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Selling a House with Solar Panels: Lease or Loan?

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Let’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.

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 (on average, 4.1 percent more) 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.

selling a house with solar graphic

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 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

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

  1. nitin

    To the comment that said if you can not lower your bill if you don’t lower your consumption you couldn’t be more wrong. I use the same amount of electricity. I have AC set at 76 in the summer heat in california. I still pay less than 200 combined to PGE and Tesla. My bill used to be 500+ in summer with PGE before solar. Overall what I do is I pay tesla like I don’t have solar and I am paying PGE. I just pay them extra to pay my solar panels off faster. My solar bill is like 1500 a year and my PGE is around 500-600 now for the year. Becoare I was paying around 300-3500 to PGE. I just take the extra money I am saving and put it towards my principal. It really depends on where you are in the country. If you are in california and you are with PGE, YES you do need solar and there is no way you can be on the losing end. If you are in SMUD market paying 10 cents a kwh then no point getting solar. But PGE market, oh hell yeah lol!

  2. Oliverduke

    Thank you so much for this post. It is helpful and informative blog. I want to sell my own house on lease. It is very helpful for me.I will share your post to other user.

  3. Hank

    I love the idea of solar but I have concerns. First what will the energy market look like in 5 or 10 years, Will a new source be available that makes my solar obsolete? The way inventions are being produced I wouldn’t be surprised if a small device that sits in the back yard will produce all the power you want and cost much less than my solar.

  4. Nino

    If a home for sale has a solar loan, loan value is new and has not been paid down ($20,000) & is 7 months old, can the sellers markup the value of the house to include the unpaid solar system? I.e., include the balance of the loan into the selling price. Appraisal report states the solar is owner, but technically it is not. The seller/buyer contract states that the solar system will be paid off at the close of escrow. As a buyer I’m essentially paying off the loan that the seller is obligated to. Who can claim the Federal Solar Tax Credit?

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