eligible for, and find contractors, financing, rebates and incentives for your energy upgrade projects. The goal of Energy Upgrade California is for this to be a comprehensive list, however it may not include all rebates and incentives in a given area. Energy upgrade rebates are administered by participating utilities.

Randomly selecting a few zip codes looking for available programs -- in my zip code 95818 (Land Park), there are 60 different programs available. In 95864 (Arden), there are 44 programs available. In 95628 (Fair Oaks), there are 52 programs available...you get the idea!

There are a variety of programs on the list -- installing sun-reflecting "cool roofs", replacing old appliances with new high efficiency appliances, adding wall and attic insulation, replacing incandescent lighting with fluorescent lighting, replacing pool filtration motors or pumps, replacing old central heating and air conditioning units, replacing old water heaters, installing Photovoltaic Systems (solar), installing residential small wind turbines, planting shade trees, installing low-flow water fixtures, and more!

Maydestone Apartments - restoration is in full swing!

A few months ago, my sweetie and I were eating breakfast on a Sunday morning and picked up a copy of Midtown Monthly...we were looking through it for some ideas as far as what to do for the rest of the day when we stumbled across an article about the renovation of The Maydestone Apartment Building.

Now I have lived in Sacramento my entire life, and had driven past the old, boarded up Maydestone building on 15th and J Streets a million times, but had never known anything about it. We were so intrigued by the article, we decided to take a little field trip downtown to check it out.

So a little history...The Maydestone was originally built in 1912 as a 32-unit apartment building, each unit complete with its own kitchen, bathroom, and a pull-out beds - a luxury in that era. As Sacramento was rapidly expanding, the demand was high for affordable housing that was located within a short distance to the center of the city.

Fast forward to the 21st century...The Maydestone was boarded up in 2003 after a fire on Halloween night. It has been sitting as a vacant eyesore for the past 7+ years.

Fast forward to today...The Maydestone is being restored to the Mission-Revival style beauty it once was with the help of grants and loans from the Sacramento Housing and Redevelopment Agency. The existing four levels of apartments are being restored and the basement is to being converted into a community center for the residents. They are also making the building highly energy efficient, and it will be LEED certified. There will be 32 units total ranging from small studios to 1-bedroom units. The project architect and the developer are working hard to ensure that the building maintains its original character.

So - the next time you are downtown, swing by The Maydestone! You can peak inside and see for yourself...

Attended the Annual City of Sacramento "State of the City" Address

If you follow me on Facebook, you will already know that earlier today I was lucky enough to attend Sacramento's "State of the City Address" with some of the leadership of the Sacramento Association of Realtors. The Sacramento Convention Center was packed, and in addition to the Realtors at my table, we were joined by City Council members Kevin McCarty and Darrel Fong.

Mayor Kevin Johnson outlined his goals for the City of Sacramento - they center around improving education, creating a "greener" and more energy efficient Sacramento, and continuing the revitalization of the Downtown Sacramento area. I do love his enthusiasm! I was hoping he'd talk about the local economy and the Sacramento real estate market a little, but he didn't really touch on it. Here's to a great 2011...

Sacramento Remodeling Costs vs Actual Home Value - What is your ROI?

When I speak with prospective sellers about the value of their home as we get ready to list it, I always review the recent comparable sales from the neighborhood to assist to determine the listing price. Often, sellers will tell me things like, "Well I saw that house when it was for sale, and even though it's the same floorplan, we have new wood floors. We spent $9,000 on the floors so our house is worth $9,000 more than the house that sold." Or " We put in a $65,000 swimming pool, so our house is worth $65,000 more than the house across the street." Nope, sorry, that is just not how it works. You can not just simply add the cost of the improvement project to the perceived value of the house...generally, and depending on the project, you will only recoup a percentage of the cost of the improvements to the actual "appraisable" value of the house. An appraisal is what a mortgage lender will use to determine the value of the house in order to lend money to a buyer who will purchase your home.

