All across the country, more and more Americans are installing solar panels for home use. And it’s easy to see why — you can save a considerable amount of money while also doing your part for the environment. Despite the growing popularity of residential solar power systems, many people still have questions about selling a home with solar panels.
If you are looking to buy or sell a solar home, you will want to know how much you can expect the home solar power system to affect its value. As it turns out, there’s a big difference depending on whether you own your solar panels, financed them with a solar loan, or entered into a purchase power agreement (PPA). There are also some more specialized methods for acquiring solar panels for your home that are only available in certain parts of the country.
Let’s discuss the details of each financing option and see how they affect the process of buying and selling homes.
Initial Expectations for Solar Homes
Before we dive too deep into the specifics, it’s important to point out that residential solar power systems almost always save homeowners a considerable amount of money. This is because, no matter how you purchase them, solar panels for your home produce energy at much lower rates than the vast majority of utility companies offer.
In addition, solar energy is far better for the environment than using electricity generated by fossil fuels. Still, not every homebuyer wants a home solar power system. That’s why you should know as much as possible about the home’s solar panels before you buy or sell the house.
The Four Most Popular Ways to Pay for Solar Panels
Not all solar panel purchases are created equal. It is true that solar panels for home systems typically increase the value of a home by roughly 3% to 5%. However, if you’re buying or selling a solar home, the value of the solar panels largely depends on how they were initially purchased. These are the most common ways to pay for residential solar power systems.
Up-Front Cash Purchase
If the home’s solar panels are fully owned, that’s the best-case scenario. When you buy solar panels with an up-front lump-sum payment, your financial responsibilities for that solar system end, other than some occasional routine maintenance. Solar panels purchased in this manner are the most valuable for home selling purposes because they’re entirely paid for.
Solar Loans
Residential solar power can be expensive to install. That’s why so many people choose to finance their purchases with solar loans. An interesting twist to this option is the fact that the original homeowner who entered into the contract will remain responsible for making loan payments. The contract does not automatically transfer to the new homeowner.
If the home you’re buying has a home solar power system on a solar loan, you should find out if the asking price includes funds to help the existing homeowner pay off that loan. That said, while you might encounter greater up-front costs helping the seller pay for their solar loan, you will still most likely benefit financially from the home’s solar system. As long as the additional costs outweigh the long-term utility bills, you will come out ahead.
Purchase Power Agreements (PPA)
Solar leases and PPAs are similar to solar loans, with a crucial distinction. When you finish paying for a solar loan, you own the solar panels. When you finish paying for a PPA or solar lease, solar power companies will either ask you to extend the agreement or buy the system from them. If you don’t, they will remove your residential solar power array.
In most situations, a PPA will last for around 20 years. Throughout the life cycle of the contract, your solar provider will perform all necessary maintenance and repairs, and they also typically monitor energy production from your system. One important note is that a PPA or solar lease will almost always include a buyout clause that allows the homeowner to purchase the solar panels outright or transfer the remaining lease period to a new homebuyer.
PPAs and solar leases usually provide homeowners with fewer financial benefits than either up-front purchases or solar loans. However, they often have minimal initial costs or none at all. As a result, buying out someone else’s PPA or solar lease isn’t always a great idea — the structure of the PPA often front loads the financial benefits. If you’re buying a home with a solar lease or PPA, keep this firmly in mind.
Property Assessed Clean Energy (PACE) Financing
The least common of these options is to finance solar panels for your home through a Property Assessed Clean Energy program. This is because financing through PACE is only available in certain parts of the country due to local government programs. PACE financing is most comparable to a solar loan. However, there is often no down payment, and the contract usually stipulates an annual payment, rather than monthly.
The most important aspect of PACE financing for a prospective homebuyer is that any remaining money owed on the solar system transfers to the new homeowner when they buy the house. With a solar loan, solar lease, or PPA, the original homeowner retains financial responsibility unless the new homebuyer agrees to the transfer. With PACE financing, this responsibility remains attached to the home, not the person who owns it.
In Conclusion
We’ve covered a lot of ground in this article, and it’s understandable if you still have some questions about the differences between up-front payments, solar leases or PPAs, solar loans, and PACE-financed solar systems. Feel free to contact LGCY Power today, and our expert representatives can help you figure out which is the best option for your home.
One of the most frequently asked questions about residential solar installations is whether selling a house with solar panels affects the process. Do homes with solar panels sell faster? How does the process work for selling a home with a solar panel lease? In this article, we’ll answer these questions and more as we walk you through several important aspects of buying and selling a home with solar panels.
In many situations, potential buyers will be thrilled to purchase a home that already has solar panels installed. After all, the idea of paying significantly less money for utilities — while also protecting the environment — is an appealing thought for quite a few homebuyers. However, there are plenty of exceptions, and you’ll need to evaluate the specifics of the installation before buying or selling your home with solar panels.
A Key Factor: Where Is The Home Located?
A key factor that many people fail to consider is the simplest one of all: where is the home located? The more common residential solar systems are in your area, the easier the process of selling your home with solar panels will be. In general, each kilowatt of solar power your system generates adds roughly 1% to the price of your house, but that varies tremendously depending on which part of the country you live in.
If your home is located in a state like California — where residential solar installations are highly popular — you will likely have a much easier time selling a home with solar panels compared to selling the same house in North Dakota, where it’s very unusual to see solar panels on the roof of any home. However, there are several other factors that aren’t quite as obvious on the surface.
Does The Homeowner Own The Solar System?
One crucial variable is whether the homeowner actually owns the solar system, or if they acquired their panels as the result of a lease or Power Purchase Agreement (PPA). If the homeowner purchased the system outright, then it is considered to be part of the home. In these situations, the solar system will be included in the home’s appraisal. This is true whether the homeowner bought their solar panels with cash or a loan, as long as the loan is already paid off.
On the other hand, if the homeowner has not paid the loan in full, it all comes down to the details of the loan agreement. If the lease allows for the homeowner to hold ownership of the solar system while they’re in the process of paying it off, the system is included in the appraisal. It’s also important to note that if there are still payments due on the loan, the homeowner will either need to pay off the rest of the loan or transfer it to the homebuyer.
Selling Your Home With Leased Solar Panels
Here’s another common question: Can I sell my house with leased solar panels? In short, yes you can. However, this requires the seller to either buy out the remainder of the lease (or PPA contract) or transfer it to the buyer. In this situation, you might need to find a buyer who specifically desires a home with solar panels, as someone who’s on the fence or merely casually interested is less likely to agree to take over the contract.
Another option if you’re selling your home with solar panels is to consider whether you could simply bring them with you to your new house when you move. This is not an option for those of you with leased solar panels — or if you’re still paying off a loan, depending on the contract specifics — but if you own your solar system outright, there’s nothing stopping you from picking it up and moving it. This can actually be the easiest answer to selling a house with solar panels, but it obviously doesn’t fit everyone’s needs and priorities.
Questions? Contact Us
Do you still have questions about how to buy or sell a home with solar panels? Feel free to contact one of our LGCY Power Energy Consultants at any time. With some help from our expert representatives, you can quickly get answers to all of your important questions, from selling a home with a solar panel lease to transferring your solar panels to a new location and everything in between.
