Selling a House with Leased Solar Panels? Follow This Game Plan

Follow these steps to transfer your solar lease to the new buyer:

1. Notify your solar company that you are selling your home. Most companies will connect you with a service transfer specialist who will provide you with information on transferring the lease.
2. Connect your agent to your solar service transfer specialist. The solar representative will provide them with a copy of your solar agreement and supply information on the leased solar panels so your agent can effectively market your home and communicate solar benefits to interested buyers.
3. When you’ve found an interested buyer, provide them with a copy of your solar agreement and give them your solar service transfer specialist’s contact details in case they want to discuss the details of the lease.
4. The buyer will need to bring the solar agreement to their mortgage lender when they apply for their home loan. The lender will review the agreement and check that it contains a transferable warranty. Basically, the lender needs assurance that the buyer is not responsible for costly repairs to the solar panels, which could disrupt their ability to pay their mortgage.
5. Once the buyer receives the green light on their home loan, reach out to your solar lease transfer representative and request they send the service transfer form to you and the buyer. You’ll both fill out and sign the form — a process you can usually take care of digitally via editable PDFs or online forms.
6. The solar company will run a credit check on the buyer, as they will be responsible for making the payments. Most solar companies require a credit score of 680 or higher, though some may allow for lower scores in exchange for a higher interest rate on the lease.
7. The solar company will send you and the buyer a document confirming the buyer is approved as the new tenant under the solar lease. The approval window can take as little as 2-3 days, depending on the solar company.
8. Lastly, you need to inform your solar transfer specialist when the home escrow closes to finalize the transfer.

Complete all of these transfer steps before you finalize your home sale to ensure the buyer is officially responsible for the solar lease payments. Otherwise, your credit can be harmed by missed payments.

Buy out your solar lease to add value to your home

Some solar lease contracts include an early buy-out option, allowing you to buy out the remainder of the lease and own the solar panels outright. When you own the solar panels, you remove the solar lease from the home sale equation and boost your home’s market value.

To decide if buying out the panels is a practical option for you, compare the purchase offer to the estimated value owned solar panels add to homes in your market. For instance, if the buy-out offer is $6,000 and the solar panels are likely to add $8,000 to your listing price, it might be worth purchasing the panels for a more straightforward selling process.

Consult your real estate agent to assess how much value owned panels would add to your home to help you make the decision.

Hire a top real estate agent to sell the benefits of solar

Whether you choose to buy out or transfer your solar panels, work with a top real estate agent who has experience selling homes with solar. An agent’s expertise is especially essential for the following components of your home sale:

• Pricing your home:
  Pricing your home right (typically at or slightly below market value) is one of the biggest factors that will determine how much your home eventually sells for. If you buy out your solar panels, your agent can assess how much value your solar panels add to your house based on comparative listing and sale data in your market. If you choose to transfer the lease, your agent will likely have a different pricing strategy, which weighs the need for buyers to take on the solar lease.
• Thorough marketing to highlight solar benefits:
  Every platform your home listing appears on should highlight the solar panels and the renewable, affordable energy they generate for the house. Your agent can articulate the benefits and details of the lease or ownership concisely in the marketing campaign, making your home’s solar capabilities an attractive extra for buyers.
• Communicating the details of solar with buyers:
  Real estate agents experienced in navigating deals involving the transfer of solar leases can explain the process to wary buyers who do not understand how it all works. If the buyer gets cold feet at any point in the process, your agent can get them back on track by providing information and bridging the gap between them and the solar company.

Educate prospective buyers on your solar agreement

Research shows that today’s buyers desire energy-efficient homes and are attracted to green features. According to a recent survey by the National Association of Realtors (NAR), nearly half of real estate agents said their clients expressed some interest in sustainability, which could make your home with solar panels attractive to many eco-conscious buyers.

Nurture buyers’ go-green instincts by supplying them with the specific benefits of your house’s solar system. Give your real estate agent these persuasive details for their sales pitch:

• The total you paid for utilities last month
• The difference between your energy bills before and after you installed solar
• If the buyer is interested in buying out the lease at a later time, inform them of the estimated value solar panels add to homes in the area
• An overview of the little maintenance required to maintain leased solar panels. Typically, in a solar lease, the solar company provides routine maintenance on the panels, including repairs covered by the warranty.  The homeowner can easily wash dirt and debris off the panels with a hose if needed.
• The coverage the transferable warranty provides, if applicable
• Environmental benefits of solar energy

If you’re transferring the lease, you’ll also need to provide buyers with the following information:

• Name and reputation of the solar installer
• Quantity of energy the leased solar panels produce
• Lease payment amount and schedule
• Rate of payment escalation as per the escalator clause in your solar contract

Choose the best offer to close the deal

When you buy out your solar lease, choosing the best offer will be fairly straightforward. On the other hand, if you’re transferring the lease, you’ll need to find a buyer who can meet the credit requirements of the third-party owner of the system.

“Typically if you’re able to qualify for a home loan, then there’s no reason why you don’t qualify for the solar panel purchase or lease…I’ve yet to see it and I’ve sold quite a few homes with solar leases,” Morales explains.

While this is usually the case, buyers who can barely afford the down payment could disqualify for a home loan once the mandatory solar lease is added to the payment calculations by their lender. To avoid hiccups, let prospective buyers know they will need to pass a credit check to take on the solar lease as early as possible. Provide them with a copy of the solar agreement and your solar representative’s contact information to give to their mortgage lender in case the lender has outstanding questions about the lease.

Leased solar won’t stop you from selling your house

Leased solar panels add a dimension to your home sale, but they won’t stop your home from attracting buyers or receiving attractive offers. A recent study on homes sold with solar leases by Lawrence Berkeley National Laboratory found that 77% of the leases were successfully transferred to the new property owner, while only 20% of study participants said the leasing agreement scared off potential buyers.

“Early on, maybe five, six years ago when those solar leases were a bit newer to people, I think buyers were a little shy when it came to dealing with those types of homes and those types of contracts. But now, I feel like buyers are a lot more receptive to solar leases than they used to be,” Morales reassures.

With this in mind, remember there’s no need to stress so long as you take the necessary steps to educate buyers when selling your home.

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