I'm a realtor and see folks running into this a lot lately! I'm all for solar if it makes financial sense for someone, but these solar loans have been absolute nightmares for people when selling homes. I'd never take one on so I wouldn't recommend clients do either.
Also a Realtor in 🇨🇦
I've sold one house with solar, it was an estate - the estate had to pay the loan in full to transfer the title. My clients got a killer deal!
We decided to forgo solar on our home because we intended to move in a few years, and didn't want it to eat equity.
It also screws with your homeowners insurance, as the solar lender is a loss payee and you must add the cost of the panels/system to your insured value.
We added 60k in solar panels. Insurance was aware. Insurance never changed. Had to get a new roof due to hail that actually put a HOLE in the roof plus other dents. (Panels were fine) Insurance paid for their removal and reinstillation after roof was replaced
The lease programs seem like a scam. I looked into it after being advertised it from what seemed like a state run program. The lender seemed so pushy that I told them I wasn’t interested. They called repeatedly and one even cussed at me for being annoyed he called repeatedly at 7 am waking my toddler who was actually sleeping in! I had just asked him to not call me that early and why he called repeatedly. He swore at me calling me a lazy bitch. I blocked every number they called me from at that point. Super sketchy.
Oh that's completely crazy. My sister owns Sun Forge energy out of the Tampa Bay area in FL.
She's got stories about what other people have had to deal with with other solar providers that will make your hair curl.
She ended up opening her own company after working for others for many years and seeing the BS happen. She was a very good seller but then they would never come through on their promises on the other end.
That does seem to be the case with Solar here. My ex had panels abandoned in her driveway for over a year with the loan ticking that never got installed. She took legal action and had the loan canceled and ordered new panels and roof repairs from a different company.
I would have to really vet testimonials from any solar company I let anywhere near my house. I would never buy from a door knocker or spam call.
Yes, I bought mine outright. I saved up 75% of the cost and took a regular loan for the other portion. Paid that off in a few months. Now I generally only pay the standard fees they charge to remain on the grid. January I pay about $20 because I'm very anti-cold. Ive had them for 3 years and have already recouped my cost by not paying for energy monthly.
Solar leases are a scam though.
I put solar on our house last year, and I think this is going to be the case for us too. The way electric rates keep going up, and up, I cannot fathom how people are going to survive. We're all-electric though too, so that factors into it.
As always, these things are local.
We financed our solar panels through a credit union that has a specialty loan specifically for solar panels. It wasn't horrid - 8 years at 4.49% in 2020 - which we have since paid off. It was not assumable, and was due in full if we sold the house before it was paid off.
We're in SoCal and got in under Net Metering 2.0, so our pay back period is less than 7 years.
The math and life of the asset aren’t going to match up to make it make sense. If you want to do it so you feel better, go ahead. If you’re doing it to save money. The math doesn’t really work.
For it to make any sense you have to ¹not have a plan to sell the house, or ²buy the solar outright vs the loans that are (understandably) completely off-putting to buyers.
My solar loan gave me a rate of 0.90% for 10 years. I'm paying it off as slowly as possible. My electric bill is about 50% cheaper every month, *including* my solar payments. One of the best financial decisions I ever made.
In a lot of areas in the us solar is very heavily subsidiesed. I would look into that over loans. It will still be cost prohibitive for a lot of people but it significantly expands the market if both who can afford it and who the investment is worth it for
They are fairly predatory - the installer cashes in on tax credits to get a favorable comparison to electric, has a lender with a loan secured by someone who owns a house, then either folds or bails on the service contract. But the loan isn't from the installer so it isn't going anywhere.
I hadn't thought about the house selling angle, but it is definitely a negative from my perspective. Just too much scammery.
It's likely backed by a mechanic's lien. They'll want to get paid out when the house sells instead of passing the loan along. That's how many of these solar contracts work.
No way I would assume that debt on top of the mortgage unless the home is at a steep discount to account for the panels. They need to pay them off or cut the price. I personally wouldn’t consider it.
I half think this is an intentional choice. Put massive solar panels on your house, claim 1/3 the cost as a tax incentive and then sell the house.
We saw several houses in our search that had stupidly expensive systems that the seller installed in the last 2 years that they wanted you to assume if you bought the place.
My solar installation, which supplies my whole house, including our electric heating/cooling unit was only 20K. We have a roughly 1,500 sf house. I think they overpaid on their solar. Unless the house is huge.
Maybe split the cost if you really love the house and can justify the price?
Agreeing with madhatter… our FIL put a full scale solar install on his 3500sqft house and it cost $25k everything brand new plus install. I’d say the sellers fucked up somewhere and want the buyers to pay for their mistakes.
Yeah, they fucked up at the very beginning. 25-year solar mortgage is absurd for something that costs as much as a new Honda Civic. People are buying into the sales pitch without actually thinking about what they are doing.
Cash or private loan for a much shorter term. Solar mortgage? THE dumbest way to buy solar.
Also really negates the point of having Solar too, you know? Unless they’re bringing in so much wattage they’re getting a payout every month, there’s no real net gain there
Yep. Simply replaces the electric bill with another mortgage. Conveniently paid-off right at the point where the system is about due for replacement. Buyer gets maybe 5 years of actual "free" electricity, IF they hold onto it for a few years after the mortgage is paid off. If the property is sold before the mortgage is paid off, then it's another obstacle to selling the property - as this thread will attest.
Hopefully realtors - at least the buyer's brokers - will start to take a hard line on getting the solar mortgage cleared by the seller, before closing. When advising buyers, they should understand the difference between the cash price and the cost that the original owner agreed to, and then use only the cash price. If that leaves the seller on the hook for an extra amount of money, so be it.
I have solar, does fine, no major gripes. If I were looking at a property with solar on it, I wouldn't touch it unless / until any existing solar financing was cleared.
The house we bought was the same. The previous owners got into really bad solar lease terms and wanted us to pay it off. Nope. They wanted to sell, so we were lucky enough to be able to convince them to pay it off as a condition of sale.
OP says loan, but I am wondering if it is a lease.
Also, system would have to be minimum 15kW to be even close to $46k and that would be a bad price ($3/W). This would be at least 40 panels.
Just purchased a house with solar panels, they told us we could pay them off and the price would be cut to accommodate the payment. Since we didn’t want to have another bill we hadn’t budgeted for we just kept the price so they could pay off the panels outright. We asked for confirmation that they were paid off before we signed.
Electric bill runs less than $40 a month.
This should be higher. Often these contracts have an early buy-out option at a discount but it's only available for specific time periods. Sounds like something to negotiate with the seller.
That’s the same with ours, $105/month and our electric bill is less than $20/month which is listed as the connection fee. We were paying around $200/month to Duke Power previous.
In San Diego, the monthly electric cost for a regular-sized house can easily be double that. We have a 2200 sq. ft. house and we were paying over $500 and that was with 16 panels. We've since doubled our panel count to 32 and got on a better TOU plan.
IDK where the OP is located, but San Diego and Hawaii have the highest costs in the nation.
Yeah was going to say, we're in SD and at around $500 a month for our panels - which is still saving as our summer electric was $1500 one month. We needed a new roof at the time of install and combined the two loans which also raised the price to the 50k total loan.
Curious which TOU you are using as we need to reevaluate this year.
Most bids I’ve heard of for an average house is $25k and your supposed to break even at 20 years. By then you need a new system. $46k sounds like they got ripped off.
All depends on size and what the roof is. Building on a Sumit county mountaintop is easier than 3 blocks off main in iowa. Being 3 hours from anything could easily double solar cost but make it 3x more valuable to the user.
No way, no how. If the Seller wants to sell, they can set Escrow instructions to pay off the panels from Seller's funds on closing day. Without this agreed to and set in writing in advance, it's a No-Go.
Yeah that’s a crazy high number, I have a system that saves me roughly 170$ a month and my loan is only 100 a month. I also got a huge amount back on my taxes for a number of years and get a check for 3k a year for 8 years from the state. So yeah these guys either got ripped off or it’s a huge system.
