With more homeowners across Arizona adopting solar power, the conversation around buying and selling a solar home becomes more prominent. Selling a home with solar panels can be a great opportunity, but it also comes with unique considerations.
If you’re preparing to sell a home with solar panels, this guide will help you make the process smooth and successful. We’ll discuss the benefits of selling a home with solar, how to sell a home with a solar lease or loan, and some key steps to follow to make your solar-powered home shine on the market.
Benefits of selling a home with solar panels
There are three key benefits of selling a home with solar panels: research shows that homes with solar panels generally sell for a higher price and are sold quicker than homes without. This becomes even more true as younger buyers generally prefer environmentally-friendly options to a greater degree. You also have additional selling points to use when promoting your home, including lower electricity bills and a smaller carbon footprint. Let’s explore these benefits in more detail.
1. You might be able to sell for more
One of the biggest benefits of selling a house with solar panels is the potential for a higher sale price. Research from Berkeley Lab found that homebuyers are willing to pay around $15,000 more for a home with a solar system. Solar panels add significant value, and as energy costs rise, the promise of lower or no electric bills becomes an attractive selling point for buyers. On top of that, more buyers than ever are attracted to the appeal of a sustainable home with renewable energy.
According to the National Renewable Energy Laboratory (NREL), for every dollar saved on energy bills thanks to solar, the home’s value can increase by $20. So if your system saves you $500 per year, that could add up to a $10,000 boost in your property’s value. Additionally, a housing trends report by Zillow found that properties with solar energy systems sold for 4.1% more than those without.
Other research shows that the resale value of a house can increase by up to $4 for every additional watt of a solar panel. So if you have a standard 5kW solar system in your home, its resale value can increase by up to $20,000. While these numbers are all slightly different, they all clearly tell one story: solar panels can increase the value and appeal of your home when it comes time to sell.
2. Your home might sell faster
Solar panels won’t just increase your property’s value – they can also accelerate the sale. In fact, homes with solar panels tend to sell 20% faster than those without. Data from Rocket Homes shows that homes equipped with solar spent 13.3% less time on the market. Buyers are increasingly drawn to energy-efficient homes, and installing solar panels often tips the scales in your favor when it comes to receiving quicker offers.
3. You can promote clean energy & lower bills
Finally, homes with solar panels have additional selling points that make them more attractive to potential home buyers. First of all, there’s the added bonus of saving money on utility bills. In certain areas, homeowners with solar panels can also sell unused energy back to the grid for additional credits off their electricity bill. Finally, the selling point of using clean, renewable energy also appeals to certain buyers who are looking to be more environmentally-friendly in their daily life.
Learn more about the value solar panels add to your property by downloading our free guide: Buying and Selling a Solar Home.
How to sell a home with solar panels
The process of selling a home with solar panels will differ depending on how you’ve paid for your solar panels: whether you have a solar lease, taken out a loan, or purchased them outright.
Below, we break down how the selling process might look for each of these situations.
Selling a home with a solar lease
Leased solar panels means you’ve made a contract with a specific solar provider or solar installer and are paying a monthly flat fee to use their solar equipment. You get to access clean solar energy without having to deal with the upfront investment. Instead, you’ve allowed a company to install their equipment on your property and sell you electricity at a cheaper rate. You get to pocket the difference between what your energy would have been without a solar offset and what you’re paying the solar company to maintain your equipment.
The first thing to note when selling a home with a leased solar system is that, since you don’t own the solar equipment, you’re unlikely to benefit from added property value. Secondly, if you’re selling your home before the end of your lease term, you must negotiate with the buyer on how the solar lease will be handled.
The three main options you have when selling a home with a solar lease are:
Paying off the remaining amount
You can pay off the remainder of the contract. This means the buyer will take over the responsibilities under the contract but not the payment. This option simplifies the sales process by eliminating the complexity of the solar lease from negotiations.
Depending on how long was left on your lease, you might be able to pay off the remainder using funds from your home’s sale. However, a drawback of this option is that it reduces the net profits from your home sale.
Transferring the contract
You can transfer the contract to the buyer so they assume all payments and responsibilities. In this situation, you really want to demonstrate the benefits you've received from your solar system to help new owners feel confident taking on the additional payments.
This option requires coordination between the leasing company and the buyer. Before they can take over the contract, the buyer must pass a credit check. Note that when a buyer takes over a solar lease, the mortgage company will likely include the payment in their debt-to-income ratio. Sometimes, this additional payment can impact their ratios to a point where they’re denied a loan. If you choose this option, it’s important to vet buyers carefully to avoid having to put your house back on the market.
While opting for this choice can be more complicated and time-consuming, it means you can pass on the solar lease without any additional expenses on your part, which is a significant bonus.
Buying the solar panels
If you have the option to, you can buy the solar panels from the solar leasing company. This option involves additional expenditure on your part, but adding solar panels to your property will likely also boost your home’s value.
The options available to you might differ depending on your specific solar lease contract and how long you have left in the term. To make the best decision for your unique circumstances, we always recommend working with a real estate agent who’s familiar with solar leases and has a positive attitude towards solar.
For more detailed guidance on selling a home with a solar lease, download our free guide: Buying and Selling a Solar Home.
Steps to selling a home with a solar lease
Here’s the general process of selling a house with a solar lease:
Step 1: Review your lease agreement: Go over the terms and conditions of your solar lease contract to understand the options available to you. Check how long is left in your lease, monthly payment amounts, and any transfer or buyout provisions.
Step 2: Tell the company you plan to sell: Call your solar leasing company and let them know you’re intending to sell your home. Ask about your options, including paying the remainder of the lease, buying out the lease, or transferring it over to the new homeowners, and the process involved for each option.
