Selling a House With Solar Panels
Selling a house with solar panels comes with unique challenges, depending on where you live and whether you bought or leased your system. It’s also an opportunity to attract more buyers on the benefits of solar energy. There’s not only the positive environmental impacts to promote, but in hot, dry climates especially, renewable energy may offer huge savings on outrageous AC bills.
By recognizing that not every buyer will sign an offer based on your “go green” attitude alone, you can take care to position your home’s solar power as a selling point and mitigate hassles that create friction on the way to a closed deal.
Just follow these simple best practices we’ve rounded up from real estate experts who’ve sold lots of homes with solar panels, plus research from the country’s top solar associations and organizations.
More and more homes are running on sun: It’s not just California
One piece of good news for home sellers with solar panels is that the residential solar market is holding strong. Despite the Section 201 solar tariffs that put pressure on the solar market as a whole, nearly 315,000 Americans added solar power to their house in 2018, representing annual growth of 8% for the residential sector.
California remains the uncontested leader in solar with enough capacity to supply 6.3 million homes (which is sure to grow after the state passed legislation requiring all new houses to be equipped with solar energy). But states outside the top 10 solar leaders accounted for 25% of the share of residential installation sales in 2018 with Texas and Florida being stand-outs.
According to the Solar Energy Industries Association, the costs for installing solar panels has dropped more than 70% over the last decade and the market continues to diversify as more national and regional installers enter the picture. The 30% federal solar tax credit, which will start to decrease in 2020, has also made solar more affordable for many Americans.
Even as the market broadens across the country, homeowners who’ve opted to install solar still have to contend with a few logistics when the time comes to sell their house, including what’s still owed on their system lease, the age of their panels, and making sure buyers understand the advantages of solar.
Don’t assume that solar panels automatically add to your resale value
“Solar panels can make a home more attractive to a particular set of buyers and help get an offer sooner and perhaps at a higher percentage of the list price,” says Dan Hamilton, a top-selling agent in Palm Desert, California. “But typically the solar systems don’t add a material amount of monetary value to the home.”
The takeaway is when you sell a house with solar panels, make sure you price it right. The jury’s still out whether solar energy adds to your home’s value so don’t assume you can offset the cost of the entire panels in your list price. Instead, focus on how they can boost your home’s marketability and streamlining the process of transferring your system to buyers.
“What my experience is, for a lot of our buyers, especially ones that are going to make this more than just a winter residence and a full-time residence here, is that having the solar can provide some predictability with energy costs,” Hamilton said.
That’s in sunny California, where Hamilton says: “Solar is a big deal.” In locations with long winters and rainy seasons, homeowners have to be extra careful to do their homework on the long-term savings of solar and package it to buyers in a clear way.
Highlight the benefits of solar energy
When you’re selling a house with solar panels, you and your agent will want to hammer home the benefits of solar with potential buyers, including:
Think Americans are a bunch of gas-guzzlers? You’d be surprised how many buyers will appreciate your solar panels for the sake of sustainability. “A lot of people say they want to be green,” said Hamilton. “They want to be environmentally friendly.”
So there’s an opportunity for you and your agent to be educators. Tell buyers about how the sun delivers more energy to the earth in one hour than the global population uses in an entire year. Explain that since the sun has a predicted 5 billion years of life remaining, solar power is the ultimate renewable resource.
In a state like Connecticut, using solar energy for a year is the environmental equivalent of planting 150 trees. Going solar helps promote air purity (especially in environmentally compromised urban areas) and has the potential to greatly reduce instances of respiratory and cardiovascular health issues.
Memorize your stat sheet and be ready to give your elevator pitch.
Lower electric bills
Solar panels can reduce your monthly energy bills by 70%-100% and prevent you from being at the mercy of your local electricity suppliers.
“Edison (the primary supplier for Southern California) has been increasing rates fairly rapidly, so it provides some protection against those rate increases,” said Hamilton. “We have about four months of the year where it’s over a hundred degrees. If you’re in a 2,500 square foot home, you can easily have $600-$650 a month electrical bills if you don’t have solar. With the solar system, that costs maybe $250-$300 a month.”