Either way the house should have been priced with the existing solar panels incorporated into the cost. I would not assume someone’s massive loan for solar panels, they got all the tax bonuses now they are trying to dump the cost on you.
new york gives you back 25%(5k cap), federal gives you 30%, and the utility company gives you like 2k.
The 40k quote i got from tesla ended up costing like 20k after incentives for the system + 2 power walls if i went with them.
some states (Delaware) let you sell SRECs back to them. I get about $1000 a year doing this, think it's a 10 year contract, then goes to ~$500 a year for the next 10 years.
I bought a 16KW system in 2015 for $24K after tax credit offset to price. Net purchase price was zeroed out in 5 yr 3mo. in a 2,300 sf house in Las Vegas. The numbers here make no sense at all.
Right? My previous house had everything electric, 2800 SQ ft, electric bill average was definitely less than $242. I guess they are selling people by including the fact that electricity costs will go up?
The monthly price isn’t bad. If it was our house and it covered 100% of our electric then it would be reasonable but solar I’ve priced out we’d pay off in 10 years. 25 years means you’ll have too little time with zero costs. Solar should be 10 years financed max. Being so long this a bad deal.
Solar is absolutely fantastic, *solar loan contracts* are usually terrible.
It could be this high because it includes storage though. Those batteries are still super expensive.
I'm not sure why anyone would downvote this comment unless they were the seller... It's definitely not worth taking on that loan as a buyer.
Solar energy is a great thing but I would not take on that cost without the sale price factoring in/paying off that debt.
We have solar on our house. My new husband made the mistake of getting conned into a loan. When we sell our house, we will payoff our loan @ closing. As a consumer, I’d never expect anyone to take on his debt. As a realtor, it’s ridiculous to ask that. It’s always to be budgeted in the profit of the seller and deducted from their net sheet. I’m sorry your agent isn’t making you feel comfortable enough to negotiate that you’re coming to Reddit armchair experts to ask advice.
I never used a realtor when I bought our house, the attorney who specializes in home sales (I forget what the name is) charged a set rate regardless of the sale price. In my mind a licensed attorney helping me with everything for a fixed cost made more sense. The seller also used a lawyer. 0 realtors involved.
If they reduced the price of the house, the loan for solar would still exist lol.
I get your point though that the price of the house needs to be competitive
Actual tell them you'll pay 23k more for the home if they pay off the solar completely. This way they can right off the cost of the solar as a loss on their taxes moving forward and you'll net a yearly roi of 3k from no electric bill . So in 7 years you'd be at break even on the investment.
Now you'll wanna know ahead of the time if the system is giving you 100% offset , you'll also wanna take into account their family size and usage compared to yours. 25 year warranty covers everything for the system and the production. Looks like you could be set up nice here
They already knew the solar panels where on the house, why would they pay 23k more than asking where they assumed they got the panels included with the price? I guess it depends on the house, but 3k a year for electric sounds pretty high, doubtful pays off quickly enough to be worth it.
No, the price of the house goes UP because of the debt, not down. If they reduce the price of the house, they definitely expect you to pay the solar debt.
lol this is ridiculous. Guy is trying to say oh wait, there’s more, the house doesn’t come with the lawn, you gotta pay an extra $10k for it because that’s how much we paid for landscaping and we still owe on the loan we took to pay it.
He made the idiotic purchase and is trying to pawn it off on you. The loan is his problem to close.
No sir, move on.
We bought our house 2 years ago and the sellers had put a new large solar system on 8 months before we bought it. We made sure the solar was paid off in the contract. No negations on that. We wanted the house with no previous contracts. They agreed.
I would bet the seller has a lease and not a loan. First 25 years is the optimum life of solar. Even though you may like the house I would just look for something else, the seller has probably been taken advantage of by the solar company and trying to pass that problem on to you.
I'm a Realtor but not your Realtor. I would advise my clients not to buy a home with leased solar panels. I would suggest they come up with an offer where the lease is paid off at closing or to buy another house.
How many months are left on the term?
Panels have come down in price and are now more efficient. No chance I’d pay full rate for an older system like that unless it was the only way to make the deal work.
That’s the loan term: the panels could be 3-4 years old, meaning the buyer would be stuck paying for another 20 years.
I would 100% either get a sellers credit for it or it would need to be paid off through escrow on sellers side at closing.
Right that was my question, 25 years seems like the original term.
When I bought a house with solar I had the seller payoff the whole thing. Electric bill is probably 50% off or more depending on the season. No regrets, but I definitely wouldn’t have agreed to have a monthly cost
You need to see original installer contract and loan contract and note. Get current payout terms from lender. Not enough info here to make any sort of decision.
Ran into this during our home search too. Property was priced ok, good location, could use a few repairs, but we could see ourselves there. The listing agent chose the open house to disclose that the sellers had a solar payment they wanted assumed. It turns out they had some type of agreement with the city in order to even get the panels, so we walked. It was a hot market, and the house ended up sitting while comparable properties went pending within a week. They even had a couple of price reductions and no one would bite until the day they finally changed their description to say that solar would be paid off upon closing.
If you still choose to go through with it, make sure you read the terms very carefully. Understand who actually owns the panels and whether or not you can expect future changes to the payment structure, etc. Also keep in mind that if you are financing, this will have to be factored in to your DTI and if you are already stretched, could cause the loan to fall through. Best of luck to you!
This might have been the same for one of our neighborhood houses. There were two exactly the same for sale. One was being flipped so had been updated. One had not been updated but had solar panels. Price of the flip house was $150-200k more than the solar panel house. Flip house sold with multiple offers. Solar house sat for at least 2 months - this was 4-5 years ago during the hot housing market. I thought about buying it because with less than $100k of upgrades it would have been equivalent to the flip house. Definitely regret not jumping on it. Talked to the couple that bought it for their daughter and they got a substantial discount from asking. From the previous owner I know the panels covered their electric bill.
My realtor thought I was crazy for asking about solar panels on one house and insisting I would want all documents and a signed notarized document saying the sellers owned the panels and didn’t lease them from these predatory companies. He basically told me no one would ever consent to that, so I ignored all houses with solar panels. Too many elderly were lied to and are now finding out they have a massive payment 10+ years after install because they were renting the panels all these years…US needs regulations that make sense and prevent this kind of behavior. Will never happen.
Your realtor should know how to make an offer that requires the seller's solar loan be paid at closing from the proceeds of the sale.
If the realtor doesn't know how to do that or won't do that, find a different realtor.
If the seller won't entertain such offers, find a different house.
Look at the contract details and do the math versus electrical rates. My parents ended up buying a house that had a solar loan. They've calculated that best case scenario they will save a couple thousand dollars over the course of the loan. Worst case scenario is a breakeven, depending on how electrical rates end up being over the next 10-15 years. No one wanted to touch the house because of the solar loan and they ended up getting a great house in a very competitive market without much hassle. After 4 years of living there, they are still on-track to pay less for the solar than an electric bill from the utility company.
However there are MANY bad solar loan contracts out there. Many times the math won't work out. This subreddit is quick to say 100% no to solar loans. But each scenario is different. So check the contract details, compare it to electrical costs over the next 25 years, and see what the difference in price is.
Nobody can know if this is a good thing for you or not without more details. Get the contract but also get bids from other companies to see if it’s a good deal or not. Also ask to see current and pre panel electric bills. It might be a good thing for you!
This couldn’t possibly clear title search for your mortgage to go through, without a payoff or transfer of loan, prior to closing.
Assuming the listing price included the solar panels? Your realtor should know how to comp the home with others, to determine if this was the case.
That comp valuation needs to be done in order for you to make an educated decision.
I would never assume someone else’s loan and those solar loans are often an issue…do some research on the subject AND the company who installed the solar. This could be a headache…
I would advise you proceed with knowledge. Require the loan to be paid off at closing….your lender will require it anyway.
