Buying a Home with Solar Panels

Wonder how to know if it’s worth buying a home that’s already equipped with solar panels?

Before deciding on buying that solar-powered home, determine the kind of solar installation you’re looking at. 

This will help you make the financial decision that’s right for you.

Leased vs. Owned Residential Solar Panels

There are four different scenarios you will come across when you’re looking at a home with solar panels already installed.

They are:

  • ⬥ Solar panels that are fully owned by the seller
  • ⬥ Leased solar panels
  • ⬥ Solar panels that are financed with a PACE (Property Assessed Clean Energy) loan
  • ⬥ Solar panels purchased with a solar loan

Seller owned

Solar panels that are owned by the seller is the simplest, and most desirable scenario you’ll come across.

You’ll likely pay more for the home than you otherwise would, simply because of the added value that solar panels offer. 

However, you can recover some or all of these costs in the event you sell later down the road. You’ll also gain an immediate monthly benefit with lower electric bills.

When you buy a home that includes solar panels owned by the seller, they should be included as part of the purchase.

Leased solar panels

Solar panels that are leased by the homeowner can be part of a lease lasting anywhere from 10 to 20 years. 

Although costly, it may be possible to roll the purchase of these panels into the price of the home. Or to buy them outright from the company.

Often, payments made as part of these lease agreements are increased over time, which of course adds to your ongoing housing expenses.

Also, if you’re buying the home with the mortgage, the added debt liability of the leased panels could drive up your debt-to-income ratios.

Which of course can lead to either no loan or higher financing costs for you.

Before agreeing to buy the home with leased panels be sure to get a copy of the original lease contract to make an informed decision.

Solar financed with a solar loan

If the solar panels were financed with a secured or unsecured solar loan the seller has three options; 

  • ⬥ to buy out the remainder of the lease (which they can tack onto the sale price of the home)
  • ⬥ remove the panels and take them with them
  • ⬥ transfer the lease to you (assuming you agree)

Note that if you agree to take over the lease you will be required to meet the criteria of the solar finance company too.

Solar financed with a PACE loan

PACE loans are different from regular solar loans in that the lien attaches to the property, rather than to the individual.

What this means to you as a buyer is that the loan repayments are made through the property taxes.

Thoroughly review any leases, contracts and/or agreements that apply to the home purchase before agreeing to the terms.

Questions to ask

  • ⬥ Who owns the solar panels?
  • ⬥ Who made them? (U.S. manufacturers may offer some protections)
  • ⬥ Who installed them? (Reputable solar panel installers may offer some kind of installation warranties)
  • ⬥ What monthly fees will I have?
  • ⬥ Do the payments increase over time?
  • ⬥ What is the term of the lease?
  • ⬥ What size is the system? How much will it power?
  • ⬥ How much did it save you in energy costs?
  • ⬥ Is it possible to net meter the electricity? (i.e. sell power back to the utility company)

Finally, just as with any home purchase, you are responsible for doing your due diligence when buying a home with solar.