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Investing in solar panels is a fantastic way to help you save money and create an environmentally-friendly home, we see that every day at Green Building Elements.

However, when it comes time to sell your house, you must consider how the panels affect the selling process and your home value. 

Below, we’ll cover everything you need to know about selling your home with solar panels.  

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Solar Panel Ownership Types

Depending on the current ownership situation, selling a house with solar panels can prove to be an extremely simple or somewhat complicated process. 

To understand that process, we must first look at four types of solar panel ownership types and how they might affect the process you go through to sell a house.

Fully Owned Solar Panels

When selling a house with wholly-owned solar panels, a homeowner can sell the house with existing solar panels without transferring or removing them from service. The new owners will benefit from lower energy costs just as if they had installed their panels – except now those savings are built into the property value.

If you choose this option, make sure that prospective buyers understand it is “solar-ready.” In addition, many states have rebate programs that will pay you for your old panels after the sale, which is another incentive to keep them.

If possible, try not to transfer ownership of the solar system with the house. It may require calling in a third-party company to remove the panels before closing escrow. However, lenders rarely allow this and can be very costly if attempted self-installation.

Depending on your financial arrangement with your solar installer (cash purchase or loan), you might have to pay all or part of an installation removal fee.

Leased or PPA Solar Panels

Transferring the installation to a new homeowner with leased or Power-Purchase Agreement (PPA) systems is simple. The leasing company takes care of everything and transfers the agreement directly with the new buyer.

There may be an early termination fee if you want to transfer ownership early, but this is usually only after three years of service – so it’s not something to worry about when selling a house with solar panels.

In these cases, a home sale does nothing to affect your contractual agreement with the installer. Monthly payments on a lease continue as scheduled unless you end your relationship with that company voluntarily or they prematurely end it for nonpayment. Again, once you have sold the property, there are no issues as long as contractually obligated monthly lease payments are met.

Financed through a Solar Loan

If you financed your solar installation, check with the lender to see if transferring ownership is allowed. In most cases, it is okay as long as the new owners have a plan for continued monthly payments or can pay off what remains of the debt from purchase. If you choose this option, it’s a good idea to include the loan details in the home-selling paperwork to make the process smoother.

In some cases, you can sell the solar panels to a new owner for a lump sum or allow them to take over your payments as a “solar buyout.” It is worth exploring during escrow since it may save you money, and the buyer will have no qualms about continuing their service with an existing installer.

The benefit of this option is that there would be no monthly payment obligation in the future – but as stated before, it may require a cash sale for between $1.00 and $1.50 per watt of the system’s capacity.

PACE-Financed Solar Panels

Finally, the last case is the property owner who has taken advantage of Property Assessed Clean Energy (PACE) financing. PACE allows for zero-down installation since the loan is attached to the property itself via a special assessment.

This method comes with its restrictions, namely that it can only be used in cities that have adopted this type of program. When selling a home with solar panels with PACE financing, the buyer will be required to obtain their PACE loan for continued ownership or face foreclosure.

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How Solar Panels Impact the Property Value

Solar panels typically add to the value of a property, and buyer interest in solar-ready homes is picking up. Very few properties that can accommodate solar panels sell without them these days, and overall, they tend to command higher prices than similar homes in comparable areas.

On average, however, one study showed that consumers don’t pay much attention to whether or not a home has solar installed unless the systems are newer than 12 years old. Nonetheless, it’s a good idea to do your homework and find out what solar-ready homes have sold for in your area so you can list accordingly.

If You Own the Solar Panels

When selling a house with solar panels you own, there is the question of whether the buyer will be able to take over ownership and continue service or if they’ll need to buy out existing contracts.

It is a good idea to check with your installer on this issue – they may have a process for transferring ownership, and if not, it might make sense to purchase new contracts from them. Otherwise, you could be left with monthly payments that go nowhere.

Always disclose the existence of solar panels when selling a house, even if there are no active contracts or you plan on taking over. No matter what route you choose, it’s essential to know how best to position your home in the market – whether as a premium option offering savings every year or simply as a historic home with modern upgrades.

If You Lease the Solar Panels

If you’re leasing your solar panels and plan to sell the house, you will need to contact your installer and ask the process for terminating the agreement. Some companies offer a buyout option, while others require you to find another party willing to take over.

If you’re planning on leasing, it’s essential to understand that homebuyers do not always like this arrangement unless they can continue with their lease or get full ownership of the system. The solar industry is still viewed by many as an expensive luxury rather than a wise investment, so if you plan on selling before your terms are up, be prepared for some inquiries about how much money it would take to buy out the remaining time on your agreement.

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Selling the Advantages of a House With Solar Panels

There are several benefits to selling a house with solar panels. The most obvious is providing your buyers with ongoing savings, although you should always disclose the existing system when selling a home with solar panels.

Lower Electricity Bills

One of the main selling points of a home with solar is that if you get a system that’s up to par, it should cut your energy costs. It might not sound like much, but this can make a big difference in many areas where electricity prices are high.