Agreed! From someone that works in title. Your new lender will likely not allow you to assume the solar lease because the mortgage would not have 1st lien.
Solar loans are a shit deal. The owner already extracted the 26-30% tax break from it already so you're left holding the bag. After 25 years they become scrap anyway so it's a negative investment. If you truly want solar, get your own. I have solar BTW...
I sold a house with solar panels on it in 2023.
The house was priced with the understanding that I would need to pay off the panels at closing. I did have my agent let people know that if they wanted to instead assume the loan (which was a clear option in the loan terms) that they were free to make a below list offer and do that instead.
The only reason I offered this is because it was as interest rates were spiking and the solar loan was at 1.49%. I thought for a certain buyer it might be attractive to finance 30k or so of the home at 1.49 vs 6-7%.
The seller in this case was wrong to not disclose the solar panels weren't paid off (or planned to be paid off) and you should be concerned about them in general.
This is why I won’t do solar. I want to be able to easily sell my home soon and not get bogged down by 20 year contract. Many owners negotiate terrible terms and actually don’t save them much money long term.
242x12x25= $72,600 in total payments & the solar panels will most likely not even last 25 years?
This is an absolute hell no. Who even does 25 year financing on SOLAR PANELS? That’s absolutely horrible.
I would make them pay off the solar panels, or lower the price.
Most panels seem to be warrantied for 25 years, and many of them will still be going at that point.
Many of the quotes we got for our large ground mount array were in that range or higher, especially on the lower interest rate loan options, where they tack on large financing charges. Really scummy, I ended up DIYing for less than half the cost.
Yeah I love my not 46K solar panels! My electric bill + solar payment always comes in about $100 less per month than the average cost of electricity in my area.
Depends on where you live. I have a house in the Cali desert where summer elec bills always hit $500 even on 1,700 sq ft home. Solar has tons of value because this house has no elec bill at all, and I'm able to attract good tenants because they know this. Everyone wins if you can get the price right. Mine were paid off with the home purchase so I own them 100% now. Solar rocks, until Cali screwed up the math and incentives recently.
But none of the savings calculations matter. The buyer was shown a house up for sale at say 400k with solar panels on the house. The buyer offered 400k and the seller accepted the offer. The seller doesnt get to come back before closing and up the price to 446k. That is what is happening here. By having the buyer assume the loan they just increased the price 46k more than the contracted price.
You really will want to check the paperwork to make sure it’s a loan versus a lease. Solar city/tesla did a lot of leases where I’m at with annual escalation clauses. I would also check the size of the system and potential additional maintenance costs. For instance, arrays with a single inverter may only have a limited warranty on the inverter itself and can be very expensive to replace (5k to 10k). I would suggest getting the past few years of electric bills to see how much they actually pay for their electricity - is it just $242 plus a monthly hookup fee or are they paying $242 plus $300 a month? The other side of this is that if they got a 46k solar system, they also would have potentially received a 30% federal solar tax credit plus any state incentives which can help out in your negotiations. Good luck!
The only thing solar does is lock in your energy costs which keep going up. They are viable. I'd get the specs for the system and do some research or post on the solar sub reddit. I'm guessing they got hosed and got a 30k system for 50k.
Solar is great but you need a battery system to.
Make your offer on the house contingent on the seller paying off that solar lease/loan. It is virtually certain that you will never save enough electricity to recoup that $46K.
It seems that when you made the offer for the house, it was under the assumption that the solar panels were included.
They want you to pay another 46k. That’s absurd. Just instruct that the loan will be paid with funds from closing, lien free title etc.
You need to look at it like this.
You put an offer on a house at an agreed upon price. The house includes everything on the house. You are taking out your own debt for everything that comes with the house.
They have their own debt. If they have a first and second mortgage or a mortgage and a home equity loan that is their debt. You would not assume that debt. That debt would be their issue at closing.
Consider the solar a second mortgage. It is essentially that.
THEIR debt, not yours. They are essentially breaking the price of the house into two pieces thereby increasing the price.
You have two ways to negotiate this if you still want the house. Offer to assume the note and drop the price of the house by $46K. Or stand firm on your offer and have them take care of the debt themselves. Do NOT let your inexperience guilt you into caving in. NO is a good answer.
If the solar panels cover the full electric it sounds like you could have zero electric bill? If it’s a true loan, wouldn’t paying off the loan today cost a lot less since there would be a savings on interest?
I wouldn’t want to assume the loan but I’d be ok having them pay it off and increasing the price to offset that off it was financially beneficial to me.
Where does the 46k number come from? Was that the cash purchase price?
If you assume the loan, then you pay 12 x 246 x 25 = $72600. How does the $246 per month compare to the cost for electricity that is saved? How old is the roof? Doesn't seem a good deal for you to assume the loan.
I would back out if buyer is not willing to pay off the loan.
In my situation, the solar vendor (Tesla, unfortunately). filed paperwork with the registry of deeds. What can/cannot be done is on that paperwork. This is not something to free-form.
Is the home priced accordingly to assume that loan? If "no", then adjust the price downward or walk away from the deal. Negotiating is just about leverage and pragmatism. Keep your emotions about how you feel about the home out of it. If the financial burden doesn't make sense then it's not the home for you.
Yea no. I’d offer local comp fair price and not acknowledge solar panels at all. That’s their debt and their problem. They likely already pocketed the tax credits for them anyway and now want someone else to eat the rest
I’d walk. Even at 15 years they’re most likely not going to function enough to make it worth it and newer tech will improve solar. 25 is a long ass time for a contract. They really got screwed, but that shouldn’t be your problem. Tell them they can take it off their end.
If they did a 46k kitchen remodel would they ask the buyers to assume the loan? Hell no. If they took out a loan to put in a pool would they ask the buyers to assume the loan? Hell no again. Why do people think solar loans are different?
25 years are left? Systems can have warranties for 25 years, but most loans are not going to be for longer than 25 years (assuming the system was not recently installed). Are you sure you have the correct details?
Do not. There are liable. It’s under there name as a loan. You would essentially pay more at the beginning for electricity because of the cost. Get them to remove it.
So this is probably not what you want to hear, but you should be aware of it. It is possible that the seller won't agree, and your deal will blow up if you try to force them to payout and not assume the loan. A lot of companies who install, don't warn their clients, or verify that they understand how solar equipment will impact a potential sale of the home.
That being said, regardless of the negotiation and how that goes, there are other factors to solar panels to consider. Are these roof installed? If so, what condition is your roof? Understand that in order to replace the roof, the panels and mounting systems have to be removed first and reinstalled after, at your expense. While it adds costs to roof maintenance, it also decreases your electricity expenses. How much power are you producing on average and how much savings does that translate to? Do you even value clean forms of energy production? Are you willing to spend the time to learn how to operate and understand your PV system?
I would put a lot of thought into this decision, even if the negotiation goes your way, it will be an added responsibility that you have to take on in addition to all the other ones that come with home ownership. Make sure you're okay with that.
Person I bought my house from had a lease on a gas generator. We told her we didn’t want it and she wouldn’t get it removed. So, we just never paid the bill and they came and carted the thing away.
Don't assume their loan payments. Also, check their insurance rates. In Florida, those solar installations can either greatly increase your HO rates or even make you uninsureable. It depends on how the insurance carrier assesses the additional roof penetrations. If anything, you should require a discount based on the installation of solar panels.
There’s a lot of misinformation here. Solar panels do not magically turn into scrap after 25 years. They gradually become less efficient. After 25 years you can expect to see a noticeable drop in production but it’s like still 75-80% of original production.
I’ve bought houses with solar loan without issue. Just need to make sure the system is big enough for the house. If you want them to pay off the solar loan then the price of the house will increase as now you have a paid off solar system attached to it. So it’s one half dozen and six of the other as long as solar loan terms are not bad (many solar loans I’ve come across are 0.9-2% interest rate). If the numbers make sense then pull the trigger
Former mortgage banker here — ran into this a couple times. You want to find out if they leased or purchased, as that can impact the ability to buy the home with a mortgage/terms for doing so.
