There are more than a million homes in the United States with solar panels installed, with numbers growing every day. Due to previously complicated finance arrangements, it was not uncommon to hear a Realtor say that selling a home with solar panels was not for the ‘faint of heart’ or inexperience real estate professional. However, as residential solar installations became more common, it has become important for homeowners and Realtor’s to understand how to address rooftop solar panels at the time of sale, or purchase of a home.
There Is Not One Right Answer
One of the biggest obstacles Realtor’s have faced is that there is no simple process to selling a home with solar panels. This is easily traced back to the fact that homeowners can buy, lease, finance or purchase solar through the Power Purchase Agreement (PPA). Each scenario requires the Realtor, or even mortgage consultant, to maneuver a different path to selling a home, or helping a homeowner purchase a home with solar panels installed. One of the biggest questions a Realtor needs to ask is, “Who owns the panels?”
Can I Sell My Home with Leased Solar Panels or a Power Purchase Agreement (PPA)?
Yes. If you are the homeowner, you absolutely can see your home. However, leased panels do make the process more difficult. Commonly, residential solar panel agreements provide language similar to,
“You agree that the solar panel system is the Company’s personal property under the Uniform
Commercial Code. You understand and agree that this is a lease and not a sale of agreement.
The Company owns the solar panel system for all purposes.”
What does this mean to a homeowner wanting to sell? It means that the home can be sold, but the installed panels on the roof are property of someone else.
Luckily, most lease agreements also designate that if you sell your home, you can transfer the lease and the monthly payment to a new homeowner who qualifies for the lease. There are additional caveats when transferring a lease, outside of the new homeowner qualifying for lease assumption. One such caveat is that the Company demands to be notified prior to transferring the lease obligations so they can make correct financial filings. The failure of a homeowner to comply with this process may result in additional legal fees and financial obligations to the lease holding Company.
Can I Sell My Home with Solar Panels Financed with a Solar Loan?
Even if you still carry a balance on a loan used to finance the installation of residential solar panels, you can still sell your home with solar panels. Some research by the Lawrence Berkeley National Laboratory found that homebuyers were willing to pay more for homes with solar panels installed. The same study also concluded that in California, the average price per-watt solar panels increased the value of the home was approximately $4.00 – which is also the average price per-watt new solar installations cost.
If you purchased your solar panels and wish to sell your home during the finance period, there are several variables worth exploring. For example, if you paid the solar installation with a secured loan, you will likely have to pay them off before you can sell the home. Since your home was probably used as collateral to secure the loan, the finance company will want to ensure the loan is repaid prior to you no longer owning the collateral property. Types of finance programs that are considered a secure loan include HELOCS, mortgages or PACE loans.
If you purchased the panels with an unsecured loan, then you can likely sell your home. If you work out the sale of the home with the value of the panels included, you can likely pay off the loan with the proceedings of the home sale. Working with your solar company, appraiser, and Realtor will help you ensure you are selling your home at a price that answers to the value of the solar panels.
I Paid Cash for My Solar Panels and Now I Want to Sell:
This is the best-case scenario to sell your home with solar panels. Since the panels were paid for out right, they are the homeowners to do as they please with. Like panels installed with a solar loan, it is important to be in open communication with your real estate team to ensure that the value of the solar panels are included in the sell price of the home. Although the panels are considered an investment, their pay-off period is often extended beyond the immediate benefits of the homeowner. As panels have extended warranties and long functional lives, it only makes sense that the installing homeowner sees a bit of the financial benefit of the solar panels.
The Bottom Line
The bottom line is that selling your hone with solar panels is possible. However, the path to sale is often obscure due to different finance and ownership qualities a residential solar installation might have. To get the most of out the sale of your home, work with a solar professional to ensure your system is being valuated fairly. To go on your own would be unwise and ultimately cost you money.
Do you have concerns about selling your home and solar panels?
If you have lingering concerns regarding the installation of solar panels, the best way of financing them and the potential sale of your home, reach out and contact us. One of our Energy Advisers will be able to help answer any questions or concerns you might have.
Emily Cross, Ph.D. is Manager of Processes and Procedures at Del Sol Energy, located in Historic Downtown Brentwood. Emily is a life-long Brentwood resident and proud to raise her three, active children in the same community she was raised in surrounded by four generations of family. Emily’s professional background spans academic, government and corporate boundaries, but her passion for business is embedded in small businesses that feed into the local community, economy and promote a cleaner, healthier environment.
Leave a Question or Comment below or feel free to contact Emily at anytime with questions regarding solar.