Harmon Solar Podcast
The solar energy sector in Arizona is currently oversaturated, which has led to a scarcity of transparency. In response, we've created a podcast to provide an honest perspective on going solar in the state. Join us as we explore the intricacies of utilities, equipment, processes, and more. Our primary objective is to educate and empower you to make informed decisions on your solar journey.
Harmon Solar Podcast
Let's Talk To A Real Estate Expert
Ever wondered how solar panels can impact your real estate transactions? Join us as we uncover the intersection of real estate and solar power with our insightful guest, Michael Wiley. He's not just a seasoned real estate expert but also a former solar salesperson, bringing a unique blend of knowledge to the table. Michael shares the nuances and complexities of navigating homes equipped with solar systems. Learn about the crucial role solar energy plays in the buying and selling process. Gain a deeper understanding of the financial landscape of solar systems in real estate deals. urging listeners to work with knowledgeable agents who can effectively communicate the benefits, inspect the systems, and manage existing agreements. This enlightening conversation promises to equip you with the expertise needed when navigating solar energy's evolving landscape in real estate.
Welcome to another edition of the Harmon Solar Podcast. I'm Ralph Romano, vp of Sales and Marketing at Harmon Solar, alongside my partner Ben Wohlschlager. He's well you kind of know him as Mr Everything. I've kind of reduced him to project manager on our screen because he's not really doing everything anymore. He's kind of pulled back a little bit, so he's taken the title away from him.
Speaker 1:Mr Somethings, mr Somethings.
Speaker 2:Yeah, and today a little bit, so he's taking the title away from him, mr somethings. Mr mr somethings, yeah, and today we're gonna talk with a real estate expert. Yep, we've never done this before best time to learn now just do it.
Speaker 1:We've wanted to do it, we've talked about it, yeah, so because we have buying a home with solar or selling a home with solar. It's very important to know what's going on, and we got a guy we always have a guy. We both know this. You don't have your shirt on, though. I mean you're, I got a guy shirt oh yeah, is my no hair.
Speaker 2:No, no, you gotta wear you. I got a shirt on, you're good. Scared me a second there. I was like, okay, I can forget, today is black shirt thursday. So our guest today is michael wiley of uh homesmart realty and the michael wiley team, and I think you're based out of Goodyear right. Yes, sir, right. So you're all over the internet. People see you, I see you doing your stuff all the time.
Speaker 3:Oh yeah, we do a lot of marketing, a lot of social media stuff.
Speaker 2:I know you're involved with some different schools and some different things. I've seen you doing that. So Michael's an expert. An expert. He's been in the industry for how many years?
Speaker 3:I've been in the industry 17 years real estate and, as you know, I also sold solar, so I have a perspective on both sides.
Speaker 2:That's true.
Speaker 1:So that's what makes him unique and why we brought him into this, because he can give us the reality of what's really going on on the real estate side of all this? Yeah, because I know a lot of real estate agents. They don't know a whole lot about solar, so why not have a guy that knows solar and knows real estate right for our podcast?
Speaker 2:probably the biggest negative of bringing michael on is he's a bills fan yeah, but you know that's a different podcast.
Speaker 1:We've learned to deal with that.
Speaker 2:I mean it's okay, they lost four in a row, so that's what it is hey, I was at a lot of those games those playoff games that was tough and you're still alive and he decided to move to arizona to get as far away from as possible so tell us about so you work at HomeSmart, tell us about your role there, your team, what do you, you know, just kind of give us an idea, give us a little feel for Michael Wiley.
Speaker 3:Yeah. So just going back, I was a teacher for a long time high school teacher coach and I got into real estate, which it was a great transition. So basically I'm a team leader, I run my own team. Been there, my own team, been there 18 years, all going on 18 years and um, seeing the different markets. I came into the market when there was a the largest crash in real estate history.
Speaker 3:the economy went and you stuck around yeah, and I remember when I was coming in I was like, what are you doing, getting into real estate? And I was like, well, if nobody wants to come in, now's the time to do it yeah, right.
Speaker 3:And then you know, as I went through real estate and started to grow, my team and my business, solar came around. So, um, I I got into solar and great story about that how I ran, how I got connected with you guys. Um, so a good friend of mine, um, somebody door knocked on his house from solar city, right, and he was listening what he had to say, and so he said you need to talk to my buddy, my buddy's in real estate. So I'm always I'm following energy right, cause it affects real estate. So I connected with this guy, met with him at the time he was a manager for solar city, he was running a sales team and so I joined on board with solar city at that time and they had great training. Like, just talking about offset the slope of the roof, you had to draw your own systems. Like there was so much that went into solar at that time that I didn't understand, but I had to learn it and their training was really good. So I went out and did that.
Speaker 3:And then as I got to see and nothing against solar city, but as I got to see kind of what was out there, and I got to see what was out there through real estate. So as I was selling and buying homes, I was seeing different solar products right and there was one product that kept coming up and it was Harman and you guys were so much lower than the rest At that time. It was fixed rate leases, which I totally believed in and, um, you guys were putting. I remember seeing one of the first deals. It was like eight and a half cents a kilowatt, fixed for 20 years, and I said, wow, that's incredible Like.
Speaker 3:So I ended up reaching out to you guys and then learn more about your business and I'm big on because my reputation and my name is everything in real estate and I would never put anything on anybody's roof that you wouldn't call me to sell your home Right, because I make a lot more money in real estate than I did selling solar. But I saw a benefit there and I wanted to get the word out to my clients, which I did. I put solar on a lot of people's houses back then and then everything changed in 2017. But you guys always did a great job, from your process to the install and you know, clients always felt good about it and there were never any issues. And there were a lot of issues with other solar companies, so that was really important to me to put my name behind something.