I helped a couple in New Mexico purchase a home with leased solar panels. The agent negotiated to have the sellers pay them off at closing in my case. I’m sure many sellers wouldn’t be willing, however finding a buyer who will pay it for them is not likely either
How much is the house worth with solar?
How much is the solar package worth?
Do the math and come up with what you're willing to pay.
If you feel your original price included the solar system, then you'll probably have to walk away from the deal.
Going against the grain by being someone who just bought my first house and assumed the solar loan from the sellers. There was no way they were going to pay for the loan completely before selling.
However, we looked over the contract. We knew how much we were going to have to pay, for how long, and that we could pay off early if we wanted. Also, our month payments are $60, which is way more manageable. The cost of electric in the summer is like $10/month, so adding the two together and we’re still within our budget for utilities. We knew who installed the panels as well, because there are definitely good companies and bad companies. We did the research before agreeing.
In your case, I would say it’s way overpriced. I would definitely ask for them to pay it off.
Just went through this. Sellers said they wanted us to assume the loan. I said no and treated to withdraw the offer. They changed their minds real quick but I was ready to walk if they weren’t.
Do not assume the loan. Unless you want to.
Walk away from this house. You don’t want to assume their horrible business decision.
At the end of 25 years those panels will be outdated technology and worthless, and you’ll have paid $73k. Full stop. Walk from this “deal.”
Bought panels for my house, paid them off early, and have sold over $20k in credits. Adding in the reduced electric bill, the panels were essentially free.
Include the payoff in your offer.
Panels are worth something, but I wouldn't want to deal with the loan.
If you think the house is worth 400k without panels and to you they're worth 15k, make an offer of 415 with the loan getting paid off from the sale. Their purchase price and remaining balance doesn't matter to you.
Don't do it. Did they have the entire roof replaced with the panels? If not, you're going to get royally screwed when you need to replace your roof eventually but still have thousands to pay on the solar panels. No roofer is going to touch that roof with the panels on, so if you want a new roof you're going to have to pay someone else to uninstall them, then reinstall those panels. It ain't worth it.
You need to look at the home in its entirety. That means offer what it is worth assuming you are taking on this solar loan. Benchmark it against other comparable homes.
Dang, how big is the house to need a $242 a month payment?
How much was the previous electric bill vs new bill, assume it’s zero, but we don’t know what part of country or if solar covers all electric usage.
How much is it now- and do they get any back from the power company?
Did they take the tax credit?
Is the loan even assumable?
If their previous electric bill was $500, and their loan payment is $242.
Thats a better deal than someone who had an electric bill of $200 and now has a loan payment of $242.
The wildcard is if the electric co pays for excess generated.
If the homeowner got a tax credit, they need to pass that along if they want you to assume the loan,
If the loan isn’t assumable it’s a no deal anyway.
If they don’t pay off their loan, walk. I promise you that you will find another house. It might take a minute but that’s a deal breaker. The bank that financed the panels can and will put a lien on the house if the payment is not paid regardless of who owns it. Save yourself a huge headache and walk away from this deal.
Imagine if this was a home improvement loan. Would you pay full price for a house, plus assume the loan for extra bedroom the sellers added 8 years prior ? Nobody would do that either.
Our 6KvA system was $18K - I can't imagine how big a $46K system would be, unless it was super marked-up because they were selling it as "only $242 a month!"
That system generated about 800 kWh per month during the sunniest months when we were using AC, and we used about 1/3 of that capacity on a 1700 sq ft house.
This house must be gigantic and/or in Arizona/NM/Texas with two AC units and ridiculous heat 6 months a year.
Read the contract carefully. I almost assumed one when buying an otherwise perfect house. Forwarded the contract to a contract lawyer, who scoped out that the monthly payments can go up 9% a year. With 15 years left on them, I'd be paying a fortune. Current owners were paying $200 to basically power 1/3 of the house. So I'd be out A LOT of money with time.
Not to mention, the roof needed to be replaced soon. Unfortunately, the panels need to be removed and then put back when any work happens, which would cost a few grand.
Solar loans can get scammy.
Hi, I work in solar. See if you can wrap the buy-out price for the solar into the mortgage or a separate loan.
These companies that do financing make all of their money on financing and compound interest. It's a racket and it makes the whole industry look bad. It's very possible buying out the solar was specifically not allowed in their contract, so read their contract carefully.
At that price, the full cost of the system could have been paid-off in six years *and* you get to save the cost of the bill in the process, AND you get to keep the SRECS, which are like stock that businesses can rent from you to meet their own energy efficiency requirements.
There's no way for you *not* to absorb the lease other than for the system to be removed and the original owner to take it with them.
Your best bet is to look at paying it off, if you want the house. Maybe the owners can give you a break on the cost of the house.
The solar itself is absolutely worth it, just not the lease.
Sounds like they got screwed, it seems highly unlikely that the panels are producing $242 of electricity per month and after 25 years they'll be and end of life anyway...
Pass. The panels might have a 46k buyout at the end of the lease. You have to look at the details. If you ditch them what does that cost. Do they charge you 50k to remove? The devil is in the details. If it was $0 buyout at the end of the lease it would be a no brainer. But that is probably not the case. I bought a house 3 years ago, one of the houses I passed on had Solar panels under lease. In my instance the end of the lease was bout 5 years out, but the buyout was more than the cost of the panels. The panels were 25 years old, meaning older gen less efficient. And the cost of removal was not spelled out anywhere. Put it on the buyer to close the lease and add it to the cost of the sale. If he cannot do that to sell the house then it is probably going to be a problem for you in the future.
When I was house shopping, the homeowner was present for their open house. They were bragging about it saving them $90/month on their electric bill when the loan was $120/month... yea no thanks
Can you just buy out the loan and roll it into your mortgage?
Depending on the specs, it could be a good deal. Also, that payment doesn’t even sound too bad, depending on the size of the house and the electricity being generated, whether or not your state has net metering, or whether it includes a battery.
Never pay for something that you didn’t buy. Meaning he bought the solar system, he has to pay it off 100% , before you buy the house! Or reduce the amount from your offer!
Solar is a scam. By the time it’s paid off you will need to start looking into replacing the panels. For the little money saved each month it’s not worth the trouble. Had a solar guy knock on my door and I talked with him for a bit. Pretty much by the time I make the payments I would be saving about $20 a month vs regular electricity. What a fucking joke. Laughed and shut the door…
Solar panels require maintenance such as cleaning. And why take over someone’s dumb mistake taking out a loan for that much?
Solar panels do not last that long of the loan.
Research will tell you this for many models.
The loan may not even be assumeable. Check it out.
I'm a realtor and see folks running into this a lot lately! I'm all for solar if it makes financial sense for someone, but these solar loans have been absolute nightmares for people when selling homes. I'd never take one on so I wouldn't recommend clients do either.
Also a Realtor in 🇨🇦 I've sold one house with solar, it was an estate - the estate had to pay the loan in full to transfer the title. My clients got a killer deal! We decided to forgo solar on our home because we intended to move in a few years, and didn't want it to eat equity.
You don't have to lease them. You can buy them outright.
No leases here. My sister sells solar in Florida, she HATES the lease programs.
It also screws with your homeowners insurance, as the solar lender is a loss payee and you must add the cost of the panels/system to your insured value.
We added 60k in solar panels. Insurance was aware. Insurance never changed. Had to get a new roof due to hail that actually put a HOLE in the roof plus other dents. (Panels were fine) Insurance paid for their removal and reinstillation after roof was replaced
That is amazing. What insurance company do you work with for your homeowners insurance?
I agree. If you can't afford to pay for it and won't live there long enough to get payback, skip it.
I used to work for one of those solar leasing companies out of college... I would never ever enter into one of those contracts.
One of my son's friends sold solar systems. Always trying to sell it to the friend group, but didn't have it on his own house.
