Selling a House with Solar Panels: Lease or Loan?

selling house solar EnergySageLet’s face it: life happens. You may be planning to install solar at your house this month, but five years down the road you could get relocated for work and have to sell your house and move elsewhere. Or, you might be living in a home that you expect to outgrow but aren’t quite sure of when that next move will happen. The question is, when you don’t know if you’ll be in your home indefinitely, should you still be considering solar? The short answer is,YES. Going solar is still a viable money-saving solution for your house, even if you expect to sell it in the foreseeable future.


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Solar can increase your house’s value in a sale

Depending on how you decide to go solar, you may be able to benefit from your solar energy system during the home sales process. Studies show that homes with solar tend to sell more quickly and for higher prices than comparable homes without solar. However, that all depends on whether you bought or leased your solar panels.

Home sales if you own your solar energy system

In a study conducted by the Lawrence Berkeley National Laboratory, researchers found that potential homebuyers were willing to pay more for homes equipped with customer-owned solar. In fact, they discovered that homes with the average PV system in their sample size (3.6 kW) sold for a premium of $15,000 across different states. Even if you have a portion of a solar loan to pay off, the increase in sale value of your home can help offset or even cover that loan residual amount while also creating a profit.

 Home sales if you leased your solar energy system

Many homeowners considering a solar lease express concern about reductions in home value. They worry about potential buyers being unwilling or unable to take over the lease, and the potential costs that they would incur if they had to buy out their lease. Luckily, most of these concerns are unfounded.

A recent study done by Lawrence Berkeley National Laboratory analyzed homes in southern California that had been sold with a solar lease/PPA attached. Most participants saw no impact on their home sale value as a result of their lease agreement. Researchers also found that 77 percent of the leases were successfully transferred to the new property owner, but that 20 percent of study participants had potential buyers scared off because of the leasing agreement.

There are additional considerations to keep in mind if you expect that you’ll be selling your solar home during your solar energy system’s lifetime (typically 25 to 30 years). We’ll go into further detail of those below.





selling a house with solar graphic




Selling your house with a solar lease or PPA

Don’t feel forced to pay high utility electricity rates today just because you might move in the next 20 years. The typical lease/PPA agreement lasts for 20 to 25 years, but it’s well within your rights as a homeowner to sign an agreement now and then sell your home before the end of your lease term. There are two strategies to sell a home that has a leased solar energy system attached:

  • Buy out the remainder of the lease: By paying the rest of your lease, you can either have the panels removed from your roof, or keep them there and sell the system as part of the property.
  • Transfer the lease to the new property owner: If the new owner is willing to take over the lease and meets the third-party owner’s criteria, you can transfer the agreement over to their name.

If you’re considering transferring the lease to a new property owner, they will need to meet the credit requirements of the third-party owner of the system. This isn’t usually an issue – if a potential buyer has been approved for a mortgage, then their credit score is likely high enough for a solar lease/PPA.

If you’re selling a solar home with a leased system, keep in mind that the terms of your lease agreement will vary depending on the leasing company. For example, some leases may have a penalty for paying the lease out prematurely, and some might be easier to transfer to a new homeowner than others. Be sure to read your lease agreement thoroughly before signing so you fully understand the terms. 

Selling your home with a solar loan

Your options for selling your home with solar if you own the system vary depending on how you financed the purchase. If you plan on financing the purchase with a secured loan (like a home equity loan or home equity line of credit), you will have to pay off the remaining balance of the home before you sell. This is because your property is used as collateral for the loan. In most cases, secured loans don’t have prepayment penalties, so there’s no disadvantage to paying the system off early.

If your solar panel system is financed via an unsecured loan, the loan is not tied to your property, so you can sell your home and move prior to paying it off. Remember, you are still obligated for paying off the remainder of the loan.

In most cases, paying off secured or unsecured solar loans is straightforward – since solar panels increase the value of your home, you can usually pay off the loan with the additional revenue from your home sale.

