The Complete Guide To Selling A House With Solar Panels

What happens when you try selling a house with solar panels? Will it be an obstacle for potential home buyers? Will it appeal to people who want to save money on utility bills or reduce their carbon footprint? And does it matter whether you own or lease the solar energy system on your home?

Let’s answer these questions so you can know what to expect if you install solar panels and end up selling your home at some point thereafter.

Do Solar Panels Hurt The Resale Value Of Your Home?

Green features matter to home buyers, according to a recent National Association of REALTORS® survey. Of the respondents, 51% said their clients are interested in sustainability. The survey also found that 63% of agents believe promoting energy efficiency is either very valuable or somewhat valuable when listing a home.

Homeowners believe that solar panels make their homes more attractive to potential buyers. According to research conducted by Rocket Homes^SM, homeowners believe a solar array adds a median of $12,500 to their home value.

The same research also shows that homes with solar power are nearly 25% more likely to sell above the asking price. Solar homes may also spend roughly 13% less time on the market.

This data indicates that home buyers want solar panels and that sellers with solar panels may benefit from their investment. Solar panels are clearly more likely to increase your home’s value than hurt it.

Do Solar Panels Add Value To An Appraisal?

Fannie Mae has a chart focused on appraising properties equipped with solar panels.

Other organizations that deal with home loans may have different requirements, so be sure to discuss this with your real estate agent or mortgage lender.

How Are Your Solar Panels Paid For?

It’s possible for a homeowner to pay for their solar panels in a few ways. Let’s compare the facts about each method and assess the advantages and disadvantages.

Selling A House With A Solar Lease

Leased solar panels are appealing to some homeowners because they’re a low-cost way to generate renewable energy. Rather than requiring an upfront cost, solar panel leases allow homeowners to pay a monthly fee to use the electricity the photovoltaic (PV) array produces. Typically, homeowners with a solar lease will make fixed monthly lease payments to the solar company. 

Homeowners with a solar lease typically won’t own their home long enough to reach the end of the lease agreement. Lease periods can run longer than 20 years, but the average homeowner only spends 13 years in their home.

Home sellers might have to buy out the remainder of the lease or see if the home buyer is willing to take over the contract. Also, the price of the solar lease can’t be included in the home’s listing. It’s a wise idea to provide as much documentation as possible for potential buyers to review. Have your energy bills, a complete copy of the lease and your payment schedule ready to go.

On the plus side, the solar installer handles all the maintenance related to the PV array.

Homeowners who choose a solar lease aren’t eligible for the federal solar tax credit and various other incentives.

Selling A House With A Solar Power Purchase Agreement

A power purchase agreement (PPA) is similar to a solar lease: A third party owns and maintains the solar equipment. The key difference is that homeowners with a PPA will pay a fixed price per kilowatt-hour (kWh) for the electricity the solar panel system generates.

The price a homeowner with a PPA pays per kWh will usually be lower than the price charged by the local utility company.

If you agree to a PPA, you won’t be eligible for the federal solar tax credit or other potential incentives. Instead, the leasing company gets to take advantage of these benefits.

If you’re selling a home with a solar PPA, you’ll have to transfer the PPA to the new buyer as a separate transaction. The seller, buyer, real estate agents and solar company will negotiate the terms in most cases.

Selling A House With Financed Solar Panels

If you finance your solar energy system and sell before it’s paid for, selling your home might present some complications.

Mortgage lenders may want the system paid off before a buyer can close. It may be possible for the home buyer to take over the loan, but that could impact whether they can get a mortgage for the amount needed.

How To Sell A House With Owned Solar Panels

Selling a home with a solar energy system that’s completely paid for presents no complications. It’s a straightforward situation for the buyer and the seller. The system can be included in the home’s listing price just like any other home improvement.

4 Helpful Tips: How To Sell A House With Solar Panels

Energy costs are on the rise, and situations like the mass outages in Texas have homeowners concerned. Still, your real estate agent might not have all the knowledge necessary to turn your solar panel system into a selling point. Here are a few ways you can help prepare your agent for potential buyers who are unfamiliar with solar panels.

1. Explain Your Net Metering Arrangement

Many utility companies use net metering to compensate homeowners with solar panels for excess power they generate. Be sure to explain how your electric company compensates you.

2. Compare Your Electric Bill To Similar Homes

Provide proof of your savings by comparing your electric bill with the expected energy costs of similarly sized homes that don’t have solar panels.

3. Ensure Your Green Fields Are Filled Out

Multiple listing service (MLS) profiles for homes generally include “green fields” where agents can add a home’s green home certifications and energy performance data. Be sure these are filled out so prospective buyers or their agents can see the green credentials of your home.

4. Explain Your Warranty And Maintenance

Not everyone understands that solar panels are low maintenance and typically covered by long warranties. Be sure your real estate agent can inform new homeowners about your solar panel maintenance efforts, how long you’ve had your solar panel system and how much time is left on the warranties for the labor, panels, inverters and other hardware.

The Bottom Line: Selling A House With Solar Panels Is Harder If You Lease the System

If you’re a long-term thinker who’s wondering what might happen if you install solar panels and later decide to move, think about how you want to pay for the system. If you can buy the solar panel system outright or pay off your solar loan before selling, you’re setting yourself up for an easier transaction.

Other ways of paying for solar panels can add some complications. Owning your system also makes your home even more attractive to home buyers interested in clean energy.