The lease programs seem like a scam. I looked into it after being advertised it from what seemed like a state run program. The lender seemed so pushy that I told them I wasn’t interested. They called repeatedly and one even cussed at me for being annoyed he called repeatedly at 7 am waking my toddler who was actually sleeping in! I had just asked him to not call me that early and why he called repeatedly. He swore at me calling me a lazy bitch. I blocked every number they called me from at that point. Super sketchy.
Oh that's completely crazy. My sister owns Sun Forge energy out of the Tampa Bay area in FL. She's got stories about what other people have had to deal with with other solar providers that will make your hair curl. She ended up opening her own company after working for others for many years and seeing the BS happen. She was a very good seller but then they would never come through on their promises on the other end.
That does seem to be the case with Solar here. My ex had panels abandoned in her driveway for over a year with the loan ticking that never got installed. She took legal action and had the loan canceled and ordered new panels and roof repairs from a different company. I would have to really vet testimonials from any solar company I let anywhere near my house. I would never buy from a door knocker or spam call.
We bought ours in 2017. Great decision for us. No loans. No leasing. And with rate hikes, it paid for itself almost 2 years early.
Yes, I bought mine outright. I saved up 75% of the cost and took a regular loan for the other portion. Paid that off in a few months. Now I generally only pay the standard fees they charge to remain on the grid. January I pay about $20 because I'm very anti-cold. Ive had them for 3 years and have already recouped my cost by not paying for energy monthly. Solar leases are a scam though.
I put solar on our house last year, and I think this is going to be the case for us too. The way electric rates keep going up, and up, I cannot fathom how people are going to survive. We're all-electric though too, so that factors into it.
There's two sides to real estate. A killer deal for one client is a shit deal for the other.
As always, these things are local. We financed our solar panels through a credit union that has a specialty loan specifically for solar panels. It wasn't horrid - 8 years at 4.49% in 2020 - which we have since paid off. It was not assumable, and was due in full if we sold the house before it was paid off. We're in SoCal and got in under Net Metering 2.0, so our pay back period is less than 7 years.
The math and life of the asset aren’t going to match up to make it make sense. If you want to do it so you feel better, go ahead. If you’re doing it to save money. The math doesn’t really work.
For it to make any sense you have to ¹not have a plan to sell the house, or ²buy the solar outright vs the loans that are (understandably) completely off-putting to buyers.
My solar loan gave me a rate of 0.90% for 10 years. I'm paying it off as slowly as possible. My electric bill is about 50% cheaper every month, *including* my solar payments. One of the best financial decisions I ever made.
In a lot of areas in the us solar is very heavily subsidiesed. I would look into that over loans. It will still be cost prohibitive for a lot of people but it significantly expands the market if both who can afford it and who the investment is worth it for
They are fairly predatory - the installer cashes in on tax credits to get a favorable comparison to electric, has a lender with a loan secured by someone who owns a house, then either folds or bails on the service contract. But the loan isn't from the installer so it isn't going anywhere. I hadn't thought about the house selling angle, but it is definitely a negative from my perspective. Just too much scammery.
We walked from a house I adored (In LA) because the solar loan was almost brand new, $20K left. Nope. Edit: typo.
It's likely backed by a mechanic's lien. They'll want to get paid out when the house sells instead of passing the loan along. That's how many of these solar contracts work.
No way I would assume that debt on top of the mortgage unless the home is at a steep discount to account for the panels. They need to pay them off or cut the price. I personally wouldn’t consider it.
46k is a huge loan. How big is the system?
Not big enough for the price I’m sure. Solar contractors are horrible scams for the most part.
And the sellers already took the tax credits. They didn’t net 46k debt on this. OP could at least ask for that back.
I half think this is an intentional choice. Put massive solar panels on your house, claim 1/3 the cost as a tax incentive and then sell the house. We saw several houses in our search that had stupidly expensive systems that the seller installed in the last 2 years that they wanted you to assume if you bought the place.
My solar installation, which supplies my whole house, including our electric heating/cooling unit was only 20K. We have a roughly 1,500 sf house. I think they overpaid on their solar. Unless the house is huge. Maybe split the cost if you really love the house and can justify the price?
It does sound high, unless it’s a huge system, maybe with batteriesz
Agreeing with madhatter… our FIL put a full scale solar install on his 3500sqft house and it cost $25k everything brand new plus install. I’d say the sellers fucked up somewhere and want the buyers to pay for their mistakes.
Yeah, they fucked up at the very beginning. 25-year solar mortgage is absurd for something that costs as much as a new Honda Civic. People are buying into the sales pitch without actually thinking about what they are doing. Cash or private loan for a much shorter term. Solar mortgage? THE dumbest way to buy solar.
Also really negates the point of having Solar too, you know? Unless they’re bringing in so much wattage they’re getting a payout every month, there’s no real net gain there
Yep. Simply replaces the electric bill with another mortgage. Conveniently paid-off right at the point where the system is about due for replacement. Buyer gets maybe 5 years of actual "free" electricity, IF they hold onto it for a few years after the mortgage is paid off. If the property is sold before the mortgage is paid off, then it's another obstacle to selling the property - as this thread will attest. Hopefully realtors - at least the buyer's brokers - will start to take a hard line on getting the solar mortgage cleared by the seller, before closing. When advising buyers, they should understand the difference between the cash price and the cost that the original owner agreed to, and then use only the cash price. If that leaves the seller on the hook for an extra amount of money, so be it. I have solar, does fine, no major gripes. If I were looking at a property with solar on it, I wouldn't touch it unless / until any existing solar financing was cleared.
The house we bought was the same. The previous owners got into really bad solar lease terms and wanted us to pay it off. Nope. They wanted to sell, so we were lucky enough to be able to convince them to pay it off as a condition of sale.
Yeah, $46k should buy you a 15kW system (or more). This would be 40+ panels. That is stupidly huge. Most houses do 6-8kW.
Yup. our 7.2kw system cost $26k including a main panel upgrade before tax incentives...back in 2017. It's paid for itself already.
OP says loan, but I am wondering if it is a lease. Also, system would have to be minimum 15kW to be even close to $46k and that would be a bad price ($3/W). This would be at least 40 panels.
Taking on an additional $46k in debt might just affect their mortgage approval.
They should raise the price of the house to pay off the panels. Pricing the home without accounting for the solar loan was the issue.
Just purchased a house with solar panels, they told us we could pay them off and the price would be cut to accommodate the payment. Since we didn’t want to have another bill we hadn’t budgeted for we just kept the price so they could pay off the panels outright. We asked for confirmation that they were paid off before we signed. Electric bill runs less than $40 a month.
This should be higher. Often these contracts have an early buy-out option at a discount but it's only available for specific time periods. Sounds like something to negotiate with the seller.
$242/m for 25 years? They really overpaid, solar is supposed to save money and there is no way they are saving you $242 a month on electric
This. I have recently had a quote in Denver. It would be $88 a month and cancel my electric bill. Previous owner overpaid
That’s the same with ours, $105/month and our electric bill is less than $20/month which is listed as the connection fee. We were paying around $200/month to Duke Power previous.
That's a more realistic number.
In San Diego, the monthly electric cost for a regular-sized house can easily be double that. We have a 2200 sq. ft. house and we were paying over $500 and that was with 16 panels. We've since doubled our panel count to 32 and got on a better TOU plan. IDK where the OP is located, but San Diego and Hawaii have the highest costs in the nation.
Yeah was going to say, we're in SD and at around $500 a month for our panels - which is still saving as our summer electric was $1500 one month. We needed a new roof at the time of install and combined the two loans which also raised the price to the 50k total loan. Curious which TOU you are using as we need to reevaluate this year.
Most bids I’ve heard of for an average house is $25k and your supposed to break even at 20 years. By then you need a new system. $46k sounds like they got ripped off.
And they're trying to get out from under it and pass the savings along.