Speaker 2:Plus, you had great pricing right, yeah, to give perspective, when he says that fixed leasing at eight and a half cents that's like getting a gas card that's guaranteed at, let's say, $0.99 a gallon for the next 20 years Right, that's kind of the territory that would be in. That's just crazy. Right, it's crazy. And that's kind of like what I have in my house. I have an $0.08 lease guaranteed for 20 years. I mean it.
Speaker 1:APS for 99 cents a gallon For 20 years. For 20 years.
Speaker 3:And I use the analogy when I would sit down with my clients. I would say guys, okay, here's what this is. This is a fixed rate mortgage at 2.5%, 3%, or do you want a variable rate mortgage with APS at 5%? Right? And when I explained it to them that way, they were like oh yeah, that makes sense. And so it was yeah, let's do it.
Speaker 1:Never that way they were like oh yeah, that makes sense, and so it was yeah, let's do it. Yeah, Never thought of it that way. That's actually pretty smart, would you like?
Speaker 2:to sell solar again. So real estate's interesting for us in solar because there's a lot of real estate agents that don't have a clue about solar. They just don't Right. I mean, I'm I'm sure you've run into that in your in your business, where you know people that just know nothing about it. I don't know how your team is if they're educated on it, but there's a lot of real estate agents that just don't know.
Speaker 3:Yeah, that's the problem in the industry, I feel like agents don't. There's kind of a negative connotation, which I hate that, because then it kind of gives solar a bad vibe, and I love solar, you know. I think there's a lot of benefits to solar and I think it's just a matter of agents being educated on solar. That's probably the biggest problem.
Speaker 2:Yeah, and I would say, when they're not educated which a lot of them are not, I would say a high percentage, it's instantly solar is looked at as a negative, no matter what. Yeah, we'll talk about the fact that some solar is a negative. Sure, there's no doubt. We talk about that all the time, even just without. We'll be transparent with you. Yeah, yeah, so you know how we are guys. Yeah, we're going to tell you, but there are situations and we'll get into that that Mike's written into where it's very negative, but there are situations where it's very positive.
Speaker 1:Yeah, and we get customers that call into us that you know they'll say, hey, I'm going to be selling my house, how solar, can you tell me about it? And we're like we're solar experts but we're not real estate experts, right, so you need to talk to your real estate agent. We'll give you all information about the solar system itself, but as far as, like, the value of it or how to sell it or how to buy it, we can't go into that. So you need to talk to your real estate agent about that. So that's why we have someone here to kind of give you that information and he's a hybrid, because he knows it's a hybrid he knows both, yeah which there's very few of out there.
Speaker 2:I know of one other one.
Speaker 1:That's it oh yeah probably just one other guy that I know there's two in arizona.
Speaker 2:Yeah, his real estate company is focused on just that, so we're homeless. But yeah, he's only two guys that I know about. That's interesting. So you get a client and wants to sell their, that wants to buy a house um, no, forget that, let's you give account. Wants to sell a house and they have solar on their house. How does that change in the way you're going to market the house and the things you're going to do with that client versus somebody that doesn't have solar?
Speaker 3:Sure. So the first thing is I need to look at their solar agreement and see all the numbers, the benefits. I want to see their energy bills because I need to paint a picture. I need to be able to educate agents who are bringing buyers to this property on the solar system, be able to sell the solar system Because, honestly, you can't really sell the house without being able to sell the solar system. So what I like to do is I like to get all those numbers and I'll actually create like a sheet that shows the benefits of the solar, the savings, what the costs are, what your future costs are if you continue with APS, so how you can save money in the future with the solar, and then I think, once you have that transparent and people can see it and you can explain it to them, then they are definitely more open to the solar and they actually like the idea of solar. Okay, yeah.
Speaker 3:Yeah, as long as it's a good deal, right it's?
Speaker 1:good, it's not like. It's not like when people put a pool in their house and you go out there like, oh yeah, there's a pool and it's going to add value to my house. It's pretty easy to sell like it's. Solar is very intricate as you if you've been watching our podcast. It's very case, specific to your home and your needs and things like that. So someone that's buying or selling a home with solar, you need to know what those details are.
Speaker 2:That's a really good point because we've talked about. It's not cookie cutter, right? So if your habits are different than the guy you're buying from's habits, it's going to be a different situation, right? If that guy works at home all day and he's constantly home and using his power that way and you're somebody that's never home, different scenarios for you yeah, I know I've walked into some homes that would you know.
Speaker 1:They're trying to sell the home and they have they're just just their bills laid out and like, oh, this person has solar and look at, they don't pay anything for electricity, and I'm like it's a little misleading, because they didn't pay anything for electricity, that doesn't necessarily mean I'm not going to pay anything for electricity.
Speaker 1:It's how they use power versus how I use power. So you you have to kind of go into more details of, okay, what is the system, how big is the system, how much does it produce? You know, how old is it? All the different details you can't just, you know as an agent, just show here are their bills Right and you should expect the same.
Speaker 3:Yeah, and if I could touch on that, one more thing, you brought up a good point because, also, the rate plan that you're on Exactly, and that's a huge factor, because if you're grandfathered in under a rate plan before 2017, that transfers over to the new buyer and it's very important that the buyer's agent knows that and tells their client that, and you need to be able to show those benefits. So, yeah, I think it's just a matter of really being able to educate the buyer agent and their clients beforehand. And it's key to be proactive and do it upfront, because what happens in a lot of solar transit or real estate transactions is agents don't know, they don't show the benefits, they don't know how to articulate it, and then a buyer gets under contract and the deal can fall out in the inspection Once they do find out and have to do the the transfer of the solar lease. So you don't want that kind of headache. And that's where it gets a bad and negative connotation, I feel, because some of these steps aren't done up front.
