Want to buy a house with solar panels? What you need to know first

Solar panels: They could brighten or dim the prospects of a home search. It all depends on the specifics.

Although solar energy has grown in popularity in recent years, homes with solar panels are, nationally, still somewhat rare. Only about 4 percent of U.S. homes had solar panel systems as of 2020, according to data from the Energy Information Administration. They are much more common in certain areas, such as the Southwest, where solar panels dot millions of rooftops in cities such as Las Vegas, Phoenix, San Diego and Los Angeles.

But still, in general, homes on the market aren’t likely to have solar panels. “We don’t have a lot,” said Sarah Knight, a real estate broker in Spokane, Washington. “They’re not very common – maybe one in 30 houses would have them.”

This is true even in the Southwest, an area rich in residential solar systems. “You wouldn’t expect to see most houses have solar panels,” said Skip Adams, a licensed broker in Albuquerque, New Mexico.

Adams said that while Albuquerque sees more than 300 days of sunshine a year, making it a pretty ideal place to install a solar system, many people are turned off by the cost. Adams said he has closed deals because of solar panels — sellers hoped they would add value, but in many cases, they are not fully paid for and buyers are asked to shoulder the cost of paying for them.

Buying or selling a home with solar panels can be more difficult than many people realize. However, if you are interested in buying or selling a solar home, there are a few things you should know.

What if the house you want to buy has solar panels?

A home with an existing solar system can become a point of contention for buyers, Adams said. Solar systems are expensive and sellers may not have fully paid for the system. So a buyer could be on the verge of paying off the remaining balance of the system, assuming it was financed or paid for with a loan or similar arrangement.

That’s because homeowners may have installed a system thinking they’ll live in the home until it’s paid off — unless they paid it off in cash or have a financing agreement.

“Some people think that if they buy their forever home, the cost of a system might eventually come down,” he said. “But what we’ve seen is more harm than good for sellers – many times, homeowners will sign up to buy solar panels without realizing or planning ahead, then go sell their house and have (an effective effect). ) warranty on it.”

In other words, sellers are not only trying to find a buyer for their home, but also a buyer who is willing to make the payments for a solar system. “Buyers don’t like it,” he said, and “it’s caused a handful of deals to fall through.”

This can be mitigated, of course, if the sellers have already paid for their solar system in full. Meaning they don’t owe any money or have otherwise fulfilled their financing agreement with a solar company. In this case, the system can add value. Some research has shown that solar panels can add a 4% premium to the price of a home.

At the end of the day, a solar system will likely make a home more expensive for a buyer, either because they have to pay for the system or because they are paying the premium associated with a fully paid-for system.

“Costa,” Knight said, “and not everyone has that kind of money.”

How to buy a house with solar panels

For those looking to buy a home with a solar system, the process can get confusing depending on one key factor: whether the seller owns the solar panels or has a lease or power purchase agreement with a third party.

If the seller owns the panels

The best case scenario for buyers is that the seller completely owns the solar panel system. That is, it is paid in full and there are no outstanding financing agreements or loans. If there’s a solar loan or financing agreement that the buyer will have to take on, the buyer should ask a lot of questions about the details — make sure you know exactly what you’re signing up for — and give yourself a idea of ​​what exactly the payments look like.

There are a lot of details and situation-specific issues that could arise. You need to understand exactly what’s going on — who owns the panels, how much is owed on the panels, if there are leases or other loans floating around, etc. Buyers can always require sellers to pay off any outstanding loans as a condition of the sale, Adams said.

If the seller has an electricity rental or purchase agreement

If a home has leased solar panels or has a power purchase agreement, things could be more complicated. In this case, a third party would own the panels, and a potential buyer would have to look at the lease to see if it’s something they’d want to take on. If not, panels may be removed before the transaction can close.

Again, in such cases, panels create a headache and could complicate a deal. While a lease or power purchase agreement may have options for purchases or the like, there could be damage to a home’s roof panels — another issue that might need to be addressed before closing.

All in all, there is a lot to consider, and buyers will want to do as much research as they can.

How to find a home to buy with solar panels

For buyers who aren’t scared off by all the possible hiccups, finding a home with an existing solar system isn’t terribly difficult. Knight said agents and brokers have a way to find listings for potential buyers through multiple listing services (MLS), but since most homes don’t have solar panels, the options can be few and far between.

So for buyers, the specific geographic search area will likely play the biggest role in finding a home with solar panels.

Perhaps the best thing buyers can do is to look for a home that has a solar system that is paid for in full and has no financial strings attached, be it a lease, a power purchase agreement or an outstanding solar loan. This way, you purchase a home that can generate electricity and reduce energy costs without taking on monthly payments or rent.