Selling home with a solar lease.

[Luan Oliveira]

Hi everyone!

I'm wondering what your experience is on selling a home with an existing solar lease.

My parents are interested in having a solar company install panels in their home, especially since the company may upgrade their electrical in the process. I'm particularly worried about how they can be perceived at sale time. Do you have any experience with selling a home with a solar lease? If so, how'd it go?

The install won't particularly lower their energy bill, offsetting the cost of upgrading the panel is the primary motivation. I just want to make sure there's no issues when it's time to sell. For what it's worth, they're located 10 mins outside of Boston so it's a particularly hot market!

Thanks for your insight.

[Charlie MacPherson]

@Luan Oliveira It depends on whether they're owned or leased.  In your case they're leased.

The advantage is usually that you'll get somewhat cheaper electricity.  The leasing company gets all solar credits and any other tax breaks.  I have not heard of upgrades to the electrical panel/service on install, but in your case, that's a good break.

The disadvantages are:

The leasing company will require that your roof be 5 years old or less, so you might need to replace the existing roof.

There will most likely be a lien on the property for the value of the equipment. That could be an issue with a re-fi or HELOC as it could reduce available equity.

Assuming you don't want to pay the balance of the lease and remove the panels when you sell, the buyer will have to assume the lease.  That means a credit check, which will be a small ding on the credit score - and if the buyer is on the bubble credit wise, it could blow up the entire sale.

Buyers tend to be pretty neutral about panels unless they're mounted on the front of the house, in which case I'll get some complaints about the aesthetics.

Appraisers assign no value to leased systems, which makes sense as they're not yours.

I'm selling my own home right now and we have 48 owned solar panels.  The system is installed on a barn that's 300' from the house.  That increased the install cost as the installer had to dig a 300' trench to bury the cables.  It was about $52,000, financed with a low-interest loan that was subsidized by the state.

The advantages are:

We get a guaranteed SREC (solar renewable energy credit) payment of $187/month, guaranteed for 10 years.  That's a total of $22,440.

We got a one-time state tax credit of 15% of the install price.

We spin the electric meter backwards most of the year, building up a large negative balance with the utility and we burn it off in the winter.  Even with baseboard electric heat and running the AC mercilessly in the summer, our total spend for heat and electricity was $746.61 for the last 12 months.  There's something very satisfying about getting electric bills that say "No Payment Due"!

The system breaks even in year 7.  However, like leased systems, most appraisers so far have told me that they assign a no value for a system like mine.  That's astonishing given the fact that it's saving us about $2,500/year in electric costs and will be paying out SREC credits for another 8 years, but the appraisers have said "show me a study that says that buyers will pay more".

Back to your sale - inventory in the Boston area and all of eastern Mass is still incredibly low.  If you price it right, there will be so much competition that any perceived disadvantage of leased solar will probably vanish.

Be sure you have electric bills available to show to potential buyers.  Sell the benefits of cheaper power and being environment friendly.

Good luck with the sale!