Speaker 2:Yeah. So if I'm a buyer looking for a house that has solar on it, I like your approach. You're saying, basically you're creating this whole spreadsheet or whatever it is. It sounds like you obviously hey With your spreadsheets, but you're creating this whole document to be able to show and educate people on how the benefit of this, of the solar in this house, how it works and what it means You're you're having those conversations correct All up front. Yeah, up front. So if I walk into a house and I'm getting basically, hey, there's my bills and the agent's not talking about it, it's probably instant red flag, could be it could be.
Speaker 2:It could be, I mean, it depends If he doesn't understand solar, then he doesn't know how to market it, that's right.
Speaker 2:So that could be that or, like we talked about before we did this podcast, there was there's a lot of deals out there from back 2017 and prior, especially, but that was when we were least heavy in Phoenix. Yes, a lot of sunrun leases, a lot of solar city leases, and they're not good. They have what's called an escalator, where they go up 2.9% the payment does every year for 20 years, so you got to start factoring that in and then a lot of them were sold at a very high price because some of these solar people were trying to make a lot of money. We talk about that all the time, right? So you get the combination of trying to make a lot of money putting that escalator on it. Now these are bad leases where they're not going to be beneficial to anybody that walks into this house. I've had friends of mine kind of mean say I bought this house, take a look at this lease and I'm looking at it going yikes, this is not good for you. Maybe you should have talked to me beforehand?
Speaker 1:Did you already buy the house?
Speaker 2:Yeah, there's not a whole lot. You can do about it at that point yeah, you're kind of.
Speaker 1:I think it's important for that real estate agent to be educated too, and in the solar system, because they're already educated in just the market, the house and all that you know. If you have a buyer, let's say, coming from out of state, so they move to a new neighborhood and they have no idea what it's like living in arizona, you know they're brand new, so they don't know anything. Right, I'm sure they're asking you questions like how are the schools here? What's the crime rate in this neighborhood? All this stuff. So if you start asking what utility company is this? How am I getting it built? What is my solar system going to do, and you as a real estate agent, you're like I don't know, it's not a good look on you.
Speaker 3:Well, one thing I'd like to touch on. I don't think a lot of people know about this, talking about solar, but real estate in general, 95% of the business is done by 5% of the agents. Wow. So I get it all the time Like, oh, so-and-so is a realtor, so you?
Speaker 1:don't do anything, I'm just kidding.
Speaker 3:Well, he's a realtor but, he did three deals Right and the industry is set up that way. It's kind of an easy entry, which the reason I bring that up is because if you're not doing this stuff day in and day out, you're not seeing these different solar deals, you're not a professional. It's kind of hard to help somebody, not just on the real estate side, but now you're adding solar to it. That's why I feel like there's a lot of uneducated agents not able to help their clients.
Speaker 2:Do you service the entire Valley? Yes, so good to know. Yeah, because this is what I'm hearing from you and obviously I already know you, so I'm a little biased. But just hearing the things you're saying, if I'm a homeowner and I want to buy a home that has solar on it, or if I'm going to sell a home that has solar on it, I need to talk to you and your team 100%. I'm not going to talk to anybody else because of all the things we're starting to put out here. That's just bad. Sure, that's really bad. So you need to.
Speaker 1:In this market because we've touched on many, many times. There are shady companies out there. You know putting things on your roof that shouldn't be there, whether it's unpermitted or not, or you know, or whatever, or it's a bad deal. You know, having someone educated take a look at it before you buy or sell it.
Speaker 2:You need to have someone in this market. It's important, right? It's an extra step. So you deal, I'm sure, a lot with appraisers.
Speaker 3:Yes, appraisers in solar. It's challenging because the lender orders the appraiser Right and so I don't have a lot of access to them. Okay, Right before, and I could send them a recommendation, and sometimes we do have to do that, especially if it's an owned solar system, but I don't have a lot of access to appraisers in general. Okay, all right, so I won't go down that road.
Speaker 3:But I have something to talk about. When you're buying solar, that's very important. Here's another thing that happens when I sit down with a client and we get them prepared to go out and look at homes, we want to see what they could afford or what they're comfortable in their payment, right. And so now if we're looking at homes with solar and it has like a graduated lease on it, they now have to count that payment against their debt to income ratio, which lowers their buying power. And I've actually had agents go out and they're showing, say, a listing like mine that might be a $500,000 listing and that client can't even qualify for that home. If my house has a graduated solar lease on it, meaning it's an escalator and goes up Right.
Speaker 2:Yeah, I was going to say explain what a graduated solar lease is.
Speaker 3:Yes, so you need to prep your client. You need to know that information. Don't waste their time driving them around looking at something that they can't even look at, right, right. So what I always do is I'll look at the house ahead of time, right. So what I always do is I'll look at the house ahead of time. Ben, you know this.
Speaker 3:I pull the solar agreement, get all the information from the agent. Even if they don't have it uploaded, I'll get it. Then I'll send it to my client. We'll talk to the lender. Is this going to affect their payment? Yes, it is OK. So what could they qualify? So, if you like this house, now it changed. And here's the thing about it. It's not that it's the worst thing, guys. Okay. And the reason I say that it still might be cheaper than APS, right, right. Long term, you're controlling your cost. It is affecting your real estate, but you'd have an energy bill anyways, right. The difference is they don't count your SRP or APS bill against you and your debt to income ratio. But if you have a great, that's right, and you need to understand that formula.
Speaker 2:Yeah, in that scenario, could you make it a condition where the homeowner has to pay off the lease as part of the sale?
Speaker 3:I actually had that happen. Yeah, pay off a lease on a buyout, negotiate the lease Uh, these are things that I've done personally and seen happen.
Speaker 1:Yeah, it's going to be something that I don't know, if we were going to get into it later, but you know what happens when you do buy a house that has a solar system, that is financed or leased, or you know it's an escalating lease. Can you know, does the homeowner have to buy this off or pay it off before it sells, or can they transfer to the new owner, or they can they negotiate the price down to assume it? And you know what are the options that they have.
