Ranch home with orange roof featuring solar panels.

A Guide To Selling A House With Solar Panels

7-Minute Read
Published on November 22, 2022
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Outfitting your house with solar panels can be a great way to take advantage of an eco-friendly energy source for your home while also saving your pocketbook by lowering your energy bills. Moreover, there was a recent increase to a 30% tax credit to help homeowners offset the cost of the purchase and installation of solar panels and other forms of alternative energy.

Beyond the clean energy and money saving benefits of solar power, there is evidence that it may be a real selling point in the eyes of potential buyers. A solar energy system has been shown in studies to increase the value of your home.

There are potential benefits to selling a house with solar panels, but there are some complicating factors to consider, especially if you don’t own the panels.

Is It Harder To Sell Your House With Solar Panels?

It’s possible to sell your house with solar panels. Rocket HomesSM data for the full year 2021 showed that homes with solar panels spent 13.3% less time on the market and were 24.7% more likely to receive an offer over asking.1,2 But there are challenges to selling a house with solar panels that you might run into.

In the coming sections, we’ll get into what you should expect if you’re looking to sell a house with solar panels.

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Challenges And Obstacles To Selling Solar Homes

A solar home can be thought of as any home that is partially or completely powered by energy from the sun. Given the broad definition, a solar home can look quite different depending on the way you go about it. Getting solar panels of your own is just one option.

Depending on the type of arrangement you have for getting your solar energy, here are some of the obstacles to work through when you sell your home.

Solar Leases Or Power Purchase Agreements (PPAs)

If you don’t want to deal with upfront solar panel cost, you might look into a solar lease or a purchase power agreement (PPA).

With a solar lease, you contract with a specific solar company or solar installer and pay a flat monthly rate for the equipment.

With a purchase power agreement, you pay a fixed rate for each kilowatt hour generated based on your use of the solar equipment installed by a third party. With either of these arrangements, the idea is to generate the electricity at a cheaper rate and pocket the difference between what your energy bill would be without a solar offset and what you’re paying the company to maintain your equipment.

There are two things to consider if you’re looking to sell your home after putting one of these arrangements in place. First, because you don’t own the equipment, it doesn’t get counted toward your property value. You’re not going to necessarily sell your house for more under this arrangement.

Secondly, if you sell the house prior to the end of the term of your lease or PPA, you and the buyer have to agree on how the solar lease will be handled given the options in your solar contract. Although these options may vary, they often include the following:

  • Prepayment: The seller can prepay the remainder of the contract. In this case, the buyer would assume any responsibilities under the contract, but not the payment.
  • Assignment or assumption of contract: The buyer takes over all payments and responsibilities of the contract initiated by the seller.
  • Purchase: The seller has the option to purchase the solar panels at a price listed in their contract so the buyer doesn’t have to deal with it. Additionally, if the panels are purchased, it can be included in the home value.

It’s important to note that if the buyer takes over a solar lease, this is included in their debt-to-income ratio (DTI) for qualification purposes. This is not the case with a PPA because it’s looked at like a utility payment.

Solar Panel Loans

Now let’s say you opted not to lease your panels, but you’re paying for them over time with a loan. When solar installers provide a loan, they often put a lien on a homeowner’s title that’s removed when the loan is paid off.

In order to sell your property, for buyers who are coming in with a mortgage, you’ll likely be required to pay off that loan at or prior to closing. Mortgage companies want to make sure that new homeowners aren’t taking on additional responsibilities.

The good news is that because you own the solar panels, that can be included in your property value to the extent that it makes a difference in your market.

Lack Of Knowledge

Solar energy is still a relatively new concept to account for in property valuation, so buyers, sellers and their real estate agents may all be operating from a limited base of knowledge. They may have several concerns:

  • How much do solar panels add to home value? This is where having recently sold comparables in the area with solar panels will help. There may be other advantages to being the first on your block with solar, but increased home value may not be one of them if you don’t find the right buyer. On the other hand, there are some tools to estimate the value that solar panels bring to your home. Appraisers can also certify green home features, including solar panels.
  • How much can I expect to save on energy bills? Energy bills can easily be shared with the personal information blacked out so sellers could give buyers this information by using their before and after utility bills.
  • How long can I expect my solar panels to last? This one is a bit tougher, but one thing you can do is rely on the advice of your solar company and/or installers. One good indicator may also be how long they’re willing to warranty the equipment. If there is a warranty, make sure that it stays with the house – and new owner – once the home is sold.

