Buying a house with leased Solar

[Ikk]

That $250 a month seems high. I own just under a 1900 sq foot house and have a 5.5kw system form solar city that I Leased. Now I did it a bit differently and paid the lease up front so if I ever decided to sell the new owner would not need to pay monthly for the lease. The lease covers everything for 20 years and guarantees me a minimum yearly production if not Solar City sends me a check to make up for it "which they have for 2 of the 3 years I have had it. I am on my third year and have gone from a $2500 a year bill to my last year bill of just $77. including transmission fees and Chevy Volt. You may want to check with the owner if they can pay off the lease prior to selling you the house. SCE rates are outrageous and if you can get free solar out of it that could be worth it.

You state you are not a handy guy but if you can get the solar for nothing and that is if, I am sure there are simple upgrades you can do to make the house more efficient. All my lights are LED did it myself no issues, Some what of a big cost up front doing it all at once but I gradually did it and savings are big at the end.

[J.P.M.]

That $250 a month seems high. I own just under a 1900 sq foot house and have a 5.5kw system form solar city that I Leased. Now I did it a bit differently and paid the lease up front so if I ever decided to sell the new owner would not need to pay monthly for the lease. The lease covers everything for 20 years and guarantees me a minimum yearly production if not Solar City sends me a check to make up for it "which they have for 2 of the 3 years I have had it. I am on my third year and have gone from a $2500 a year bill to my last year bill of just $77. including transmission fees and Chevy Volt. You may want to check with the owner if they can pay off the lease prior to selling you the house. SCE rates are outrageous and if you can get free solar out of it that could be worth it.

You state you are not a handy guy but if you can get the solar for nothing and that is if, I am sure there are simple upgrades you can do to make the house more efficient. All my lights are LED did it myself no issues, Some what of a big cost up front doing it all at once but I gradually did it and savings are big at the end.

That sounds like a pretty standard SolarCity prepaid lease. How much did you pay and for what type of equipment ?

Unless the OP's lease is weird, the current owner/leasee must either buy out the lease or have the new owner take it over. The perspective new owner has the option to take over the lease or look for a different house if the current owner does not buy out the lease. The prospective owner has no obligation to take over the lease.

[Ikk]

That sounds like a pretty standard SolarCity prepaid lease. How much did you pay and for what type of equipment ?

Unless the OP's lease is weird, the current owner/leasee must either buy out the lease or have the new owner take it over. The perspective new owner has the option to take over the lease or look for a different house if the current owner does not buy out the lease. The prospective owner has no obligation to take over the lease.

I got my system for $13,600. It included a 5.39 KW system with 2 power one AURORA grid-tied inverters.

[Sunstar]

wow so some houses now come with solar panels? If you're not interested in solar panels, would you get a "discount" on the house?

[SunEagle]

wow so some houses now come with solar panels? If you're not interested in solar panels, would you get a "discount" on the house?

There are some Contractors building Net Energy homes in Florida that include a medium sized pv system. The price is part of the total home package and there seems to be some interest in having those type of homes built.

The problem I hear (from realtors) is that an existing solar pv system can be a turn off if the installation is a few years old or if the purchasers just do not like the look of the panels on the roof.

Some people just don't want or care about solar in Florida which makes it hard to sell a home with an existing system. Go figure.

[Ikk]

Here in California there is no discount if you decide you don't want the solar. Solar on the overall cost of the house is very little as solar is becoming so cheap. I had a neighbors father who died that had solar put up a few years prior. It added no real value to the house. Since you can get Solar for 0 down on a lease it has made the market for homes with solar not that huge of a selling point from what I gather. Also there seems to be a conception that a home with solar should provide a $0 dollar electrical cost which is not the case here in California. A good solar setup should keep you in the lowest tier of pricing. As well as there are still monthly transmission costs that solar does not cover.

[silversaver]

unfortuntely that about 70% of solars were on lease..... what does that tell you? People like the idea of saving money without any cash out the pocket.

[J.P.M.]

Some people just don't want or care about solar in Florida which makes it hard to sell a home with an existing system. Go figure.

Which makes them just like a lot of other people in the rest of the U.S. anyway, and that can lower number of available and potential buyers which will impact the selling price of a property with existing solar. Be thankful you don't have leases in FL.

[SunEagle]

Which makes them just like a lot of other people in the rest of the U.S. anyway, and that can lower number of available and potential buyers which will impact the selling price of a property with existing solar. Be thankful you don't have leases in FL.

Actually I am happy that leases are not allowed here. Way too many people getting rich on others people's misunderstanding the bad side of the lease.

[J.P.M.]

Actually I am happy that leases are not allowed here. Way too many people getting rich on others people's misunderstanding the bad side of the lease.