Speaker 3:And it's kind of like in real estate. On the resale market we have a standard contract through the Arizona Association of Realtors and I can tell you verbatim what that is. When we're dealing with builders, they all have their own contracts. It's kind of the same thing in solar. When I see a house that has solar, I have to pull the contract. I have to read through that contract because they're all different. So it just depends on a case by case scenario. But let's say there is an example of a house that has a solar lease or some type of solar on it. There is the ability to buy it out and sometimes that does get negotiated up front.
Speaker 2:Yeah, that's what I was going to do. If I sell my house, I'm just going to pay it off and just sell, and just sell it, as it's just a benefit of sitting here saving your money, you're not going to cost you anything, that to me is a very positive.
Speaker 3:Yeah, I agree, right, yeah, it's like a prepaid lease.
Speaker 2:It's like a prepaid lease Right.
Speaker 1:But if you're like, oh, I have five thousand dollars left on my loan for my solar system, I don't have the cash to you know, roll it into the sale of the home, or drop my price by five grand to kind of make up that you know, and it'll be paid off once the home closes that deal.
Speaker 3:And great point and it also the real estate market matters factors into that right when the real estate market's hot, when COVID hit and the market went up, yeah, I mean they had leverage. So with solar that you're going to buy that house and do the graduate lease or whatever that is. But now that the market's softer, it's a buyer's market it's hard enough to sell the home. If there's solar and you're trying to negotiate value, it does make it tougher.
Speaker 2:So it all does depend on the market conditions, 100%, all right. So I mean, we're not I'm going to clarify here. We're not sitting here saying solar is a bad thing, right? You don't want to have it on your home or you don't want to buy a house with solar. It's just a lot of. Again, there's a ton of variables.
Speaker 1:The common theme with all our podcasts, everything we talk about, there's always variables.
Speaker 2:There's going to be times where it's going to be tougher because of market conditions, and right now market conditions are kind of soft. Yeah, that's about to change, I would assume, after the election. I think things are going to get better next year. It's funny.
Speaker 3:since election I've already had a listing that was sitting with no showings. I've had two showings in the last two days.
Speaker 2:Right, Because now people are instantly feeling good about things and thinking, hey, the economy is going to rebound, solar and you're like, but I'm only going to be in my home for another, like five or six years. Okay, take that into consideration.
Speaker 1:You know, with your system size and you know, talk to your real estate agent Like, hey, I'm, I'm here in the home now. I want to add solar, but I'm only going to be here about five or six years and that's even a bigger reason why you have to make sure the company you're talking to about solar knows what they're doing and is not trying to take advantage of you, because if they take advantage of you.
Speaker 2:You might be sitting on a brick.
Speaker 1:Yeah, that's one of the questions I asked to you know, when I'm talking with customers, I always tell them how long do you plan on being in the home? Design a system that's going to be for you to be there forever. If it's going to be, you know, just kind of a general system for whoever takes over the home next, then we'll make it, make it work that way and it makes you make a decision on what.
Speaker 2:if you want to lease, right, you want to finance it, you want to pay cash for it. We always say cash is king, and it's always going to be the best scenario where you get you run into a home that's got a bot and so it's a bot system that's paid for. That's even easier for you to sell. Oh, it's huge. Yeah, it's a huge benefit, right? So I guess I just want to make those points. Is it all matters? The variables are all there, right? If the system's owned and paid for, yeah, that's a value to that home. People are going to want that. If it's a lease and you can pay it off within the transaction, or every, there's a value there. If it's finance, you can even pay it off in the transaction as well if it's financed.
Speaker 3:Another thing to touch on that that's important that I see, is the tax credit. So here's what happens If I see a solar system on a house, say I represent a buyer and that seller did not take the tax credit and pay down the principal, then that might not be a good solar deal for that next buyer. But if they took the tax credit, they applied it to the principal. I would say majority. Most times that ends up being a pretty good solar situation, right. So there's a lot of things that go into it.
Speaker 2:So we've talked about that before. Just to clarify and that's a really good point actually when you, when you get a system and you finance it those first 18 months we talked about where your payment's here right, it's a lower payment, it's a good payment for you. If that person doesn't take the tax credit that they're getting off of buying that system and put it back into that loan, it re-amortizes and when it re-amortizes it typically goes up quite a bit. It goes up that 30% that you didn't pay back and now your payment goes from. Know, let's say you were 120 a month.
Speaker 1:now you might be 200 a month yeah, and that's something you're now paying right because the homeowner didn't take the tax credits.
Speaker 2:You're now paying for that so it might be a good idea to kind of, when you, when you look at the when paperwork and say, okay, what's the payment on this, on this, uh, solar system, what's it producing? And kind of try to put that together and I'm sure that's probably what you do to figure out what they're paying per kilowatt hour, because you know what is APS average right now is what? 16 cents, 16 and a half cents on average Sure.
Speaker 2:If you have a solar system where you're paying that or more probably not a really good idea, you know, but if you're paying less than that, you're saving money, okay. Well then you can count that. Hey, over the next period of years I have to buy this house. I'm going to save money on electricity because of xyz. So you need a. You need someone that knows what they're doing. It's the more I'm thinking about it. Man, it's just so important to have a guy like michael and his team, because you could really get in a bad way real quick yeah, no, it's.
Speaker 1:It's good having all that knowledge, because I know there's times where you know I was shopping for a home with mike and I would say, hey, I like this home, let's take a look at those. You know it has a solar system. Send me all their their information. I take a look and I go, I no longer like the home. Yeah, because it was just a bad deal and I don't want to, I don't want to assume that bad deal. But then there was other times where like, okay, I like this home, let send me the information on their solar system. I look at it. Okay, this was actually a good deal. This, everything looks legit. Okay, we're now. This home still is a good deal.