When selling a house with solar panels, be prepared to explain how much buyers could save on their monthly bills and whether or not they would have to take over any existing contracts. If you’re leasing, consider providing similar utility bills from before the house had panels to give an idea of the savings potential.

Higher Home Equity

Another significant benefit of solar is that it boosts your home’s equity. As a result, potential buyers are often willing to pay more for a house with solar. Not only do they save money in the long run, but a lower monthly bill results in the following:

  • They can put more down on their mortgage payments each month.
  • More money down each month equals building up equity faster than owners who rely on traditional power sources.
  • Money saved on low maintenance costs of solar panels can provide additional savings.

If you’re selling with solar panels already in place, consider including some estimates or statements about how much this supposedly higher resale value will help pay off closing costs or their down payment. Of course, there is no guarantee that buyers will agree with these numbers, but it never hurts to be prepared when trying to sell a house with solar installed.

Low Maintenance

Solar panels are relatively low maintenance. The system should come with a warranty covering parts for several years, but there aren’t many ongoing costs or maintenance concerns beyond that. Also, since the panels don’t rely on power from the grid, being off won’t mean you need to call an emergency maintenance specialist to get them back up and running.

Solar Panels Have a Long Lifespan

Solar panels last between 25 to 50 years, much longer than the 10-year average for most home products. Some homes from the 1970s running on solar were installed when it was cutting-edge technology and will likely outlast their owners.

Because of their long lifespan, homeowners can sell a house with solar panels without worrying about finding buyers down the road who will feel nervous about having to replace the system a couple of years down the road.

Cool House Factor

Solar panels are stylish. A house with solar is seen by many as an environmentally friendly way to live and is generally cooler than one without. There is already a strong trend of homeowners moving towards renewables, so if you can provide them with ongoing savings on top of this cool factor, your house could stand out from the rest. If you’re selling a home with solar panels already installed, play up this cool factor.

Read More: Buying a House With Solar Panels

9 Questions Buyers Will Ask Sellers About Their Solar Panels

Most prospective home buyers will ask you questions about solar; whether or not they will get the opportunity to own a house with solar panels depends on how well-informed and prepared you are to answer these queries.

Here is a list of common questions your buyers may ask below, along with tips for providing clear, concise answers.

1. What is your current electrical bill each month?

Prospective buyers will ask you what your current monthly electricity bill is. If you’re selling a house with solar panels already installed, be prepared to give some proof of the energy savings potential they provide. Potential buyers may not want to take on an additional power source that costs money if it’s more expensive than what they are currently paying. If you are selling with solar installed already, show similar utility bills after the panels were installed.

2. Who owns the solar panels?

Provide a copy of the contract you made with the solar power company when you installed the system. If you own them, be prepared to explain how much they cost and what kind of return on investment can be expected. If you’re leasing the solar panels, you should have a copy of the contract that explains how much you’ll pay and what rights you have, as well as how long the lease is for.

3. If financed, who is paying for the solar panels?

If you own them, then hopefully, they have been paid off already. If not, explain your current monthly payments and the remaining years on the loan. If you’re leasing solar panels, explain how much you’ll pay each month for this lease.

4. Who manufactured the solar panels?

This question is important because the solar panels may become damaged over time. If a major company makes them, they should be easy to find in case of any necessary repairs or replacements. You should be able to provide this information to the potential home buyer, and if you’re leasing, provide a contact name and phone number.

5. Who installed the panels?

This question requires a different answer than the previous one. You do not need to provide the potential buyer with a list of contacts to call for repairs, but it is essential that they feel confident that the system was correctly installed. Therefore, providing copies of relevant documentation showing your installation date and warranty status should suffice.

6. Is there a current warranty?

If so, you should provide details of the specifics. If there is no warranty or it has expired, explain why and how this happened. Warranties on solar panels often help the potential home buyer feel more confident in their purchase by assuring that the system will continue to work for a certain period without issues.

7. Is there a current service plan?

A service plan is similar to a warranty in that it will continue to protect the system for a certain period after installation. However, many people are wary of purchasing homes with solar panels because they are afraid of costly repair fees down the road.

Providing the service plan documentation should reassure them that this is not likely an issue. It will also give the contact information for the service plan in case-specific questions arise or if they run into problems with the solar panels.

8. How large is the system?

This question is expected if the potential buyer is interested in how much energy it can produce. Provide the number of panels installed, their capacity (in kilowatts), and what percentage of your total electricity consumption they can power. Check with the solar power company that installed it, or ask them for guidance if you’re unsure.

9. Is net metering a possibility?

Net metering is a program some power companies offer to provide incentives for homes with solar panels. The amount of energy your panels produce is subtracted from the total electricity you use, and whatever remains can go towards powering other houses/businesses in the area. 

