How Do Solar Panels Impact Homebuying?

Homebuyers may look at a home with solar panels and see benefits such as lower electricity bills and reduced environmental impact, but there are other factors to consider before buying. 

Who owns the solar system? 

Sometimes homeowners lease solar panels from a third-party company or sign a power purchase agreement, meaning they buy electricity generated by a third-party company that owns the solar panels installed on their home. 

“Mortgage underwriting guidelines require the panels to be owned before an appraiser can consider whether they add ‘contributory value’ to the property,” says the National Association of Realtors®. “If the owners took a loan to finance the system, that loan must be paid off before the home sale closes. If the solar panels are leased or tied to a PPA, you’ll be assuming a contract with a third-party solar company.” 

NAR encourages homebuyers to read any lease agreement carefully before committing, as a home with third-party solar systems will likely come with additional monthly payments, usage terms and restrictions on modifications.  

Other Considerations 

In addition to third-party lease terms and agreements, NAR advises homebuyers to be aware of: 

• The system’s age. Upgrading an old system can be costly. 
• How excess solar energy is handled. This varies by state and utility provider. In some instances, surplus power can be sold back to the grid. 
• Proper permits and inspections. Systems that aren’t permitted can cause problems for buyers and sellers. 
• Warranties. Here’s what to know about solar panel warranties. 
• Homeowner’s association rules. Buyers should confirm that there are no HOA restrictions on solar panels or future modifications. 
• Roof conditions. If the home’s roof needs to be replaced, buyers should factor in the cost of removing and reinstalling the solar panels, in addition to the cost of regular roofing.