Certain home improvements will yield a stronger "return on investment" than others. The actual cost of the remodeling versus the actual increase in value of the home are two different figures. Obviously if you are a homeowner, your enjoyment of the upgrades you make to your home is really important, but you will never get dollar-for-dollar increase in your home's value.

Remodeling Magazine does a study every year regarding the home improvements that will give you the best return on the money you spend for the upgrades. Because trends are different regionally, they have separated different geographic areas in their report -- so here is the data for Sacramento specifically.

So what are the top 5 Sacramento home upgrade projects that give you the best return on investment (ROI)?

1. Replacing your front Steel Entry Door; the average cost to do this is $1,464, and the average actual value of this upgrade is $1,641 (112.1% ROI).
2. Replacing your Garage Door; the average cost to do this is $1,514, and the average actual value of this upgrade is $1,461 (96.4% ROI).
3. Wood Deck addition; the average cost to do this is $13,827, and the average actual value of this upgrade is $11,956 (86.5% ROI).
4. Minor kitchen remodel; the average cost to do this is $23,603, and the average actual value of this upgrade is $19,854 (84.1% ROI).
5. Window replacement; the average cost to do this is $14,431, and the average actual value of this upgrade is $12,016 (83.3% ROI).

You can read the full report here.

FHA's Energy Efficient Mortgage Program (EEM)

I am frequently asked about the FHA Energy Efficient Mortgage Program by buyers seeking to purchase homes in need of energy efficient upgrades. This programs allows buyers to finance the cost of energy efficient improvements through the mortgage loan. The buyer's loan can be increased according to EEM guidelines to cover energy improvement costs. Monthly mortgage payments increase slightly, but the buyer generally will save money on a monthly basis over the term of ownership of the home because energy bills (power / gas) are decreased...

A buyer can borrow up to 5% of the value of the property (not to exceed $8,000) above and beyond the contract purchase price of the home. Generally, FHA loan limits can be exceeded to accommodate an EEM, there is no additional downpayment required on the amount above the original contract purchase price, and there are no addition appraisal requirements.

So what types of improvements can a buyer make via the Energy Efficient Mortgage? A few examples;
-Replace a central heat & air system
-Add insulation
-Install dual pane windows
-Replace a water heater

If you would like to find out more information about the EEM and get pre-approved for your loan, you can contact Marlena Olson with the Vitek Mortgage Group at 916-486-6931.

Green Initiatives at Sacramento Municipal Utility District

It's been a while since I wrote a long blog post, so I figured today while I spend some time as the "agent on duty" I would write a novel...or at least maybe the first chapter of a novel. Ok, make that the prologue to a novel. Whatever...

So if any of you follow me on Twitter, you already know that on Friday morning I was lucky enough to attend a presentation by Nancy Bui, Director of Ward Two for the Sacramento Municipal Utility District (SMUD) at the "Public Issues Forum" hosted by the Sacramento Association of Realtors.

A couple fun facts about SMUD before I get too far...did you know that SMUD is the sixth largest community-owned electric system in the US in terms of the number of customers served? I sure did not know that! SMUD provides services to more than 550,000 customers (more than 1.3 million residents) over a 900-square-mile area that includes Sacramento County and a small portion of Placer County.

Anyway...we are very lucky to have SMUD in Sacramento. Why?