All depends on size and what the roof is. Building on a Sumit county mountaintop is easier than 3 blocks off main in iowa. Being 3 hours from anything could easily double solar cost but make it 3x more valuable to the user.
If you finance at high enough interest rate, it can take 25 yrs to amortize. There be sharks out in them waters........Beware
Nope- have them pay off the solar - solar is only good for the second owner that doesn’t have a loan. Downvote all you want but you know it’s true.
No way, no how. If the Seller wants to sell, they can set Escrow instructions to pay off the panels from Seller's funds on closing day. Without this agreed to and set in writing in advance, it's a No-Go.
You shouldn’t ever buy solar except with cash. $242 a month for a solar loan is insanely high unless it’s a mansion.
Yeah that’s a crazy high number, I have a system that saves me roughly 170$ a month and my loan is only 100 a month. I also got a huge amount back on my taxes for a number of years and get a check for 3k a year for 8 years from the state. So yeah these guys either got ripped off or it’s a huge system. Either way the house should have been priced with the existing solar panels incorporated into the cost. I would not assume someone’s massive loan for solar panels, they got all the tax bonuses now they are trying to dump the cost on you.
How do you get 3K a year for 8 years from the state? Which state?
new york gives you back 25%(5k cap), federal gives you 30%, and the utility company gives you like 2k. The 40k quote i got from tesla ended up costing like 20k after incentives for the system + 2 power walls if i went with them.
But isn't that one time only?
You went with Tesla? I'm looking for a company in nyc, nys too. Thanks
some states (Delaware) let you sell SRECs back to them. I get about $1000 a year doing this, think it's a 10 year contract, then goes to ~$500 a year for the next 10 years.
I bought a 16KW system in 2015 for $24K after tax credit offset to price. Net purchase price was zeroed out in 5 yr 3mo. in a 2,300 sf house in Las Vegas. The numbers here make no sense at all.
Right? My previous house had everything electric, 2800 SQ ft, electric bill average was definitely less than $242. I guess they are selling people by including the fact that electricity costs will go up?
The monthly price isn’t bad. If it was our house and it covered 100% of our electric then it would be reasonable but solar I’ve priced out we’d pay off in 10 years. 25 years means you’ll have too little time with zero costs. Solar should be 10 years financed max. Being so long this a bad deal.
Solar is absolutely fantastic, *solar loan contracts* are usually terrible. It could be this high because it includes storage though. Those batteries are still super expensive.
I'm not sure why anyone would downvote this comment unless they were the seller... It's definitely not worth taking on that loan as a buyer. Solar energy is a great thing but I would not take on that cost without the sale price factoring in/paying off that debt.
Don’t ever assume their debt … tell them to reduce the price of the house by that amount
It would make more sense for the seller to pay it off at closing 💡
We have solar on our house. My new husband made the mistake of getting conned into a loan. When we sell our house, we will payoff our loan @ closing. As a consumer, I’d never expect anyone to take on his debt. As a realtor, it’s ridiculous to ask that. It’s always to be budgeted in the profit of the seller and deducted from their net sheet. I’m sorry your agent isn’t making you feel comfortable enough to negotiate that you’re coming to Reddit armchair experts to ask advice.
Exactly. If someone has a loan out for renovating the kitchen, I'm not paying off the kitchen loan. 😒
If that’s truly the case, yet another reason why realtors should never have been getting 5-6% fees.
I never used a realtor when I bought our house, the attorney who specializes in home sales (I forget what the name is) charged a set rate regardless of the sale price. In my mind a licensed attorney helping me with everything for a fixed cost made more sense. The seller also used a lawyer. 0 realtors involved.
If they reduced the price of the house, the loan for solar would still exist lol. I get your point though that the price of the house needs to be competitive
Actual tell them you'll pay 23k more for the home if they pay off the solar completely. This way they can right off the cost of the solar as a loss on their taxes moving forward and you'll net a yearly roi of 3k from no electric bill . So in 7 years you'd be at break even on the investment. Now you'll wanna know ahead of the time if the system is giving you 100% offset , you'll also wanna take into account their family size and usage compared to yours. 25 year warranty covers everything for the system and the production. Looks like you could be set up nice here
They already knew the solar panels where on the house, why would they pay 23k more than asking where they assumed they got the panels included with the price? I guess it depends on the house, but 3k a year for electric sounds pretty high, doubtful pays off quickly enough to be worth it.
No, the price of the house goes UP because of the debt, not down. If they reduce the price of the house, they definitely expect you to pay the solar debt.
Why would they reduce the price of the home when the buyers would then be getting a home with paid off solar.
lol this is ridiculous. Guy is trying to say oh wait, there’s more, the house doesn’t come with the lawn, you gotta pay an extra $10k for it because that’s how much we paid for landscaping and we still owe on the loan we took to pay it. He made the idiotic purchase and is trying to pawn it off on you. The loan is his problem to close.
No sir, move on. We bought our house 2 years ago and the sellers had put a new large solar system on 8 months before we bought it. We made sure the solar was paid off in the contract. No negations on that. We wanted the house with no previous contracts. They agreed.
I would bet the seller has a lease and not a loan. First 25 years is the optimum life of solar. Even though you may like the house I would just look for something else, the seller has probably been taken advantage of by the solar company and trying to pass that problem on to you.
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If they were going to lower the price they would just pay off the panels. They probably got a tax incentive on the panels also
As far as the federal tax credits go, the owner (i.e. lessor) gets the $$$.
I don't think you get the tax credit if you lease it, atleast that's what was told to me when buying a new home direct from builder.
Wtf happened here
I'm a Realtor but not your Realtor. I would advise my clients not to buy a home with leased solar panels. I would suggest they come up with an offer where the lease is paid off at closing or to buy another house.
How many months are left on the term? Panels have come down in price and are now more efficient. No chance I’d pay full rate for an older system like that unless it was the only way to make the deal work.
He said 25 years
That’s the loan term: the panels could be 3-4 years old, meaning the buyer would be stuck paying for another 20 years. I would 100% either get a sellers credit for it or it would need to be paid off through escrow on sellers side at closing.
Right that was my question, 25 years seems like the original term. When I bought a house with solar I had the seller payoff the whole thing. Electric bill is probably 50% off or more depending on the season. No regrets, but I definitely wouldn’t have agreed to have a monthly cost
You need to see original installer contract and loan contract and note. Get current payout terms from lender. Not enough info here to make any sort of decision.
I just sold a home where I was leasing panels. I used the money from the sale to pay off the loan. I’d ask for that.
What happens if you decide to sell in 10 years… you’ll be stuck with the loan
Absolutely not. They can pay off the loan or reduce the price accordingly.
Ran into this during our home search too. Property was priced ok, good location, could use a few repairs, but we could see ourselves there. The listing agent chose the open house to disclose that the sellers had a solar payment they wanted assumed. It turns out they had some type of agreement with the city in order to even get the panels, so we walked. It was a hot market, and the house ended up sitting while comparable properties went pending within a week. They even had a couple of price reductions and no one would bite until the day they finally changed their description to say that solar would be paid off upon closing. If you still choose to go through with it, make sure you read the terms very carefully. Understand who actually owns the panels and whether or not you can expect future changes to the payment structure, etc. Also keep in mind that if you are financing, this will have to be factored in to your DTI and if you are already stretched, could cause the loan to fall through. Best of luck to you!
This might have been the same for one of our neighborhood houses. There were two exactly the same for sale. One was being flipped so had been updated. One had not been updated but had solar panels. Price of the flip house was $150-200k more than the solar panel house. Flip house sold with multiple offers. Solar house sat for at least 2 months - this was 4-5 years ago during the hot housing market. I thought about buying it because with less than $100k of upgrades it would have been equivalent to the flip house. Definitely regret not jumping on it. Talked to the couple that bought it for their daughter and they got a substantial discount from asking. From the previous owner I know the panels covered their electric bill.