Step 3: Coordinate with a real estate agent: Choose a real estate agent who understands solar leases and how they can affect the home sale. Be sure they see the value in solar panels and can help communicate the benefits to potential buyers.
Learn the importance of selecting a solar-savvy real estate agent when selling your solar-powered home in our guide: Buying and Selling a Solar Home.
Step 4: Be transparent with buyers: Be open and clear with buyers about the implications of taking on a solar lease, including how they can impact debt-to-income ratios and complicate getting a loan. It’s best that buyers understand this early on rather than later.
Step 5: Include the lease in your listing: Include the solar lease in your home listing to vet potential buyers and avoid attracting those who aren’t interested in taking it on. Emphasize the benefits, including cost savings, sustainability, and a reduced carbon footprint. Gather any documentation you can share that highlights how much you’ve saved on energy bills so you can instill confidence in potential buyers.
Note: If you live outside of Arizona and have a solar power purchase agreement (PPA), the process of selling your home would be relatively similar to what we’ve outlined above.
Selling a house with a solar panel loan
Buying solar panels with a loan means you’re slowly paying for them over time. In this case, you’ll probably have to pay off the rest of your solar panel before selling your home. Most mortgage companies will want to ensure their homeowners aren’t taking on any additional debt, and financed solar panels would be one.
This option isn’t all bad, though – because you will have paid off your solar panels, you can include them in your marketing and they’ll likely boost your property’s value. Most home buyers who are seeking a solar home will appreciate owned panels and understand the simplicity of this kind of transaction over a lease. In some cases, the additional value lift you get from selling a solar-equipped home can be used to pay off the rest of your loan so you’re not left out of pocket.
Selling a house with owned solar panels
When you purchase solar panels outright, selling your home is a simple and straightforward process. Owned solar panels means you’ve fully paid off your solar system and have 100% ownership of all the equipment.
You won’t have to take any additional steps, pay any extra expenses, or worry about buyers taking on payments. Instead, you can market your solar panels to potential buyers and benefit from increased property value with no extra work on your part.
Steps to selling a house with owned solar panels
Here’s the general process of selling a house with owned solar panels:
Step 1: Collect all documentation: Gather all relevant documentation related to your solar panel system, including purchase contracts, warranty information, permits, and any maintenance records. You can then pass this on to interested parties. Buyers want to feel confident that they're getting a high-quality system that's worth what they're paying for. The more information you can share with them, the more confident they'll feel
Step 2: Schedule a final inspection: Call your solar installers for a final inspection or maintenance check to make sure the solar system is in good condition and working efficiently. While the buyer is also likely to conduct an inspection, it’s best if you identify and address any potential issues before they do.
Step 3: Determine your system’s value: Assess your solar panel system’s value by researching the market value of similar systems or consulting with your solar installers to determine the system’s worth. Real estate agents who understand solar will be able to help with this process and determine how much additional value your solar panels add to your home.
Step 4: Market the benefits: Be sure your marketing materials highlight the advantages of owning a home with solar panels, including the environmental benefits and potential savings on energy bills. Working with a real estate agent who sees the value in solar is essential as they’ll communicate the benefits to all interested parties and address any concerns. Note: Buyers taking on a home with pre-installed solar panels won’t be eligible for the federal solar tax credit.
Another highly marketable benefit is a home that’s been grandfathered into an older, more lucrative rate Net Metering rate plan. Net Metering is a type of utility plan that is highly desirable and largely extinct in most Arizona utility districts. Net Metering plans offer solar homeowners a dollar- for-dollar credit for any excess solar energy sent back to the grid. Newer rate plans cap the buyback rate to a fixed amount that is generally much lower. If the solar energy system was installed under a Net Metering plan, there’s a good chance that the home is grandfathered into this highly desirable and lucrative program for the duration of its 20-year utility contract. A buyer must transfer the electric service into their own name to assume the Net Metering plan. If a different rate plan is selected, the Net Metering plan will end, and the homeowner will never be able to go back to the retired Net Metering option. Furthermore, a solar homeowner cannot discontinue service for any length of time. If the service is terminated, the Net Metering program will end.
Because Net Metering offers a higher return rate, these homes are highly prized. This is where working with a solar-savvy agent and appraiser really pays off.
The quickest way to identify a solar home with Net Metering potential is to look at the original solar panel installation date. APS ended Net Metering on August 31, 2017, and SRP ended the program on December 9, 2014. If the solar panels were installed before those dates, there’s a good chance the home is on a Net Metering plan. It’s always best to ask the seller and/or contact the utility provider to confirm.
Step 5: Be transparent with buyers: Always be clear and transparent with potential buyers if they have any questions about your solar panel system’s age, capacity, or warranties. Allow them to perform due diligence and share any relevant documentation that might help them better understand your system and what they’re taking on.
Step 6: Transform ownership: Transfer ownership of your solar panel system once the house is sold. Be sure to update ownership information with your solar installers so they’re aware of the changes.
Step 7: Inform your utility: Finally, let your utility company know about the solar panel ownership change and ensure the new homeowner is now responsible for any net billing or utility interconnection agreements.
Summary: Selling a home with solar panels
Selling a home with solar panels offers three key advantages: increasing your property’s value, spending less time on market, and attracting buyers with unique perks such as lower energy costs and a reduced carbon footprint. Whether you have a solar lease, solar loan, or owned solar panels, the process of selling a solar home can be smooth and successful once you know what’s involved.
We’ve outlined the key processes for each of these circumstances in this guide, but every situation is unique. Be sure to consult with a real estate agent who’s experienced in solar, understands the advantages of a solar-powered home, and can communicate the benefits to potential buyers. With the right attitude and confidence in your solar energy system, your home’s sale can be seamless and profitable.
For more tips and insights on selling a solar home, download our free guide: Buying and Selling a Solar Home.