Buying a Home With Solar Panels in Arizona? The Costs Buyers Don't See

If you're buying a home with solar in Arizona, there's something you need to understand before you fall in love with the house. Because not all solar is the same, and what comes with those panels can look very different from one home to the next. It's great when the system is owned outright, that's usually the best scenario, but sometimes there can be a huge loan attached to the system. They could be leased, sometimes even with payments that go up as the term goes on, and that means you may have to qualify to take over an existing agreement. Also, what happens if the company that installed the solar system isn't even in business anymore? I deal with solar pretty regularly in real estate here in Arizona, and whenever one of my buyers loves a house, I find out it has solar. I kind of cringe a little bit, and then I start asking all my questions. Not because I think solar is necessarily a bad thing, but I've seen how complicated it can get during a transaction. So if you're thinking about buying a home with solar, I'm going to walk you through the things that I would want to know before moving forward. And if you already own a home with solar and you're thinking about selling, we're going to talk about what you should probably figure out before you ever put that house on the market. So the very first thing I want to know when I see solar on a home is, who actually owns it? Because when you see solar panels sitting on a roof, you really have no idea what's going on behind the scenes. The homeowner may own that system outright. They may have a solar loan, or they may not own the panels at all because they're leased, or they could be part of another type of solar agreement. And those are all very different situations when you're buying or selling a home. So before we start getting excited about how much money the solar is going to save us every month, I want to see the paperwork and I want to understand exactly what we're dealing with. Let's start with the easiest one. The solar is owned outright. This is my favorite situation when a home is being sold because there isn't a solar loan or a lease and the buyer doesn't have to take anything over. The system is owned by the seller and in most cases it transfers with the home. But even when the solar is owned outright, I still will have some questions. And the first one is, if the company that installed it is still in business. Because we've had solar companies out here in Arizona go out of business or file for bankruptcy. So if something goes wrong with the system, who do you call? And what happened to that warranty? I also want to know how old is the system? Is it actually producing what it's supposed to produce? Is there a warranty? And is that warranty transferable to the new owner? And probably most importantly, who is currently servicing or maintaining that system? Because owning the panels is great, but I still want to understand exactly what my buyer is getting or maybe not getting. Now let's talk about finance solar because this is where things can start to get a little bit more complicated. Let's say the homeowner owns the solar system, but there's still a loan attached to it. And sometimes that loan balance can be pretty significant. So one of the first things I want to know is, how much is still owed? What are the terms of that loan? And what needs to happen to get it transferred when the home is sold? Is the seller going to pay off the solar loan at close of escrow using the proceeds from the sale? If not, can the loan be transferred to the buyer? And what does the buyer have to do to qualify for it? Because now in addition to qualifying for the mortgage, they may also have to qualify for a solar loan that could have a balance of anywhere between 40, 50, or even $60,000. And depending on the buyer's financial situation, that additional payment and debt can become a challenge when you're trying to put this big real estate transaction together. Then we have lease solar. And this is where as a real estate agent, I really want to get a hold of that actual lease agreement because with solar leases, the homeowner doesn't own the system. They're basically paying another company for the use of that system. And usually it's a long-term contract that can last 20 years or more. So when that homeowner decides to sell, we have to figure out exactly what happens to that lease. Some sellers may have prepaid the lease and that's super nice. Others may want the buyer to take over their existing lease. And if the buyer is taking it over, how do they qualify? How much is the monthly payment? How many years are left on that agreement? And most importantly, does that payment stay the same or does it increase as the years go on? And I've definitely seen my share of solar agreements with those escalating payments. And that's something that I want my buyer to understand and plan for. You're not just looking at what the solar payment is today in addition to your mortgage payment. You need to understand what you're agreeing to pay for for the remainder of that contract. And I also want to know what happens at the end of the lease. You don't necessarily own those panels when the agreement ends. Sometimes they can auto renew and then they could be 20 to 25 years old. Maybe they don't work anymore. Who's responsible for removing them if you don't want them anymore? Is there an option to purchase them? And what does the contract actually say happens at the end of that term? So these are the kinds of things I want answered before my buyer agrees to take over someone else's solar lease. Then there's one other situation I've come across here in Arizona and that's a little different. And that's when APS, which is the electric company for Phoenix