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Selling with Solar
If you have solar panels on a house you’re selling, you might have questions:
Is there anything I should know about selling with solar? How will the solar system affect the sale? Will the solar panels help sell the house, or will they make the house harder to sell?
This article answers some common questions about selling with solar:
- How will a solar system affect the sale?
- Can a Buyer assume a solar lease or power purchase agreement (PPA)?
- What if I have a solar loan? Can a Buyer take over a loan?
- Bonus section: “Buying with Solar – What Should I Know?”
How Will a Solar System Affect the Sale?
I have good news and bad news.
Good news – many buyers want solar systems! Market demand may vary around the world, but in southern California, many buyers do want solar. Be sure to include details such as solar system size, output, and other characteristics in the marketing materials. Buyers want to know by how much the solar system could reduce their energy bills.
Bad news – selling might be expensive, or difficult. Selling with solar can be expensive, if you have to pay off a solar loan or lease prior to the sale.
Even if you don’t have to pay it off, it might be difficult to find a buyer who can assume the lease or loan. Most home buyers need to take out a mortgage to buy a house. In addition to qualifying for the mortgage, they will also need to qualify for any solar lease or loan payment.
Can a Buyer Assume a Solar Lease or PPA?
In most cases, solar leases and power purchase agreements (PPAs) are assumable. Keep in mind, though, that the buyer must be both willing and able to take over the payments.
In addition, both the solar company and the lender need to approve the assumption.
In order to approve of such a transfer, many solar companies require a minimum FICO score. If the buyer has poor credit, the solar company could reject the application.
In addition, the lender needs to include the monthly lease payment in their house payment calculation. The buyer will need adequate income and assets to cover both the mortgage, and the solar payment.
What If I Have a Solar Loan?
Start with this question – is the loan assumable? Many solar loans are not assumable, which means you will need to pay off the loan at closing.
If you have a solar loan, call the bank and ask if a buyer can assume the loan. If not, you may need to pay off the loan in order to sell your house. To make this easier, the escrow officer can use your sale proceeds to pay off the loan on your behalf.
If the bank does allow assumption, then similar to a lease, the buyer will need to be willing and able to assume the loan. Their lender will need to make sure that the buyer qualifies for the payment in addition to their mortgage. Also, the bank servicing the solar loan will need to determine eligibility to take over the loan. Finally, the buyer must be willing to take over the loan payments.
Bonus: Buying with Solar
If you want to buy a house that requires assumption of a lease or loan, keep a few things in mind. In addition to qualifying with the solar company or bank that handles the solar payment, your lender will also need to approve that additional payment.
Depending on the loan, you may need to earn at least twice the payment amount, to maintain an acceptable debt-to-income (DTI) ratio. For example, if the solar payment is $200 per month, the lender may require an additional $400 per month in income to approve that additional payment.