Speaker 3:And guys. Something else to talk about what's out there and we know this because we put a lot of them on myself those fixed leases from before 2017, fixed rate leases. If you get into one of those right now at the $0.08, $0.09, $0.10 range, you're saving what? Almost 50% on your energy bill. That's nice savings in today's market, oh yeah.
Speaker 2:And there's a lot of those out there. So the the things to look for, just to clarify, is if you have a pre, if you find somebody has a prepaid lease, basically they don't pay anything anymore. They paid it all up front.
Speaker 2:It's like a cash purchase right it's like a cash purchase and you're just sitting there getting the benefit of the power for 20 years, however many years are left. Um, if you have a fixed rate lease where, like I do, I have an eight cent a kilowatt hour lease, it doesn't change for 20 years. It's eight cents. It's that gas card at 99 cents. That's just nothing but a benefit.
Speaker 2:So you have to look at the kind of lease somebody's in or the kind of situation purchase wise that they're in, to determine if it's good or bad for you, because it's going to be good and it's going to be bad, depending on all these variables again, that we always talk about. So a lot of people out there, when I say real estate agents aren't educated, a lot of them aren't and they're just gonna poopoo solar the minute they hear you know what. They don't want to deal with it, because they have to do all the stuff that Mike's talking about to really understand the situation. Right, you might get somebody that wants to sell their house and you might look at this and go. This is not a good thing, that's right.
Speaker 2:It happens all the time then you got to either put a plan together to figure out how to make it a good thing, or maybe you have to even walk away from it. I don't know if you have, but it becomes a tough sell.
Speaker 3:Well, I've had to negotiate out of it because I haven't been able to sell the house. So that's another thing. If somebody's in a bad solar deal, we have options and with my knowledge and background in solar, I've been able to negotiate out of those deals in order to sell the house, or else they can't sell their house.
Speaker 2:Do you actually contact the lenders or the lease companies?
Speaker 3:Both yeah, depending. Yeah, depending on the deal. Wow, how do they respond?
Speaker 2:I know that Sunrun was big back in 2017, them and SolarCity and I know there's people sold a ton of leases back in 2017 and 16. And a lot of them did those graduated leases where they're going up every year and they were at 2.9% and I know Sunrun actually had to come in and make them zero escalated leases because they were so bad for people because of how high these dirty people sold them for, and so they did their part. I give them credit for that. They actually helped out to try to help the customers out so they can sell the homes and be in better situations. So, yeah, there's so much to look at when you're buying a home with solar.
Speaker 3:And another thing, too, guys, is and this is what I love about your company is, when I sell a house or I represent a buyer and it has solar, you guys do the inspections.
Speaker 2:Right and you've been around.
Speaker 3:That's another big deal of getting your solar system inspected before you're going to make this purchase.
Speaker 2:Yeah, so just like they do home inspections, we do the solar inspections, right? So real estate agents will give us a call and we'll go out there. Um, for a fee, we'll go out there and we provide a complete report of what we found with the system. Is it working? Is it not working things that it might need? I don't know if you've done some of them with us.
Speaker 3:Yeah, you guys have done some for me, In fact. Uh, you guys did one. Um, it was the Phoenix Mercury coach. The coach before you did her house. She had a beautiful home, she had a really big solar system and you guys came out, did a great job inspecting it. There were a few things that needed to be fixed or adjusted and the seller was able to take care of it and everything worked out great.
Speaker 2:Yeah, if you're a buyer and you're buying a house in solar and you don't get it inspected, that's not a good idea.
Speaker 1:You're getting everything else inspected.
Speaker 2:As is.
Speaker 1:Yeah.
Speaker 2:Get it inspected, because you'd be surprised at things that we find sometimes and it's very important to know that up front. And it's such a minimal fee, just like a home inspection, just like everything else you do at home. You should be doing this automatically.
Speaker 1:Speaking of those home, do you find that there are home inspectors now adding looking at solar to their tool belt, or they just kind of say not my wheelhouse, I'm not gonna do it?
Speaker 3:my inspector is very good about that. He does look at it, just it like very minimal and he'll always recommend getting a professional company like yourself to do a thorough inspection. Okay, but he'll give you kind of like an overview. I didn't see anything from the outside. No panels are broken.
Speaker 2:No loose wires that type of thing, but very, very minimal okay right, because we're going to get in there and we're going to actually run testing tests.
Speaker 2:We're going to make sure all the inverters are working. We're going to make sure the panels are still producing, right. There's a lot of things you can't see just by doing a visual inspection. So you can see that stuff, but there's so much more. That's one product that I really think we finally got in 2017. We were talking about that and we finally put it out. It took us a few years to get there, but it's such a great product. I mean, I know, when I sell my house as a seller, I would want to have that report done and I would want to have that on the table and say here's our solar system and here's the report we did on it. I don't know if I'm going to do. I'm going to hire you, so you're just going to do it.
Speaker 3:I've recommended that to some clients and, um, we haven't had a situation. Because the other thing you got to remember too, guys, when you're on leases and maybe you guys could talk more on this or teach me. This is something that I don't a hundred percent know but with these leases, they're fully warranted by these companies.
Speaker 1:Yeah, they have a production guarantee now.
Speaker 3:So the key is that um they're still in business, right?
Speaker 2:as long as they're still around.
Speaker 3:That's a big problem. So as long as they're still around there's an issue, they have to come out and fix it because of the guaranteed production in the lease. I understand that piece um, so getting an inspection at that time, I don't know if that's necessarily. You have to on that type of solar right, a lease per se, because it's warranted, guaranteed, they need to come fix anyway. So if it's not producing, you let them know they'll come fix it. But on any purchases or anything like that or warrant right, like I think it's huge because no one's monitoring it exactly, or even if they are monitoring it.