here, actually owns the solar system on the roof. And in these situations, the homeowner has agreed to allow APS to use their rooftop for the solar system. APS owns the equipment and the power that it produces and then the homeowner receives a credit on their electric bill in exchange. From a real estate standpoint, this is very different from assuming a traditional solar lease. If the home is sold, the new homeowner may have the option to continue the agreement. Depending on the specific APS program and agreement, if the new homeowner doesn't want the system, APS may remove it at their expense. This is why it's so important to see the actual agreement. Two houses can both have solar panels sitting on the roof and each have completely different situations behind them. Now there's another issue that has become a much bigger concern over the last few years. What happens when the company that installed your solar panels goes out of business? And this is where it's important to understand that the company that sold or installed your solar system may not be the same company that financed it. So just because the solar company is no longer in business doesn't mean your loan or your lease just goes away. There will most likely be a company that is expecting that payment every single month. So when I come across a home with solar, one of the things I'll do is I'll look up the company that installed the system to see if they're still in business. And if I find out they're not, now I have a whole other set of questions. The first being who is servicing the system? So what happens if say an inverter stops working or a panel needs to be replaced? Maybe you need to replace your roof. Who is going to remove those panels? Is the equipment still covered under a manufacturer's warranty? Who handles that warranty claim? And what happens to any workmanship or labor warranty that was originally from the installer? This is something we're seeing more of in Arizona and it's one of the reasons I want all of this information up front. A solar system may be working perfectly fine today, but if the company that installed it is gone, I want my buyers to know what happens when something eventually needs to be repaired. And this isn't just a hypothetical. One of the biggest examples here in Arizona is Titan Solar Power. They were based right here in Phoenix and they filed Chapter 7 bankruptcy in 2024. They installed solar systems on thousands of homes and when the company shut down, those panels obviously didn't disappear and neither did the financing for the homeowners who still had those solar loans. So now you potentially have homeowners who are still making payments on a solar system, but the company that originally installed it is no longer there to call when they have a problem. So if you're a buyer and you love a house that has solar, none of this means you shouldn't buy it. It just means that you've got to do your homework. Look at the actual solar agreement. Who owns the system? Is there a loan or a lease attached to it? What is still owed? And what, if anything, are you going to be responsible for taking over? One thing you can do during your due diligence period, that first 10 days, is ask for the seller's electric bills so you have some idea of what the real savings have been. And if you're on the other side and you own a home with solar that you're thinking about selling, do yourself a favor and figure all of this out before you've put your home on that market. Find your solar agreement. Find out what you still owe. If it's a lease, understand exactly the transfer process. What does that look like? How can you transfer it to your buyer? You want to gather your warranty information and your production history. Maybe pull a year's worth of electric bills, especially in the summer. Because the last thing you want is to get a great offer on your house and then find out during escrow that there's an issue with the solar that could affect your buyer's ability to purchase it. Have answers to the questions a buyer is going to ask. If your solar company went bankrupt, know who's taking care of the system now and who you would call if there was an issue. I would personally recommend having your system inspected prior to listing to make sure it's working as it's intended. And then you can show that to the buyer. And if you still have a balance on your solar loan, know what that balance is and whether it needs to be paid off at closing or whether you can transfer it. What are those transfer options? You've got to figure all of that out before you have a buyer under contract. So whether you're considering putting solar on your home today, buying a home that already has it, or you're getting ready to sell one, understand the agreement behind those panels, not just what you might save on your electric bill. Because someday you may need a buyer to be comfortable taking on whatever you're agreeing to now. And if you're buying or selling a home here in the West Valley and you have questions about solar or really anything else that comes up along the way, reach out. I hope you found this video helpful and maybe it gave you a few more questions to ask the next time you're looking at a home with solar. My name is Michelle Seymour and I am an Arizona realtor that covers the area west of Phoenix, also known as the West Valley. And I get calls every day from people just like you who are thinking about making a move here. So whether you're thinking about moving today, next week, or even months from now, give me a call, send me a text or shoot me an email and I would be more than happy to help. And don't forget to subscribe and hit the bell for notifications so that you can be the first to learn about anything new happening here. Until next time, thanks for joining me today.