Understanding how solar panels can impact the sale of your home
We all know that solar systems are a great way to reduce electricity bills and create a greener household. But, what about when you try to sell your house? Do solar panels add value then?
There are several key factors to consider, including how you financed your system, how old your system is, and more. In this guide, we’ll explore the process of selling a house with solar panels.
In this article:
- Understanding solar panel ownership and its impact on home sales
- Gathering your documents for the home sale
- Pros of selling a house with solar panels
- Cons of selling a house with solar panels
- Navigating the sales process
- Making solar panels work for you
- Frequently asked questions
Understanding solar panel ownership and its impact on home sales
Solar panels can be a valuable selling point for a home. Whether or not you will get a higher price or faster sale depends a lot on how the solar panels were financed. If you paid cash, then the solar system should be an asset. If you have a loan, or lease the solar panels, things can be a little more complicated. This is important to know, since third-party ownership (TPO) is becoming more common. More than half of installers state that customers are turning to (TPO) models, such as leases and power purchase agreements (PPAs).
Owned vs. financed vs. leased solar panels
Owned systems: Homeowner owns the solar panel system outright.
| Pros | Cons |
| Most appealing to buyers and least complicated sale | Buyers may not like the solar panel’s look |
| May increase home value | Buyer is responsible for maintenance |
| Warranty can be transferred |
Financed systems: Homeowner owns the solar panel system with a loan.
| Pros | Cons |
| May increase home value | Buyer may need to qualify to transfer the loan |
| Lower energy costs for buyer | Buyer is responsible for system maintenance |
| Sale may happen faster | Seller may have to pay off loan if buyer doesn’t want or can’t qualify for the loan |
Leased systems: Homeowner is leasing the solar panel system through a third party.
| Pros | Cons |
| Lower energy costs for buyer | Makes the sale more complicated and buyer has to agree to lease transfer |
| Maintenance handled by third party, not the buyer | Third-party owner has to approve lease transfer and may have conditions |
| Seller may have to buy out lease if the buyer doesn’t want it |
Generally, leased and financed solar agreements are transferable, according to SEIA. However, it is at the discretion of the third-party solar finance company (or bank). This transfer of a solar lease, loan, or other contract, such as a solar power purchase agreement (PPA), can prolong the sale process.
Solar loans and liens
A solar lien is the legal right the company financing your loan has to enforce payment. It gives them the right to reclaim ownership of the solar panel system — and potentially take other actions like reporting you to collection agencies — if you stop making loan payments.
Because of this, it is crucial that the home buyer is approved to take over the loan, or one party pays the loan off outright.. When the loan is paid in full, you own the panels, the lien goes away, and the home is more attractive to potential buyers.
Gathering your documents for the home sale
As with any other major sale, such as a car, there are steps to take ahead of time. Primarily, you’ll want to ensure that all your paperwork is together. This will make the sale a much smoother process.
Maintaining accurate records is crucial if you want to sell a home with solar panels. Buyers will want to review all the paperwork you have on the system’s warranties, maintenance, and, perhaps most importantly, your energy savings data. By showing that the system is well-maintained, and delivers electric bill savings, the buyers should feel more comfortable taking ownership. It is essential to be transparent with buyers to establish trust and avoid any future legal issues.
Pros of selling a house with solar panels
Just as they were a terrific investment originally, solar panels can also add value to your home when you try to sell it.
Increased property value
According to a study Zillow conducted in 2019, homes with solar sold for 4.1 percent higher than average. Since time has passed since this study, electricity prices have been on the rise — meaning that, if anything, solar panels should become more valuable in the future as homeowners continue to look for ways to cut down on utility costs.
Energy savings for buyers
The biggest reason buyers seek out homes with solar panels is for the energy savings. In fact, according to Aurora’s Solar Snapshot research, 93% of homeowners who are interested in solar cited savings on their utility bills as one of the main reasons. Not only that, net metering adds even more appeal to solar homes — by sending excess energy back to the grid, home buyers can potentially lower their utility bills even more and boost their energy independence at the same time.
Environmental benefits
In addition to using less electricity from the grid, solar energy doesn’t create greenhouse gases or air pollution. Knowing that, home buyers can enjoy a more ecologically friendly home.