Speaker 3:there might be something wrong with it, that is about to go out or whatever that is, and it might. The inverters might not be in warranty. Is that still the case? Inverters are a big expense, yeah.
Speaker 1:Well, yeah, if they're under warranty, you know they're obviously taken care of, but yeah, it is. It is one of the most popular things to go out of your system, your inverter. Yeah.
Speaker 2:It will go out.
Speaker 1:Yeah, it will go out.
Speaker 2:The difference is now you have so you have the string inverters from back when you were really doing it in the 2017. Micro inverters, the ones that are on the panels, have gotten more popular. Yeah, those have a 25 year warranty on them. So those are. You know, they're going to go out because they're out there in the sun on the roof. I mean they're going to go out and, uh, the string inverters will go out about every 10 to 12 years. That's what they do. So if you have a lease, that's a valid point. If you have a lease, you're okay. As long as it transfers to you, you're good to go.
Speaker 2:It's covered. Remember, it's not your system, it belongs to the leasing company. You're just buying the power. So they're going to make sure to maintain that system that it's working, because, for you need to protect yourself and make sure this thing's working because the cost comes back to you, yep. So, and if you know, if it's an own system too, I mean the warranty might cover the part, but it won't cover the labor. So a lot of them will cover the labor for the first five years and they won't cover labor anymore. So an inverter goes out. They'll put a new inverter up there, but you're paying to actually do the job.
Speaker 1:They're just going to pay for the part so you got to look at all that stuff.
Speaker 2:It's very important most people don't think about that. They think, oh, it's covered.
Speaker 1:No, the parts, it's bumper to bumper yeah, and that's exactly how they sell it. They sell it as a bumper to bumper, but it's not because the labor is only one to five years. Don't have bumpers in arizona.
Speaker 2:You only have to do I think it's a one or two year labor warranty on anything you do. Yeah, so, just so you know that we do, we have a workmanship warranty now that's 25 years. I mean, our warranties have gone through the roof, right, right. So we have penetration for 30, workmanship for 25. Nobody does that, but we're so confident in what we're doing and how we do it that we could do that. Yeah, so that's what makes Harmon different.
Speaker 3:And correct me if I'm wrong. You guys are a roofing electrical company too that does solar. So those are all important pieces of the process. What happens, curious, when the lease is over? So let's say, for example, like I got a 20 year prepaid lease on my roof and that 20 years is up, what's going to happen to my system? How does that work?
Speaker 1:I got to be real careful of my answer here. The correct answer is look at your contract, because on every lease it has what happens at the end of the contract and you have to kind of go by those, those terms. So your options, usually on on all your leases, are at the end of the contract. You can either renew it on like a year by year basis. You can buy the system out at fair market value. So they'll, you know, come out appraising, oh, if this system is worth this, you can pay for it. Or the leasing company will remove it from your roof, um, at no cost to you. So those are pretty much your, your options. That's spelled out on the paperwork yeah.
Speaker 2:So just a couple points of that. When they remove it, they have to put the roof back to condition correct, so they have to seal the hole. They can't just say, okay, see, I'm ripping this thing off so so think, think about that.
Speaker 1:they have to roll trucks out right, pull that stuff off your roof, all the wires, seal your roof, put it all back together. That's not something that's done for free. They have to pay for that, so a company has to come out and do that and pay for it.
Speaker 2:This is where fair market value comes in. Do you think that a solar company or a leasing company wants to pay for that?
Speaker 1:Probably not, and then what are they going to do with those 40 modules that?
Speaker 2:are 20 years old.
Speaker 1:I always tell people it's not like leasing a car. When you lease a car, at the end of your two or three-year lease, that company can still sell that used car. It still has a value. Ralph, are we selling 20-year-old panels at Harman Every day? So you have a 20-year-old system that was specifically designed for you and your home. 20 year old system. 20 year old inverters, 20 year old wiring, 20 year old, everything right. Who's gonna buy it? There's no value. So they spent all that money taking it off your roof and now the company's stuck with this 20 year old system.
Speaker 2:Let's clarify there's no value to the next person to sell that to right there is value to the home it sits on.
Speaker 1:Yeah, because when I rip it off, that rail is wasted I don't need that rail anymore, because that was designed for your house, right those panels are now.
Speaker 2:You know they've derated 20 years down, so they're not producing what they were producing 20 years ago, still valuable to that home, but not to sell. Yeah, it just doesn't make any sense. So, with all that said, fair market value is probably a dollar, probably a dollar. Seriously, it's probably going to be somewhere they're going to say here's a dollar sign, this, we're done yeah, I I don't see them doing anything else with it exactly.
Speaker 1:I think at the end of those leasing terms, the leasing company is going to go. You know what? We take a look at this and pay us a buck and we'll call it a day, it's, it's yours and I think we're probably about we're getting close seven, eight years away, six years well, leasing started around 2005-2006.
Speaker 2:So those 20 year leases are coming up soon. It's next year and the year after. We're just hitting it for the first time.
Speaker 1:We're going to find out what they're actually going to do. Yeah.
Speaker 2:And I think what we're going to see is saying hey, keep it, Send me a buck.
Speaker 1:Everyone's happy. We've already made our money. You made your savings.
Speaker 2:And if you don't want it, on my house they have to yeah. There's no way around it. Definitely what I would tell you to do against. Don't sign a one-year re-up, yeah.
Speaker 1:I wouldn't do that. Do not do that. They want it. They want you to do that because it's extra money for them. Don't do that. But the most important thing is read your contract.
Speaker 3:And every leasing contract it has those clauses of what's happened at the end of your lease. That's a very good point. Okay, answer your question. Yes, no, it totally answered my question. So the fair market thing I think I like, because I was like they're not going to come take this thing off my roof so no, why would they?
Speaker 1:yeah, why would they?
Speaker 2:right, and then someone mentioned roofs. What were we talking about?