And the savings aren’t limited to sunny states. In Massachusetts, solar users enjoy an average 20-year savings of $30,523 despite the state’s long winters and coastal weather.
So put the potential savings into real numbers for buyers, especially if they express concerns over inheriting your monthly $50-$250 solar panel lease. Source data from old electric bills (check your online utility account if you don’t have them handy). That way, you can work real numbers into your marketing materials by comparing data from before and after the installation of your solar panels.
To control for weather variances, use numbers from the same month, if possible; for example, compare data from the April before you installed your solar panels with data from the April after the installation took place.
Extra financial incentives
Net metering is a policy in most states that allows solar panel users to swap unused solar energy for credit toward their traditional electric bill. Since solar energy doesn’t 100% replace electricity in the home, this is a great way to keep electric bills even lower, since you may be eligible to receive discounts and utility credit based on the amount of unused solar energy your panels were able to generate.
Promote the reputation of your solar installer to put buyers’ minds at ease
If you had your solar panels installed by a reputable company in the area with a recognizable consumer brand, highlight that in your marketing materials. This will allay buyer concerns about the quality of your solar panel installation.
According to EnergySage, the top 5 solar panel installers nationally include:
- Vivint Solar
- SolarCity (TeslaEnergy)
Help reduce buyer concerns over maintenance.
Solar panels aren’t like pools or elaborate gardens, which require constant tending to—so make sure buyers don’t view them as an extra maintenance hassle.
“There’s no moving parts, they’re easy to maintain,” said Hamilton. “Really, all you need to do is have someone clean them every two to three months, keep them so they’re clear and can access the sun, and there’s not a lot of maintenance to them. Maintenance is really a non-issue.”
DIY-minded solar owners can give their panels the occasional scrub with water and a coarse cloth to rid them of any dirt and debris. Otherwise, any reputable solar installer should be able to handle regular cleaning of your solar panels.
Buyout your lease if you can
Homeowners are increasingly owning their own solar panels rather than leasing them from a third party. In 2014, 72% of solar users leased their panels but that shifted in late 2016 to just 47%. Owning your panels makes it a lot easier to sell the house because you don’t have to worry about any liens against the property.
If you do lease your panels, you’ll need to do one of the following:
1. Buy your lease out
If you’re in a position to do so, buying out the remainder of your lease prior to the sale of your home is the most straightforward way to handle the situation if you’ve got a set of rented panels on your roof. Buyers can be scared off by solar leases, and you may be able to boost your resale value of your home if you own the panels outright.
The bad news is that with the typical cost of solar system installation averaging at $20,000, you could be on the hook to shore up a good chunk of change, depending on how far along you are in the lease payments.
2. Transfer the lease
Can’t afford to pay off your solar lease? It is possible to transfer the lease over the buyers, but it creates a few complications. The buyers will need to meet the solar company’s minimum credit standards to qualify for the lease, and lots of people don’t want to tack on that extra monthly expense to their overall housing costs.
Depending on your market and how in-demand solar panels are, it could take longer to sell your home and you might have to reduce your list price to find a buyer willing to take on the lease.
Work with an agent who has experience selling a house with solar panels
An agent who’s sold homes with solar panels will know how to do things like:
- Address your solar system in the MLS remarks
- Make sure you make all the proper disclosures about the lease (if you have one)
- Ensure you’re released of liability from the panels after closing
Plus, they’ll have experience talking to buyers about the benefits of solar and promoting solar in your marketing plan.
“I always want to use sign riders in front of my listings, and in all of my marketing materials talk about the solar,” said Hamilton. “I get the necessary information from my seller so I can speak intelligently to the buyer about the solar.
As far as how you can help your agent?
“You need to get a copy of your solar agreement for your agent…if buyers ask about the solar, I need to know the terms of the contract,” Hamilton advises.
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