Another important thing to note is that the panels don’t necessarily have to be on-site for you to benefit from energy savings. A group of people can participate in a “green field” project. This is where solar panels are installed on vacant space and members of the group help pay for and maintain it. In this case, each person benefits from the savings. You may not be able to include this in the appraised value, but it can be a selling point.

Lack Of Seller Transparency

One of the basic principles of economics is that markets tend to work best when both parties have all the information available to make an informed decision. The more you can tell a buyer about how much they can realistically expect to save, the way the system is maintained, any warranty that came with it and the lifespan of the panels, the better. You’ll attract buyers who are interested in this.

Seller Skepticism

On the flipside, you don’t want to be negative either. Solar panels can be quite an investment and it can take quite a long time before it fully pays off. That timeline is also going to change quite a bit based on where you live and how much sun you get. You might be frustrated, but if you portray that, it could be harder for you to sell your home.

It’s important for you to remember that the buyer won’t have the upfront investment, so the solar panels may pay off in terms of savings much faster for them. It should always be a selling point and not a detraction.

Benefits Of Selling A Home With Solar Panels

There are several benefits to marketing a home as having solar panels. For starters, the new homeowner is likely to save on their monthly utility bills. They can also save on the electric bill in some areas of the country by selling their unused generated energy back to the grid if they have an agreement with the power company. Renewable energy will also appeal to buyers who are looking to be eco-friendly in their energy usage. Here’s a breakdown of the benefits.

You May Be Able To Sell Faster

As mentioned earlier, according to Rocket Homes, houses spent 13.3% less time on market last year when they had solar panels. It could be a boon if you’re looking to sell your home quickly.

There’s a pretty defined timeline for selling a house and certain things are going to take longer. For instance, there will be time for an appraisal and a home inspection in most cases. However, this could speed up the time between putting your home up for sale and accepting an offer.

You May Be Able To Sell For More

Not only could you sell faster, but there’s a decent chance you may be able to sell for more. This is particularly true if there are other comparable properties in your area that have sold for more because they have solar panels. Rocket Homes data showed that homes with solar panels were 24.7% more likely to sell for more than the asking price.

Clean Energy And Lower Bills May Be A Selling Point

Solar panels on a home are a shining beacon for a certain type of buyer. They may want to participate in a clean or green energy movement. Others are going to be interested in saving on utility bills. How much you might save could be dependent on the area in which you live, but this factor shouldn’t be discounted in terms of appeal to potential buyers.

The Bottom Line

Having solar panels on your home can be a big attraction for the right type of buyer. Multiple studies have shown that homes with solar panels not only spend less time on the market, but they could also lead to you getting more for your home in a sale.

There are certain challenges to selling a home with solar panels. The only way solar panels can actually be included in your property value is to purchase them outright. If the loan isn’t paid off yet, you may have to pay it before you sell. If you lease your panels, you and the buyer will have to negotiate how to handle that. There are also some obstacles that come down to lack of knowledge.

Still, the energy saving benefits and the lure of being able to participate in more eco-friendly energy practices also attracts a lot of buyers, so the investment can be worth it if you can find the right buyer.

If you’re interested in potentially installing solar on your home, our friends at Rocket SolarSM can help. You can even apply online.

1 Rocket HomesSMis a registered trademark licensed to Rocket Homes Real Estate LLC. The Rocket HomesSMLogo is a service mark licensed to Rocket Homes Real Estate LLC. Rocket Homes Real Estate LLC fully supports the principles of the Fair Housing Act. For Rocket Homes Real Estate LLC license numbers, visit RocketHomes.com/license-numbers. California DRE #01804478. Hawaii License # RB-23371. TREC: Information about brokerage servicesConsumer protection notice.

2 Rocket Mortgage, LLC, Rocket Homes Real Estate LLC and Rocket Solar, LLC are separate operating subsidiaries of Rocket Companies, Inc. (NYSE: RKT). Each company is a separate legal entity operated and managed through its own management and governance structure as required by its state of incorporation and applicable legal and regulatory requirements.

Kevin

Kevin Graham

Kevin Graham is a Senior Blog Writer for Rocket Companies. He specializes in economics, mortgage qualification and personal finance topics. As someone with cerebral palsy spastic quadriplegia that requires the use of a wheelchair, he also takes on articles around modifying your home for physical challenges and smart home tech. Kevin has a BA in Journalism from Oakland University. Prior to joining Rocket Mortgage, he freelanced for various newspapers in the Metro Detroit area.