Energy independence
Energy independence is a motivator for 72% of homeowners, which is especially important given the increasingly unstable and overused power grid. Owning solar panels allows you to use power on your terms and rely less on your local utility.
Cons of selling a house with solar panels
While solar systems can make a home more attractive to buyers, there are also potential drawbacks.
Buyer misconceptions
There are several myths about solar energy systems that buyers may believe, which may make them more reluctant to buy your home. Two pervasive misconceptions are that panel systems damage the roof and solar energy only works in sunny climates.
When solar panel systems are installed by vetted solar professionals, the risk of roof damage is minimal. And, solar panels can actually protect the roof underneath from things like sun damage.
“Solar panels are also a roof shield,” says “Solar Joe” Mousakheel, CRO of The Solar Academy. “This installation is going to protect your new roof in the future, it’ll protect it from sunshine, rain, hail, and will help your roof last even longer.”
Additionally, solar systems can be effective in many different climates. From the Pacific Northwest, to New England, to the southern U.S., solar can be a great investment. Solar systems even produce some energy on cloudy days. And if you were the owner when the system was installed, you can prove it to the buyer by showing them your energy savings.
Maintenance considerations
Some buyers are concerned about the amount of maintenance required for solar panels. However, they generally need very little maintenance, especially in climates with regular rainfall. Since the panels are situated at an angle, rain will help mitigate a lot of the debris buildup. Even so, panels may need to be cleaned regularly.
Age of the solar system
The typical lifespan of a solar system ranges from 25 to 30 years, depending on the type of solar panels. If the system was originally installed 20 years ago, it may be starting to lose efficiency, nearing the end of its warranty, and relying on outdated technology. Buyers could worry about lower energy savings, looming repair or replacement costs, or the need to remove panels for roof work. Additionally, if the system is leased or financed, they may be hesitant to take over payments on equipment that has limited life left.
Navigating the sales process
Even with the potential pros and cons of selling a home with solar panels, you have to navigate the sale itself. For that, you’ll want some experts by your side.
Working with experienced real estate agents
Your biggest advocate in the selling process will be your real estate agent. That’s why it’s crucial to find one with wide knowledge about solar-powered homes. These real estate professionals can help you effectively communicate the benefits of solar to the buyers, and dispel the myths around them to ease the buyers’ minds.
Legal aspects
In addition to your real estate agent, it’s a good idea to hire a real estate attorney to go over all of the legal documents. They can ensure you are following all of the agreements you made with the solar panel company (if you have a loan or lease agreement) and any local regulations. Those regulations include any homeowners association (HOA) solar panel-related bylaws that your buyers may need to deal with.
Making solar panels work for your home
Solar panels can be a significant benefit for potential home buyers in a competitive real estate market. They’ll have greater independence from the grid, resulting in energy savings and a greener home. However, as the homeseller, it’s essential to ensure they have all the necessary information to move forward. Explore our Homeowner Guide to Solar to learn everything you need to know about solar before selling — or buying — a home with solar panels.
Frequently asked questions
Is it harder to sell a house with solar panels on it?
It is not harder to sell a house if the solar panels are owned outright. In fact, this may increase the value of your home. However, it may be harder if the solar panels are financed and not owned by the homeowner. Leases, PPAs, and loans can potentially be transferred to a buyer, although this complicates the sale and may prolong the process.
What happens to solar panels when you sell your home?
The panels will be included in the sale of the home. If the panels are leased or part of a loan, however, the agreement will need to be transferred from you to the buyer through the third-party financier or bank.
Can I transfer my solar loan to the new homeowner?
That depends upon the loan issuer. Some loans require the buyer to be approved before the transfer can occur.
What happens to net metering credits when I sell my home?
It depends on the utility company. Some companies allow the credits to be transferred to the new owner, while others may allow the credits to be paid out to you. However, some may void the credits.
Should I remove my solar panels before selling?
No. Research has shown that solar panels can add to a home’s value in a sale. Removing them would remove that value and could potentially void any warranty you have on the system. Even if you installed them on your new home, you may no longer have a warranty to protect them.
