We’ve seen it time and again—some people opt to lease their solar panels because they think the upfront costs will be lower. But when it comes to selling a house with leased solar panels, any initial savings pale in comparison to potential difficulties that can arise at the time of sale.

Why Selling a House with Leased Solar Panels Is Difficult

As we discussed in our last blog post, solar panels can add significant value to your home. But you’ll only realize that value if you purchase your solar panel system outright. Leasing solar panels can actually be a liability if you try to sell your home.

If you purchase your solar panel system, you can add anywhere from $15,000 to $23,000 to your home’s value. Estimates vary, but experts agree that when you own your solar panel system, you actually increase your home’s value.

Leasing solar panels, on the other hand, may not increase your home’s value at all. In fact, selling a house with leased solar panels may drive down the sales price. Homeowners with leased solar panels who are trying to sell only have two options. They can either buy out the remaining lease payments themselves, or they can attempt to find a buyer who is willing to take over those solar lease payments.

Solar companies who focus on lease options, like Solar City and SunRun, claim that they make it easy to transfer lease payments when selling a house with leased solar panels. But in reality, selling a house with leased solar panels adds an extra layer of complexity. One homeowner with leased solar panels reported that he had to lower the selling price of his home three times to get buyers interested. Potential buyers were “scared of the solar lease,” said his real estate agent.

Even if a potential buyer is willing to take over the solar lease payments, it’s not always a straightforward process. That’s because the solar lease companies set minimum credit standards for lessees. If a potential homebuyer’s credit score is just a few points too low, or if he or she is stretching to purchase the home, qualifying to take over the lease may be out of the question.

There’s another important issue to consider when selling a house with leased solar panels. Fannie Mae says that solar lease payments must be included in a borrower’s debt-to-income ratio, and that’s true for any lender. If a buyer has qualified for a $500,000 loan for a home in San Diego County but then has to take on the solar lease payments, too, the new debt-to-income ratio may push the home out of reach.

What to Expect When Selling a House with Leased Solar Panels

It’s certainly not impossible to sell a house with leased solar panels. In fact, Solar City says it transferred more than 200 leases in just one month in 2014, and 95 percent of those transfers went smoothly. But you should realize that your home might spend some extra time on the market. And you certainly should not expect to sell your home at a premium.

If you’re trying to sell a home with leased solar panels, the best thing you can do is plan in advance. Find out how much it will cost you to buy out the solar lease, because it’s possible that some potential buyers won’t even consider taking over the lease payments. That means you may be on the hook for $15,000 or $20,000 or even more.

If you simply can’t afford to pay off your solar lease before listing your home, you may need to reduce the purchase price right away. And be sure to work with a knowledgeable Realtor who can educate buyers on the pros and cons of leased solar panels.

How to Avoid the Complications of Selling a House with Leased Solar Panels

Installing solar panels is a great way to save money on your utility bill. But if you plan to sell your house in the next five to 10 years, you’ll be much better off buying the solar panels instead of leasing. Buying your solar panel system outright will add value to your home.

If you’ve already leased a solar panel system for your home and you’re trying to sell, you may want to pay off the lease before you even list your home for sale. Otherwise, prepare yourself for a lower sales price.

Understand the Pros and Cons of Leased Solar Panels

You may think that leasing solar panels in San Diego is your best option because it requires virtually no money down. But as we’ve explained here, leased solar panels can cause complications in the long run.

At RC Energy Solutions, we customize each solar panel installation to our customers’ specific needs. We invite you to contact us for a free in-home consultation. We’ll explain all your options and help you find a total home energy solution that will save you the most money over the years to come—even if you end up selling your home. We look forward to helping you lower your power bill now and in the future.

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