Speaker 1:yeah, we're talking about roofs, tax credit roof. So you're buying a home, it's an older home, got's got an older roof, it has a solar system, or I'm thinking about getting a solar system. Should I replace the roof now, before, like when I buy my home, when I'm adding the solar? What's, what's the process, what's the order? Should I buy the home, add the roof, then the solar, or should I try to wrap it all in once? What do I do well, what's the best way to do?
Speaker 2:it the best way to do it in the city of phoenix, where it's 100 billion degrees every year and everything gets worn down outside, so your roofs here don't last very long, probably. What?
Speaker 1:10 years max before it has to.
Speaker 3:I think the new home developers will give 5-10 years on roofs it's 10-year roof warranty typically, I think the underlayment usually is 20 to 25 years yeah, typically yeah, the underlayment, the shingles forget it, they ain't gonna laugh shingles different.
Speaker 1:So everyone's tiled now right.
Speaker 2:So when you've had a roof and the average, average house that we probably see that wants solar is typically 20 years old on tip, that's typical, right, I mean, they're 20 year old. A lot of them haven't been re-roofed, sure, yeah, and the customer is always like you know, I want to put solar on this and we inspect the roofs. We always inspect the roof because we have to put a 30 year penetration on it. We want to make sure it's not going to leak. So if we don't, if we see that, hey, this thing it's brittle and we're not messing with it.
Speaker 2:But I would highly recommend that if you're, if you're in a house 15, 20 years and you want solar, should probably do the re-roof right there and then roll it into the whole transaction. Because I think, according to what the IRS code is and again, I'm not a tax expert, I'm not giving you tax advice. I thought you were Ben's definitely not a tax expert, but he'll still give you tax advice, but you need to talk to your accountants. But my understanding is what I believe is that you can then get the 30% tax credit on that re-roof. You can roll it in because it is part of the installation of the solar system. Again, I'm not saying that's 100. You need to talk to your tax guy or talk to ben um, I'm gonna keep putting it there to flash my phone number but that makes a re-roof 30 cheaper.
Speaker 1:That's right, if you were just smart if you were just go out and re-roof itself, you wouldn't get that.
Speaker 2:But if you're adding solar to it now, you get that, because remember now part of the package if you add solar to a bad roof and three years from now it's raining which it barely rains here, but when it does get the monsoons and rains, and all of a sudden it's dripping in your house. Now you got a re-roof, yeah, do you think maybe there's an added expense to removing those panels while you're doing the roof?
Speaker 1:yes, there is. We just talked about that we don't remove panels for. Right, it's not free, it's quite expensive and that adds value to the home. Like, hey, I have a solar system and a new roof, but when I got my solar system, I've got the new roof.
Speaker 2:There's value there no-transcript is preventing the heat from going in.
Speaker 1:You know the way it used the panels are taking all the damage to me yeah, the panels are taking the damage.
Speaker 2:I would think that's true. So, yeah, these are basically roof covers.
Speaker 1:Yeah, yeah roof savers can I have a shade canopy over my modules as well to protect those Absolutely.
Speaker 2:Because the ultraviolet rays will still come true.
Speaker 3:You know, some we didn't talk about guys. I think is important is the pigeon, oh yeah.
Speaker 2:That's a really good point, because I'm sure that you come up against that sometimes All the time. Yeah, all the time. So we all know that pigeons love to nest and they like to nest under panels. I found that out right away when I put my solar up.
Speaker 1:This is a pigeon neighborhood, yeah.
Speaker 2:And as soon as I put it up, I didn't have the. It took them a few weeks to get the stuff around it. And man, it was a zoo down there. You just start hearing it. There were pigeons everywhere and then right over my bedroom. I just wanted to go up there and start shooting.
Speaker 1:It was kind of sort making a mess over the side of the house and everything and they could get into the wires, you know, because they're gonna be nesting and you know there's, there's those home runs and the wires under there that you know pigeons right. So what we?
Speaker 2:do is we go. We go to your system and we put netting it's. It's a plastic mesh or a steel mesh, I think it's more steel. Um, it goes completely around the arrays that we put on your roof and this way the pigeons can't get underneath there. Funny, funny story is I. I remember somebody that did that one time when there was a pigeon under there and they forgot about him and they covered him up and they left.
Speaker 1:They left him in there. Now you have a pet trapped.
Speaker 2:We didn't do it but, eventually they had to go up and get him. So he was totally a nice little pet but like I'm sure you run into homes and neighborhoods where you see that there's pigeon, you know stuff. I was gonna say the wrong word.
Speaker 2:Yes there's all over the floor, the side of the house they're eating up the wires, are doing and they're just everywhere on that house all the time. Yeah, and that's just bad. You have to know it. You know if you're in a pigeon neighborhood, right, you just know it. If you, if you've been there at least a month, you know it. I know I am it's, I hate it. So you have to protect the system against it's just another thing and also a lot of the systems we do today. It just seems like more and more they're getting the actual electrical panel upgrades. So when you're getting a new, a new solar system, a new roof, a new electrical panel upgrade, it's all value yeah.
Speaker 2:And you're getting it done for cheaper by doing it with the solar system than you are doing it separately. Yeah, you know, can you get a tax credit on that? Again, talk to your tax professional, it's part of the transaction. So yeah, I mean technically, but I didn't say that Right.
Speaker 1:Ralph does my taxes, by the way, that's why you're in jail. I get audited every other month.
Speaker 2:So I think the point of this podcast, and number one, is to talk about the real estate perspective and what people think um on that side of the business, and I think it's important to understand that if you're not educated on something, no matter who you are, um you, you tend to probably just poo it and say, yeah, I don't really know much about it, so I don't deal with that. That or you get taken advantage of. That was my next point.
Speaker 1:Okay you can go ahead and make it. No, you're doing it. I don't want to talk about it.
