Buying a house with solar panels can be incredibly beneficial if you want:
- Lower energy bills
- A smaller environmental footprint
- A future-proof and highly appraised home
Whether or not solar panels are worth the investment depends on how they were initially financed.
You SHOULD buy a house with solar panels if…
You SHOULDN'T buy a house with solar panels if…
✅ The panels are in good condition.
✅ The seller owns the panels and wants to sell them.
✅ The panels are leased AND the contract is affordable and transferable.
✅ The panels are financed through a PACE program AND you can afford the increased property tax.
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❌ The panels or operating system is in poor condition.
❌ The panels are financed through a loan or lease you can't afford.
❌ The panels' lease isn't transferable.
❌ The company owning the leased panels has a bad history for maintenance and upkeep.
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Benefits of owning a home with solar panels
A home's solar panels make it much more environmentally friendly than if it relied solely on the power grid. A lower dependence on the grid directly translates into less strain on it, and, as a result, lower emissions from the grid.
Homes with solar panels also see lower electricity bills, primarily because the panels make a home more energy efficient. As an added bonus, solar panels also make a home eligible for programs that further lower energy costs.
How much can I save when using solar panels?
You could save $10,000–30,000 over the lifetime of the panels (about 25 years) — if you own the panels outright.
Your savings depend on several factors:
- Number and quality of the panels
- Location of the home and how the panels are oriented
- Local climate (i.e., whether the area gets plenty of sunlight)
- Local electricity rates
- Net metering availability
Drawbacks of owning a home with solar panels
Owning and installing a solar panel system can be expensive, typically $13,000–18,000. (Keep in mind, this is before any reimbursement or tax credit kicks in.)
You can avoid these high ownership costs by purchasing the panels through a loan, leasing them, or financing them through a PACE program. However, these options require ongoing monthly payments.
» JUMP: Financing solar panels
Owning panels can also bring additional responsibilities, such as paying for and coordinating maintenance — which can be complicated by WHERE the panels are located. If the panels are on the roof, it might be difficult to reach them (or perform any work on the roof itself).
Solar panels (or photovoltaic panels) are made of semiconducting materials like silicon. When sunlight hits the panels, these materials convert that heat into electricity.
The panels' structure forces this electricity to flow to wiring that carries it to an inverter. This device translates that electricity from one form (direct current, or DC) into a usable form (alternating current, or AC).
From here, another wire carries that electricity to the home's breaker box, where it's distributed throughout the property.
Should I buy a house with solar panels?
If you have the option, yes, buying a house with solar panels is generally a good idea. But a lot of circumstances can complicate that purchase — or make it a bad decision altogether.
You SHOULD consider buying a house with solar panels if…
The solar panels are in good condition
A functioning solar panel system can save your electric bill $10,000–30,000 over 25 years — that's $400–1,200 a year. Regardless of the current terms of ownership, the panels themselves can be a deal breaker if they're in disrepair, of poor quality, or would interfere with maintenance on the home (e.g., the roof).
» JUMP: Solar panel inspection
The home seller also owns the panels
If the seller is willing to include the panels in the home purchase, panel ownership can easily transfer to you, the buyer.
Once you own a home's solar panels, you'll be responsible for upkeep, and the home purchase price will be higher. However, there won't be any tricky ownership issues.
If the seller financed their solar panels through a loan, you can transfer the loan to your name during the home purchase. You'd need to pay off the remainder of the loan, but you'd still own the panels once you buy the home.
You can afford ongoing payments on the solar panel system
It is possible to buy a home with leased solar panels. And depending on the circumstances, the buyer could save money on their electric bill.
However, a lease's contract frequently complicates its transfer to a new homeowner. Before pressing on with the home purchase, make sure the contract is transferable, and its terms are 1) affordable and 2) with a reputable solar company.
Buyers should also consider the home purchase if the panels were financed through a PACE program.
As a buyer, you'll still want to make sure this is an affordable purchase. Ask to see previous property tax bills after the panels were installed, and how much time remains on the repayment period.
You should AVOID buying a house with solar panels if…
The panels are in poor condition, they're over 25 years old, or if the solar operating system is in disrepair.ⓘ
» JUMP: Solar panel inspection
While panels bought through a loan are generally transferable to new owners, you'll want to make sure you can afford the ongoing payments before agreeing to buy the home.
