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The Process Behind Selling a Home with Solar

December 19, 2019

With the growing popularity in home solar photovoltaic (PV) systems, real estate industries are recognizing new advancements and applying new techniques to value homes with solar. So what happens if five years from now when you may need to relocate for a job? Perhaps you are already planning to outgrow your current home, you just aren’t quite sure when that might happen. When considering installing a solar PV system on your rooftop, you may be wondering how this could affect the process of selling the home. Here is a brief guide on how to sell a house with solar.

Selling a home with owned solar panels is a straightforward process that is much less difficult than you might expect! The first question that many people have is what installing a solar system will do to the resale value of a home. So let’s begin with answering that question.

Valuing a home solar system

Studies show that homes with owned solar systems are currently selling at higher rates (on average, 4.1% more) than non-solar homes. They are also selling much quicker! Many factors influence this increase, like the age and size of the system, as well as the energy output. Some solar panels will be of higher quality than others, this being the reason for appraisers valuing each system individually. There are tools available, released by The Appraisal Institute, that will help buyers and sellers through the process. Firstly, there is the “Residential Green and Energy Efficient Addendum,” which allows appraisers to account for several green technologies, including solar panels. They have also released a free online calculator, designed by Sandia National Laboratories and the Department of Energy, called PV Value® Photovoltaic Energy Valuation Model. Determining the value of a solar PV system by utilizing the income approach, this tool assists appraisers to apply multiple factors to the home value.

Ownership Matters

One of the most important things to consider when purchasing your solar PV system is ownership of the system. This sounds like it would be obvious, but a solar installation on the roof of a house does not necessarily mean it is owned by the homeowner. Ownership is wholly determined by how the system was purchased.

Cash Payment

An upfront cash payment is, by far, the most simple scenario of ownership. A solar system purchased with cash is considered to be a fixture of the home and can be appraised directly in conjunction with the home’s value. Homebuyers are consistently willing to pay a premium for a home powered by solar energy! This scenario also applies to a rooftop solar system purchased with a solar loan paid in full.

Solar Loan

When purchasing solar panels through a solar loan, the premium paid by the homebuyer could offset whatever portion of this loan remains while still creating a profit for the seller.

Opportunities for selling a home with a solar system purchased through a loan can vary depending on the means of financing. In most cases, solar lenders allow the homeowner to claim ownership while still making payments. If you finance your solar system with an insecure loan, there are no holds over your property, and it is possible to sell before paying off the system. However, you are still responsible for paying off the loan! This scenario is where premiums paid on solar homes can help to alleviate any remaining balance, and conceivably, you could still make a profit!

Financing through a secured loan or home equity loan, a lender may put a lien on your house, using it as collateral for the loan. In this case, you will need to pay the loan in full prior to selling the home.

Leasing or PPA

Power Purchasing Agreement (PPA) or lease means that the homeowner purchases the right to make use of the solar system in their home. Similar to leasing a car, the system is owned by the provider. In this case, the solar provider will place a UCC-1 Filing over the system, meaning it is not a part of the home value. Buyers considering a property with a leased solar system must decide if they are willing to take over the contract. Otherwise, sellers can buy out the remainder of the lease. A leased system makes no impact on the value of the home. Homeowners who plan to lease a system should consider research done on the effects on the resale process. Research shows that 77% of leases are successfully transferred; however, nearly 20% of participants in the study noted that potential buyers were deterred from purchasing due to lease agreements.

Why let the anticipation of a future move hold you back from investing in solar when you could start saving now and take advantage of all the great incentives available? Going solar is a smart financial decision even if you don’t plan to stay in your home for the entirety of your solar PV systems lifespan! Be sure to go over all of your options when sitting down with your solar consultant, and ask them for advice on finding the right realtor when the time comes!