It may be possible that this isn’t currently an option where you live or that it won’t be available to new customers after a specific date. However, homeowners might want to know that it is a possibility and the likelihood of them living in an area where it’s available.

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How Solar Panel Impact Buyers Qualifying for a Mortgage

The quality of the solar panel system directly impacts how the final buyer qualifies for a mortgage loan. That is because the loan agent will assess the home for any potential interest rate increases they might be facing due to less desirable features.

As a result, the solar panel system can increase the value of your home, which in turn raises the maximum mortgage amount that a buyer can apply for.

Liens

If there is a lien against the property due to outstanding debt from a prior owner, it will most likely have been settled upon closing. If it has not been resolved, though, this reduces the amount of money that can be borrowed and thus limits how much buyers are willing to spend on your property. Although not an ideal situation, this isn’t necessarily a deal-breaker for your potential buyers.

It is possible to obtain financial assistance from companies specializing in lien removals. They can help you settle any outstanding issues before the sale, which will make it easier to sell at the price you want. You will still be liable for any costs incurred on your behalf, though, if the property does not sell as a result.

PACE Loans

A Property Assessed Clean Energy (PACE) loan is an energy improvement loan for homeowners to use, and the local government repays them through their property taxes. These loans are available with fixed or adjustable rates, so check with your lender on which might be best for you. Although home-improvement loans are not something you would usually see as a benefit, PACE loans can allow buyers to afford the purchase price.

Other Considerations

It isn’t just the quality of your solar panels that impacts how much buyers are willing to pay. The presence or absence of other energy-producing setups can also influence their decision. 

The following can help reduce your utility bills each month and may attract higher-paying buyers:

  • An energy-efficient furnace
  • A new boiler
  • An efficient water heater

Other factors include how far you live from work and any amenities in the neighborhood. For example, residents can walk to stores and other locations within a matter of minutes, while others will find it necessary to drive due to their distance away. Longer commutes mean higher costs for fuel, so it may be worth checking what kind of salaries people living in your area typically make.

If there are job opportunities available in the area where they would like to stay, this can impact their decision. Commutes are usually longer for more affluent areas, which means the buyers may need to move further away from their workplace once you sell your home.

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Make Sure to Resolve These Maintenance Issues Before Inspection

Before putting your home up for sale, you should ensure that all of the issues with the solar panel system and other energy features have been resolved. Below are some of the specific issues you should pay attention to before selling to ensure that you and the home buyer have a good experience.

Solar Panel Cracks and Electrical Wiring

Cracks in the solar panel system are not necessarily an urgent matter, you need to fix them before your home goes on sale. The same goes for electrical wiring, which may require repairs due to normal wear and tear over the years.

The most crucial factor leading to cracks or electrical wiring issues is potential water damage, leading to costly repairs that your warranty won’t cover. For instance, if too much snow has fallen upon the roof, the panel systems could become damaged as a result. So make sure you clean up any snow above them before it melts to avoid interfering with anything.

Installation Quality

Just because a buyer is willing to purchase your property doesn’t necessarily mean they’ll want to continue using the solar panel system. In some cases, they might opt for a better setup or remove it entirely in favor of another method of energy production. Although this isn’t common, it’s still something you need to consider when selling a house with solar panels.

You can minimize these kinds of issues by ensuring the installation has been done correctly in the first place. For instance, if any wiring problems have led to power loss, your potential buyers may have concerns about investing in repairs. On the other hand, if you’re experienced with electricity and other aspects related to home improvements, you may be able to fix these problems yourself before taking buyers around your house.

Although it’s not always possible to go into great detail about the installation, you can still provide some people with basic information about who performed the work and why they chose that particular company.

Roof Remaining Lifetime

Roof remaining lifetime is one of the most critical factors when a home buyer decides whether or not to buy a property. If they feel repairs will be necessary soon, you can expect the listing price to go down accordingly.

If roof replacement is needed, it’s likely going to cost thousands of dollars, which reflects poorly on your property because there are no guarantees as to how long it would last for them. There may also be certain limitations that make it difficult for you to sell your property when many buyers are available since everyone wants newer homes. As such, you need to resolve these issues before putting your house up for sale.

Inverter and Metering System

Finally, you should make sure to let potential buyers know about the inverter and metering system. These are important because they take care of the solar panel system when you aren’t using it, which means that your home requires less energy overall.

As long as these issues are resolved, it’s likely that the metering system will have undergone appropriately tested, and your inverter is in working order. In any case, it’s a good idea to include all of this information in the description so that people aren’t left wondering what happens when you’re away from home or how much energy should be going towards certain appliances at any given time.

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Ernie Rivas
Ernie Rivas
2 months ago

Thank you for the explanation regarding solar panels and the potential issues regarding selling a home with solar. I am on the fence on getting solar, however, as a 64 year old man facing retirement, the 25 year note I am fixing on diving into …pretty sure I will be selling this house before too long. Would it be prudent to pay off the cost of my solar financing with my equity once home is sold?