🚩 Here are some other red flags for leased panels:
- The contract is difficult to transfer.
- The rates increase every few years.
- You would NOT save money on your electric bills.
- The solar company has a history of poor service.
Be diligent and ask to see the current lease to determine if it's worth the hassle. Although your home would have a smaller environmental footprint, you may not save much on your electric bill — you might even pay MORE over the term of the lease!
How are solar panels financed?
✅ BEST: Homeowner pays up front for solar panels
Buying the solar panels outright as part of the home sale means you fully own the panels. While the upfront cost is usually steep, this is the most cost-effective way to own a solar panel system. You'll need to pay only for maintenance.
Homeowner buys panels through a loan
If you can't afford to pay for the solar panel system up front, you can take out a solar loan from several lenders:
- Solar lenders, like Mosaic and Dividend
- Banks and credit unions, like AmeriFirst and Home Loan Investment Bank
- Some state and federal programs, like the Federal Housing Administration's PowerSaver Second Mortgage
You'll own the panels after they're installed, though you'll be paying them off monthly.
If the outgoing homeowner bought the panels through a loan, they can easily transfer the loan and ownership of the panels to you following the home sale.
Homeowner finances panels through a PACE program
Rather than buying solar panels up front or with a loan, you can roll the cost of installation into your property taxes through Property Assessed Clean Energy (PACE) financing, which is available in California, Florida, and Missouri.
Here's how PACE works:
- A local government pays for solar panels to be installed at a private residence.
- The property is reassessed with the added value of the panels factored in.
- The homeowner pays a higher property tax, with the additional cost put toward repaying the panel installation.ⓘ
The homeowner doesn't own the panels since they're tied to the property. This means they're easily transferable in a home sale.
Homeowner leases or acquires panels through a power purchase agreement
If you don't want to shell out for a solar panel system, you can lease the panels (or the electricity they produce) from a third party. However, when you factor in ongoing monthly payments, leased panels lack many of the benefits you'd get with panels owned outright.
Leasing panels means you're not responsible for the system's upkeep, but you will need to make recurring monthly payments to the third party — as well as the utility company.
Solar leases commonly include rates that escalate every few years, so you may end up paying MORE over the length of the contract compared with what you'd have paid to buy the panels.
Leased panels can complicate and delay a home sale. The contract between the home seller and the third party is often difficult to transfer to you; the solar company must determine if you meet the current leases' eligibility criteria before approving the transfer.
Leases vs. power purchase agreements
A homeowner who wants solar panels but none of the responsibility for maintenance has two options: a solar lease or a power purchase agreement (PPA).While customers are charged differently, leases and PPAs generally cost about the same per year.
With leases, homeowners pay...
With PPAs, homeowners pay...
A third-party company
A third-party company
A fixed monthly rate to rent solar panels
For electricity produced by solar panels, per ilowatt-hour
What you need to know about solar panels
If you're buying a home with solar panels, you should know as much as possible about the operating system and how it affects the property. At minimum, you'll want to know about:
- The quality of the panels
- Their output of electrical power
- How much money they save on the electric bill
- The terms of ownership for the panel system
Solar panel inspection
Hire a licensed professional to inspect a home's solar panel system BEFORE you agree to buying the property. A roof inspection typically costs around $200.
A solar panel inspection will reveal:
- If the system as whole is functioning properly
- What the system's output is and if it can be improved
- If there are any individual panels that aren't working properly
Solar panels are generally durable and they require minimal maintenance. But they aren't totally impervious to damage. Here are common examples of issues you or your inspector might encounter:
- Broken panel glass
- Heat damage (discolored patches on panels hinting at electrical faults)
- Wire damage, usually from critters like squirrels or birds
FAQs about buying a home with solar panels
Yes. Solar panels can help lower the cost of your electric bill, and they're better for the environment than relying solely on the grid. Ideally, you would own the panels outright when you buy the house. If the panels are leased, you might not save as much money on your energy costs AND you might have trouble transferring the lease to your name.
Find out if the solar panels are owned or leased by the seller to make sure they'd be included in the home sale. Determine the panels' quality by hiring a licensed inspector. Additionally, ask the current owner questions about the current utility bill, panel upkeep costs, and if net metering is available.