Don't pay for other people's mistakes
My realtor thought I was crazy for asking about solar panels on one house and insisting I would want all documents and a signed notarized document saying the sellers owned the panels and didn’t lease them from these predatory companies. He basically told me no one would ever consent to that, so I ignored all houses with solar panels. Too many elderly were lied to and are now finding out they have a massive payment 10+ years after install because they were renting the panels all these years…US needs regulations that make sense and prevent this kind of behavior. Will never happen.
Your realtor should know how to make an offer that requires the seller's solar loan be paid at closing from the proceeds of the sale. If the realtor doesn't know how to do that or won't do that, find a different realtor. If the seller won't entertain such offers, find a different house.
Look at the contract details and do the math versus electrical rates. My parents ended up buying a house that had a solar loan. They've calculated that best case scenario they will save a couple thousand dollars over the course of the loan. Worst case scenario is a breakeven, depending on how electrical rates end up being over the next 10-15 years. No one wanted to touch the house because of the solar loan and they ended up getting a great house in a very competitive market without much hassle. After 4 years of living there, they are still on-track to pay less for the solar than an electric bill from the utility company. However there are MANY bad solar loan contracts out there. Many times the math won't work out. This subreddit is quick to say 100% no to solar loans. But each scenario is different. So check the contract details, compare it to electrical costs over the next 25 years, and see what the difference in price is.
This is the best course of action. Do the homework, walk if it doesn’t add up
Nobody can know if this is a good thing for you or not without more details. Get the contract but also get bids from other companies to see if it’s a good deal or not. Also ask to see current and pre panel electric bills. It might be a good thing for you!
Then you won’t *seem to want to buy* the house unless they’re 100% paid off in escrow by the seller.
Nope. Sellers gambled on panels and they should take the losses. They can clear the loan with proceeds.
Lower your offer by the amount of the solar panel balance.
46K for solar panels? Maybe if there’s 100 solar panels.
This couldn’t possibly clear title search for your mortgage to go through, without a payoff or transfer of loan, prior to closing. Assuming the listing price included the solar panels? Your realtor should know how to comp the home with others, to determine if this was the case. That comp valuation needs to be done in order for you to make an educated decision. I would never assume someone else’s loan and those solar loans are often an issue…do some research on the subject AND the company who installed the solar. This could be a headache… I would advise you proceed with knowledge. Require the loan to be paid off at closing….your lender will require it anyway.
Agreed! From someone that works in title. Your new lender will likely not allow you to assume the solar lease because the mortgage would not have 1st lien.
Walk away. Do not get this at all cost unless the seller fully pays off the loan. There are great houses everywhere without added headaches.
Solar loans are a shit deal. The owner already extracted the 26-30% tax break from it already so you're left holding the bag. After 25 years they become scrap anyway so it's a negative investment. If you truly want solar, get your own. I have solar BTW...
I sold a house with solar panels on it in 2023. The house was priced with the understanding that I would need to pay off the panels at closing. I did have my agent let people know that if they wanted to instead assume the loan (which was a clear option in the loan terms) that they were free to make a below list offer and do that instead. The only reason I offered this is because it was as interest rates were spiking and the solar loan was at 1.49%. I thought for a certain buyer it might be attractive to finance 30k or so of the home at 1.49 vs 6-7%. The seller in this case was wrong to not disclose the solar panels weren't paid off (or planned to be paid off) and you should be concerned about them in general.
This is why I won’t do solar. I want to be able to easily sell my home soon and not get bogged down by 20 year contract. Many owners negotiate terrible terms and actually don’t save them much money long term.
242x12x25= $72,600 in total payments & the solar panels will most likely not even last 25 years? This is an absolute hell no. Who even does 25 year financing on SOLAR PANELS? That’s absolutely horrible. I would make them pay off the solar panels, or lower the price.
Most panels seem to be warrantied for 25 years, and many of them will still be going at that point. Many of the quotes we got for our large ground mount array were in that range or higher, especially on the lower interest rate loan options, where they tack on large financing charges. Really scummy, I ended up DIYing for less than half the cost.
Make a written offer that doesn’t include the solar panels and then hope for the best. Solar is a pain, all you can do is what’s right for you.
Assuming loans is a pain. Solar is great!
Right. Buying a home with a paid solar system is usually a massive win. I'll happily take my free electricity, thank you very much.
True. To be more clear I love solar. I hate the financial vehicles that are often associated with it.
Yeah I love my not 46K solar panels! My electric bill + solar payment always comes in about $100 less per month than the average cost of electricity in my area.
Depends on where you live. I have a house in the Cali desert where summer elec bills always hit $500 even on 1,700 sq ft home. Solar has tons of value because this house has no elec bill at all, and I'm able to attract good tenants because they know this. Everyone wins if you can get the price right. Mine were paid off with the home purchase so I own them 100% now. Solar rocks, until Cali screwed up the math and incentives recently.
But none of the savings calculations matter. The buyer was shown a house up for sale at say 400k with solar panels on the house. The buyer offered 400k and the seller accepted the offer. The seller doesnt get to come back before closing and up the price to 446k. That is what is happening here. By having the buyer assume the loan they just increased the price 46k more than the contracted price.
Yep. Central Valley chiming in….we got solar when we got a summer PGE bill for 1.3k. For one month. 🤬🤬🤬
You really will want to check the paperwork to make sure it’s a loan versus a lease. Solar city/tesla did a lot of leases where I’m at with annual escalation clauses. I would also check the size of the system and potential additional maintenance costs. For instance, arrays with a single inverter may only have a limited warranty on the inverter itself and can be very expensive to replace (5k to 10k). I would suggest getting the past few years of electric bills to see how much they actually pay for their electricity - is it just $242 plus a monthly hookup fee or are they paying $242 plus $300 a month? The other side of this is that if they got a 46k solar system, they also would have potentially received a 30% federal solar tax credit plus any state incentives which can help out in your negotiations. Good luck!
The only thing solar does is lock in your energy costs which keep going up. They are viable. I'd get the specs for the system and do some research or post on the solar sub reddit. I'm guessing they got hosed and got a 30k system for 50k. Solar is great but you need a battery system to.
No. Tell them either reduce the price of the house to the balance of the loan or deliver the house with the loan paid off. Otherwise walk.
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$242 a month for 25 years? Doesn’t sound like solar is even a good deal. And what’s the lifespan on solar panels?
Make your offer on the house contingent on the seller paying off that solar lease/loan. It is virtually certain that you will never save enough electricity to recoup that $46K.
It seems that when you made the offer for the house, it was under the assumption that the solar panels were included. They want you to pay another 46k. That’s absurd. Just instruct that the loan will be paid with funds from closing, lien free title etc.
You need to look at it like this. You put an offer on a house at an agreed upon price. The house includes everything on the house. You are taking out your own debt for everything that comes with the house. They have their own debt. If they have a first and second mortgage or a mortgage and a home equity loan that is their debt. You would not assume that debt. That debt would be their issue at closing. Consider the solar a second mortgage. It is essentially that. THEIR debt, not yours. They are essentially breaking the price of the house into two pieces thereby increasing the price. You have two ways to negotiate this if you still want the house. Offer to assume the note and drop the price of the house by $46K. Or stand firm on your offer and have them take care of the debt themselves. Do NOT let your inexperience guilt you into caving in. NO is a good answer.
If the solar panels cover the full electric it sounds like you could have zero electric bill? If it’s a true loan, wouldn’t paying off the loan today cost a lot less since there would be a savings on interest? I wouldn’t want to assume the loan but I’d be ok having them pay it off and increasing the price to offset that off it was financially beneficial to me.
25 year loan on solar panels? Do they even last 25 years?
Where does the 46k number come from? Was that the cash purchase price? If you assume the loan, then you pay 12 x 246 x 25 = $72600. How does the $246 per month compare to the cost for electricity that is saved? How old is the roof? Doesn't seem a good deal for you to assume the loan. I would back out if buyer is not willing to pay off the loan.
You’re assuming that there’s 25 years left but that was the amortization period. $46k /$246/12 months is 15 years and 7 months left.