Don’t let a future move prevent a solar panel purchase today

Going solar is a great investment in your home, even if you’re moving before the end of the solar panel system’s life. As with any contract, review your financing agreement prior to signing to see if there are any restrictions, and be sure to discuss all your options with your solar installer before making a final decision. To get started, use EnergySage’s Solar Calculator to instantly find out how much solar can save you, or register your property on the EnergySage Solar Marketplace to get multiple quotes from pre-screened solar installers.





selling a house with solar graphic




13 thoughts on “Selling a House with Solar Panels: Lease or Loan?

  1. Pingback: The Future is Now – Humium

  2. RUPI Rupasinghe

    Hi, me and my husband planning to buy a home, that current owner already installed solar panel under 20 year agreement. We Sign the P&S agreement too. But we are worried now , we have lack of information of the solar panels agreement , wheather it can be easily transfer to us or not. We are thinking are we made a right decision to buy a house with already installed solar panels?

    Reply
    1. Adam

      Every company has their own way of doing things, but you shouldn’t worry. Depending on your area, you could run into 1 issue. If it is just you and your husband moving into the home and you find that you don’t use a lot of electricity, but the previous homeowners are a large family that would use a lot of energy. They could have a high offset on their electricity. That would mean that the system could be producing more energy than you would need and you would be paying for that excess energy. I know in my area that you would only get about 40% of that cost back when selling that excess energy back to the utility. Hope this helps.

      Reply
  3. Eugene

    The company that installed them will be able to supply you with all the paperwork. Have your realtor contact them. Write it into the conditions of the sale that you can back out if the paperwork is not available

    Reply
  4. Holly Potvin

    I am trying to sell a house with a solar lease and no potential buyer wants to have anything to do with it. Help!

    Reply
  5. Kyle Hutchings

    Don’t just take this articles word for it, check with a realtor. According to mine, installing solar panels add little or no value to your home… so don’t expect that the added home value will be enough to pay off your loan if you move before you have it paid off.

    Reply
  6. Christine

    My husband and I are trying to sell our house with solar panels. And now I feel like it was a huge mistake. Solar panels add no value to your house and that’s a shame because our electricity bill is basically zero balance each month. Except for the monthly activation fee. My advice to anyone is stay away from installing solar panels unless you are planning on staying at your current home.

    Reply
  7. Rachel

    Who is in charge of signing papers after the solar company files for bankruptcy and stops all contact with customers? Now without a signature I can’t close escrow and sell my house, and with this I will lose the house I am trying to buy in another state where I have to start a new job next month? Who do I contact at American Solar Direct?

    Reply
  8. Gee

    This article is complete nonsense….when a lease has you paying $100 for 30 years, and you really truly think this a benefit, the system cost avg, $16,000…why would you pay #40,000 to lease it.
    Its a scam and this takes advantage of people

    Reply
    1. Dave

      You have to remember that every system sizes different 12 panels it’s not gonna cost $16,000 just like 40 panels not gonna cost $16,000 it varies from home to home. Either way Solar is better than what the utility companies charge. And I will always save the person that is living in the home money.

      Reply
      1. Elwin Campbell

        If solar leases are so good, why do realtors “forget” to list it in most listings.
        Solar companies suck gullible people into leasing these contraptions, then arm twist them into buying them out. Total scam.

        Reply
      2. Joe

        Solar is definitely better then the utility company but with solar the home can’t lower the consumption then previous owner or they are paying more then would be with the utility.

        Reply
    2. RealEstateChick

      Yes… As a realtor I can confirm, at least in my area, properties with solar panels that are leased on them have a stigma attached to them.. 20-30 years is a huge commitment… It’s nearly retirement time. People don’t want to assume other people’s leases. They don’t like to even do it as short-term much left in the long-term. Do your due diligence.
      Also, get everything that the sales guy says to you in writing… Everything! If he says, “hey if you ever need to move and the buyer doesn’t want the panels, no problem we’ll just move them to your new house for free” -get it in writing. If he says, “after 6 years you can buy them out right and no more lease” (sometimes you find that the lease is still there you just have to pay it off all at once at a reduced price)-get it in writing. If he says “if in 10 years you need a new roof, no problem. We will remove the panels and store them for you while you get the new roof and just install them for free once your roof is replaced”-get it in writing.. often what is promised to the consumer is nowhere to be found in the lease and let’s face it, a lot can happen in 5 years much less 10, 20, or 30.

      Reply

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