Speaker 2:All right. So either you're gonna turn your back from it because you don't want to deal with it, because you don't understand it and you don't want to take time to learn about it, or someone's going to take advantage of you, right? So you need, if you're going to do this, if you're going to, if you're going to buy a home with solar, if you're going to sell a home with solar, you have to have somebody that knows the industry, that understands solar, and Make sure your cousin knows what they're doing. Well, and it speaks to that.
Speaker 2:You just said this a few minutes back and I was on the podcast, but you said that what 90%?
Speaker 3:95% of the business is done by 5% of the agents. It's crazy.
Speaker 2:But that's, it.
Speaker 3:I saw a stat I don't have the research on this currently, but there was something like 22% of business in Phoenix is done by three real estate teams, and I won't mention those names. I'm not one of those teams but they're big call centers is what they are.
Speaker 3:Right You're not getting necessarily that same attention, but the point is is it's really important to have somebody that's a professional and is doing transactions day in and day out on a regular basis, especially when you're seeing solar and the different types of solar? How many solar companies are there in the Valley Just over the years? A couple hundred, come and go right.
Speaker 2:Yeah, especially lately, they've come and gone a lot. We've seen a lot of and we're going to actually do a podcast that's going to touch on that where we're going to talk about how a lot of these installers and companies have moved out of the market or have gone bankrupt or whatever, um, and what that means to the market and what that means to you if you have solar. But yeah, there's a ton of them. They're going out every every year. You know we'll have two, 300 of them and all of a sudden you're, they're just gone. They just come in here Biggest offender in this state where Arizona, we have a high power usage people coming in from other states doing a cash grab, selling as much as they can, then leaving the state and they don't care what they put on your roof, right, they partner with an installer, they just put what they can put on and they're out and they make their money.
Speaker 2:Worst scenario for any customer to go through, and those are the ones that you're going to see that there's bad deals, bad deals, yeah, bad deals. So there's good solar system sales, there's bad solar system sales and it impacts you down the road whether or not you want to sell this house, so you really need to be smart about who you're having put solar on your house. We do get that at Harmon, which is why we have these conversations and we put this out there. We want to arm you guys with this, and you have to have a real estate agent or a team that understands these things as well, or you're going to be in trouble. I wouldn't want to go into this without someone like you. I mean, I just, I just wouldn't. I want you to do all the things that you know that you need to do to protect me and um and and to help the bring the right people in that want to buy this house for the right reasons. I don't want to screw anybody either, right? So no, no, you do it well.
Speaker 1:I just know a lot of people out there have solar and they just don't understand it.
Speaker 2:Yeah, they just don't I mean, like I said, friends of mine buying a house with solar and not talking to me about it. That's just not smart, right? You know who you are, like you like you know what I do for a living right, I mean you've got to ask the questions, you got to leverage the experts, and that's why harman's around, and that's why michael wiley and his team are around. Those are the experts, right? So we brought in a real estate expert to kind of show are we missing anything?
Speaker 2:is there anything we want to touch on? I think we've talked about a lot. Yeah, it's a lot of stuff. Go back, rewind, keep watching, not like a tape rewind, but you know what I'm saying, you can go, we're going to have this contact information.
Speaker 3:Yeah, okay, mike. Yeah, thank you guys, appreciate it, we're gonna.
Speaker 2:We're gonna put up Mike's name and his contact information. You can say it. They'll go ahead and say it. If someone wants to reach you or your team, what do they do?
Speaker 3:They can contact us. They can go to my website at michaelwileyteamcom. There's a contact there. My number is 480-343-4534. Or email me at mwiley at hsmovedcom.
Speaker 2:And that's all on the bottom of the screen. Right now you see that information. I would highly recommend that you contact Michael if you're looking to buy a home that has solar, if you're looking to sell a home that has solar, or if you're just looking to buy or sell a home, it doesn't matter if it has solar or not, but I mean definitely if it has the solar stuff.
Speaker 3:So there's nobody else that I would call yeah, and if you want solar, we find you a know, find the right deal and package it up so it all works too. So that's one last question.
Speaker 1:We're not done yet, folks.
Speaker 2:If someone comes to you and says, hey, I want a home, you know getting a lot of people that come out of state. They come in here and they go I want to buy a home, I want solar on my home. What do you do? What would you ask? What questions do you ask? What's your process?
Speaker 3:Yeah, and that that. So my process is first thing, I educate them on solar and different options. Now I tell them I am not a solar professional. I used to sell solar. I know enough to be dangerous, but I also have the resources, the people that I can connect you with right, which is where I would lean on you guys. But you know, we'll talk about the benefits of solar, what that looks like house Because you got to look at orientation of the roof, right. I mean, if you've got a south-facing roof that has a lot of space, that's a good house for solar. Yep, right, right. So there's a lot of different things that go into it, but I just try to educate them as much as I can and then let them make informed decisions, yeah.
Speaker 1:Pretty easy that way.
Speaker 2:Yeah, I think so. I mean, there could be a situation where, hey, maybe we can't find what you need with solar on it, but we'll get it put on there, or we'll get it put on there, you can help them with that too.
Speaker 3:That's exactly how I approach it.
Speaker 2:So there you go, you got all. This is the guy. This is the guy. I told you, I got a guy.
Speaker 3:That's the guy.
Speaker 2:You guys need to reach out to him and his team if you're looking to buy or sell a home that has solar or just you know, in real estate in general. We brought him on here for a reason. You know us. We only talk to the top tier people in the industries that we trust, and so Harmon can put a stamp of approval on his forehead and say this is a real estate guy that we trust. So think about that. We'll be back next time. We've got some really good topics to get into. We're going to talk about the market and what's changed in the solar market, a couple other things. So we'll be back, but hey, thanks for watching and we'll talk to you again. Thank you, thanks, guys.