• They are making their "carbon footprint" smaller. They are planning to meet the new greenhouse gas emmission standards set forth in legislation AB 32 ahead of schedule (before the year 2020).
• Currently 17% of their energy generation is done via "renewable" energy sources.
• As a SMUD customer, you can choose to have your energy come from mother earth. You can choose to buy energy from natural sources of energy as the sun, the wind, or methane gas through SMUD's Greenergy® program.
• SMUD is helping local builders plan energy efficient home communities. They have partnered with 11 local home builders to construct over 4,100 new "Smart Homes."
• SMUD offers financing and rebate programs for energy efficient upgrades. You don't have to purchase a brand new home to have one that is energy efficient! You can finance new central heating and air conditioning, dual pane windows, solar / photovoltaic installations, etc. and get rebates for things like purchasing new Energy Star appliances, sealing your HVAC ductwork, installing a whole house fan, etc.
• They are rolling out "AMI Meters." These "Smart Grid" meters will be rolled out to all SMUD's customers over the next few years, and will replace the meters in your main panel. Through a web interface, SMUD customers can log in and view their energy consumption in real time, and modify they way they are using electricity in their homes to save money and energy.
• SMUD offer free shade trees for your home! They are a long time partner of the Sacramento Tree Foundation and according to SMUD, tree roots help clean rainwater and add stability to the soil, they produce oxygen and help cleanse the air we breathe, and if properly placed they can cut your home cooling costs by up to 40 percent.
• SMUD has a really neat online energy consumption calculator that any SMUD customer can use to help determine your current energy usage, and that suggests strategies to make your household more energy efficient, and suggests ways might save on your bill.

SMUD is looking for ways to make Green, energy efficient technology more accessible to its customers. We Sacramento residents are truly lucky to have such a forward-thinking and progressive local utility provider on the bleeding edge of this movement!

The Great Garbage Give-Away of Sacramento County

When I was a kid, I remember there was a designated day each year where you could pile your larger trash items out on the front sidewalk, and the county would come and pick it up...well actually, they would come pick up what was left after folks came to scavenge the junk. We called it "The Great Garbage Give Away."

Well now, if you live in Sacramento County, you do not have to wait for a collection crews to be in your neighborhood on a designated date. Sacramento County will provide once-per-year pick-up of your bulky waste by appointment. To schedule a pick-up, call the Sacramento County Waste Management Department at 916-875-5555. Five cubic yards of material, which is a pile about 8'x4'x4', is the maximum that will be accepted. This is also about the size of a pickup truck bed filled even to the top of the cab. Extra material will be picked up for a charge or $25 per 5 cubic yards.

The City of Sacramento still operates designated collection days in most neighborhoods, however some residents are eligible for an appointment program similar the county's program. For information or to schedule an appointment within the City of Sacramento limits, call 916-808-5454.

Downtown Sacramento Partnership

Last Thursday I was able to see a presentation given by Michael Ault of the Downtown Sacramento Partnership regarding the initiatives, short-term, and long-term vision for our downtown areas. There is a lot of great stuff going on.

When the DSP was first formed in 2001, its original goal was to initially "clean up" downtown in order to make way for development. The current mission of the DSP is to establish downtown Sacramento as the vibrant arts, entertainment, business and cultural destination of the Greater Sacramento Region through effective public-private collaboration for the benefit of residents, visitors and investors. How, you may ask? There are plans for many new, unique residential lofts, condos, townhomes, and detached "loft homes" that will fit many different price ranges. There are also plans for more office space, more fine dining, more parks, a river front promenade, more museums, more parking, and better public transportation. Also - more events a la Second Saturday, Farmers Markets, festivals, etc.

I remember when I was younger, the general consensus was that downtown Sacramento was not exactly a great place go hang out. There were some events then (mid 90's) - specifically the Thursday Night Market, and some various concerts in the parks that were always fun to go to, but really that was the extent of anything interesting, aside from some karaoke bars and a handful of clubs.

I am glad to see that there are some great plans to continue the revitalization of our downtown! There are amazing initiatives in the works.

SMUD to Partner with Developer to Build Solar-Powered Homes...

I received this news release from SMUD (Sacramento Municipal Utilities District for any out-of-town readers)...they have partnered with Woodside Homes and plan to build almost 1500 solar-powered homes near the Rancho Cordova area. It is anticipated that these homes will be complete around the year 2012. This apparently is the largest agreement between any utility company and homebuilder to date in the United States. To read their press release, click here.