+1 !

[paul65k]

Here in California there is no discount if you decide you don't want the solar. Solar on the overall cost of the house is very little as solar is becoming so cheap. I had a neighbors father who died that had solar put up a few years prior. It added no real value to the house. Since you can get Solar for 0 down on a lease it has made the market for homes with solar not that huge of a selling point from what I gather. Also there seems to be a conception that a home with solar should provide a $0 dollar electrical cost which is not the case here in California. A good solar setup should keep you in the lowest tier of pricing. As well as there are still monthly transmission costs that solar does not cover.

Unfortunately while this sounds good....it is not accurate. In CA whether it be PG&E, SCE or SDG&E the rates per KWh are some of the highest in the nation reaching in excess of .50 per KWh and solar makes more sense in CA than almost any other state........that being said what you are describing is a Realtor or Owner that just doesn't understand the value here with Net Metering 1.0....if they did they would be able to determine the future value of the system and the resultant savings. Understanding that having your own power generating station which escalates with rate increases is the value here. Comparing an owned system to a leased system is just folly and not grounded in facts.

I am a Realtor as well as a Solar owner (outright) and can tell you that the value IS THERE and just needs to be understood.

The other issue with a Lease is that it gives the buyer a huge amount of leverage as all the liability for the lease is with the current owner and the new buyer can say "Take it off" as a lease is a personal indebtedness on the part of the current lessee and is NOT associated with the home unless there was a second mortgage in which case it is not a lease.

You can't even get a new loan if it is a Fannie Mae or Freddie Mac (in other words a conventional loan) unless any liens for solar are removed from the property.......in other words the buyer has a seller over a barrel as long as they have an agent that knows what the heck they are doing.

You have all the power and need to make sure you aren't taking on some else's bad business decision (lease)......Good luck!!

[GammaRat]

New guy here.

Just commenting on my opinion on leases.

The buyer should ALSO consider the possibility of reselling the property. At that time, he will run into the same issue, except from the other side of the transaction. More than likely he will be stuck with a buyout, because the new buyer won't be interested in taking over the lease.

He should also look into the assignability of the lease. Will he be able to transfer the lease to the new buyer?

[paul65k]

Just to follow up on this issue.............I seem to be dealing with this a few times a year (at least) in my real estate transactions. The the biggest solar dealer here in town is a SunPower dealer and many homes in our area of 350+ days of sunshine per year are putting panels on their roofs. While the deals here on the AZ side of Lake Havasu are NOTHING compared to the CA side of the lake they still make sense for an owned system but the payback time is about 60% longer in AZ then a comparable system in CA.

With this being said the "Something for nothing" lease deals seem to run rampant here and many people are taken in without really understanding that they are signing up for a 20 year liability (with escalations) and not just another loan on their home.

All this being said here is the biggest issue I see during these transactions (from my Realtor POV) and that is that;

1. The seller thinks they have a great deal and in many cases have been telling their friends for years how awesome having solar is as they only think about the low bill from the POCO and don't really think about the lease payment.....when in reality they DON'T have a great deal.
2. The Seller's agent doesn't have a clue either and in most cases doesn't even understand that the lease is not just another mortgage but a personal indebtedness on the part of the homeowner and will not automatically be satisfied or transfer..... and not everybody that is looking to buy will just take over the lease without issue.
3. When I make a case for a buyer the other side looks at me like I have 2 heads, and in many cases I even have to talk lenders through this as well cuz even some of them don't understand how a leased system can screw up a transaction.

Fortunately it is getting a little better as now at least some agents are listing properties with "Owned Solar" system and I am now starting to see sellers leaving copies of their last 12 months of utility bills in a notebook for potential buyers to see when viewing the home on these owned systems to drive home the value (at least mine do ).

Solar has exploded in the last few years as we all know here and we are just now starting to see the effects of this on Real Estate values as homes with solar (Owned and Leased) are starting to be bought and sold in the marketplace. This is a "Process" and not and "Event" and will continue to evolve.......Now that I write this I think I'll put together a class on "The effects of a solar system on your real estate transaction" for the agents here at town as I'm on the education committee here at our local board of Realtors

[J.P.M.]

FWIW, +1. Thank you. Seems that the light of day may be is dawning on solar leases, and PPA's for that matter.

[DanKegel]

The issue of leased solar hurting home values is starting to get some media attention, e.g.

http://realtormag.realtor.org/daily-news/2015/03/23/solar-panels-can-be-deal-killer

http://www.whdh.com/story/31441888/hank-investigates-leased-solar-panels#

but it could use more.

Glad to hear "owned solar" is showing up on listings, sounds like people are starting to understand the difference.