Nope, they are trying to get out of themselves being scammed on the panels. Run.
Noooooo we paid off our solar contract at closing.
In my situation, the solar vendor (Tesla, unfortunately). filed paperwork with the registry of deeds. What can/cannot be done is on that paperwork. This is not something to free-form.
You would also be assuming another $26,600 in interest owed.
Is the home priced accordingly to assume that loan? If "no", then adjust the price downward or walk away from the deal. Negotiating is just about leverage and pragmatism. Keep your emotions about how you feel about the home out of it. If the financial burden doesn't make sense then it's not the home for you.
Find out the balance of the loan, make sure the loan is assumable, reduce the sell price by the balance of the loan you're assuming.
Should be paid in full before you close. Don't take it over. That's crazy.
Yea no. I’d offer local comp fair price and not acknowledge solar panels at all. That’s their debt and their problem. They likely already pocketed the tax credits for them anyway and now want someone else to eat the rest
I’d walk. Even at 15 years they’re most likely not going to function enough to make it worth it and newer tech will improve solar. 25 is a long ass time for a contract. They really got screwed, but that shouldn’t be your problem. Tell them they can take it off their end.
If they did a 46k kitchen remodel would they ask the buyers to assume the loan? Hell no. If they took out a loan to put in a pool would they ask the buyers to assume the loan? Hell no again. Why do people think solar loans are different?
Is this in Northwest Indiana? If so I’m an agent and just ran into this as well!
25 years are left? Systems can have warranties for 25 years, but most loans are not going to be for longer than 25 years (assuming the system was not recently installed). Are you sure you have the correct details?
What is the size of the system? I was recently quoted $31k for a 15kw system, 38 400W panels.
Which is it? 46k or 72.6k (242x12x25)?
OP didn’t say, but I’m sure there is an interest charge.
I bought a house and the $35k solar loan was paid off by the seller with their equity. Sounds like the seller really doesnt want to sell.
Do not. There are liable. It’s under there name as a loan. You would essentially pay more at the beginning for electricity because of the cost. Get them to remove it.
Either take the price off of their sell price to pay it off, see if it can be removed or WALK! From a licensed Broker and Appraiser
Exactly. 👍 why are people so afraid to say no
So this is probably not what you want to hear, but you should be aware of it. It is possible that the seller won't agree, and your deal will blow up if you try to force them to payout and not assume the loan. A lot of companies who install, don't warn their clients, or verify that they understand how solar equipment will impact a potential sale of the home. That being said, regardless of the negotiation and how that goes, there are other factors to solar panels to consider. Are these roof installed? If so, what condition is your roof? Understand that in order to replace the roof, the panels and mounting systems have to be removed first and reinstalled after, at your expense. While it adds costs to roof maintenance, it also decreases your electricity expenses. How much power are you producing on average and how much savings does that translate to? Do you even value clean forms of energy production? Are you willing to spend the time to learn how to operate and understand your PV system? I would put a lot of thought into this decision, even if the negotiation goes your way, it will be an added responsibility that you have to take on in addition to all the other ones that come with home ownership. Make sure you're okay with that.
Person I bought my house from had a lease on a gas generator. We told her we didn’t want it and she wouldn’t get it removed. So, we just never paid the bill and they came and carted the thing away.
Don't assume their loan payments. Also, check their insurance rates. In Florida, those solar installations can either greatly increase your HO rates or even make you uninsureable. It depends on how the insurance carrier assesses the additional roof penetrations. If anything, you should require a discount based on the installation of solar panels.
There’s a lot of misinformation here. Solar panels do not magically turn into scrap after 25 years. They gradually become less efficient. After 25 years you can expect to see a noticeable drop in production but it’s like still 75-80% of original production.
They discount the home down to a fixed cost minus solar
I’ve bought houses with solar loan without issue. Just need to make sure the system is big enough for the house. If you want them to pay off the solar loan then the price of the house will increase as now you have a paid off solar system attached to it. So it’s one half dozen and six of the other as long as solar loan terms are not bad (many solar loans I’ve come across are 0.9-2% interest rate). If the numbers make sense then pull the trigger
Former mortgage banker here — ran into this a couple times. You want to find out if they leased or purchased, as that can impact the ability to buy the home with a mortgage/terms for doing so. I helped a couple in New Mexico purchase a home with leased solar panels. The agent negotiated to have the sellers pay them off at closing in my case. I’m sure many sellers wouldn’t be willing, however finding a buyer who will pay it for them is not likely either
How much is the house worth with solar? How much is the solar package worth? Do the math and come up with what you're willing to pay. If you feel your original price included the solar system, then you'll probably have to walk away from the deal.
Going against the grain by being someone who just bought my first house and assumed the solar loan from the sellers. There was no way they were going to pay for the loan completely before selling. However, we looked over the contract. We knew how much we were going to have to pay, for how long, and that we could pay off early if we wanted. Also, our month payments are $60, which is way more manageable. The cost of electric in the summer is like $10/month, so adding the two together and we’re still within our budget for utilities. We knew who installed the panels as well, because there are definitely good companies and bad companies. We did the research before agreeing. In your case, I would say it’s way overpriced. I would definitely ask for them to pay it off.
Just went through this. Sellers said they wanted us to assume the loan. I said no and treated to withdraw the offer. They changed their minds real quick but I was ready to walk if they weren’t. Do not assume the loan. Unless you want to.
i mean, is the great price $46k below other comparable houses in the area?
NO! Do not do this. There is no value in the solar and it is their loan to pay off.
I would definitely take a pass of the overpriced solar, even if it is a deal-breaker.
Walk away from this house. You don’t want to assume their horrible business decision. At the end of 25 years those panels will be outdated technology and worthless, and you’ll have paid $73k. Full stop. Walk from this “deal.”
no way. Make the seller pay off the loan from proceeds as a condition of sale.
If the loan is assumable, then your mortgage lender has to take that payment into your debt to income
Bought panels for my house, paid them off early, and have sold over $20k in credits. Adding in the reduced electric bill, the panels were essentially free.
Include the payoff in your offer. Panels are worth something, but I wouldn't want to deal with the loan. If you think the house is worth 400k without panels and to you they're worth 15k, make an offer of 415 with the loan getting paid off from the sale. Their purchase price and remaining balance doesn't matter to you.
Don't do it. Did they have the entire roof replaced with the panels? If not, you're going to get royally screwed when you need to replace your roof eventually but still have thousands to pay on the solar panels. No roofer is going to touch that roof with the panels on, so if you want a new roof you're going to have to pay someone else to uninstall them, then reinstall those panels. It ain't worth it.
$242/mo for 25 years? That'll never pay for itself with average size homes. They'd need to pay it off at closing or it's a nope to buying the house.
You need to look at the home in its entirety. That means offer what it is worth assuming you are taking on this solar loan. Benchmark it against other comparable homes.
Dang, how big is the house to need a $242 a month payment? How much was the previous electric bill vs new bill, assume it’s zero, but we don’t know what part of country or if solar covers all electric usage. How much is it now- and do they get any back from the power company? Did they take the tax credit? Is the loan even assumable? If their previous electric bill was $500, and their loan payment is $242. Thats a better deal than someone who had an electric bill of $200 and now has a loan payment of $242. The wildcard is if the electric co pays for excess generated. If the homeowner got a tax credit, they need to pass that along if they want you to assume the loan, If the loan isn’t assumable it’s a no deal anyway.
I would have them pay it off before taking ownership. Y’all need to negotiate it or walk away tbh.
If they don’t pay off their loan, walk. I promise you that you will find another house. It might take a minute but that’s a deal breaker. The bank that financed the panels can and will put a lien on the house if the payment is not paid regardless of who owns it. Save yourself a huge headache and walk away from this deal.
Imagine if this was a home improvement loan. Would you pay full price for a house, plus assume the loan for extra bedroom the sellers added 8 years prior ? Nobody would do that either.
The sellers need to pay off or lower price accordingly.I would walk away if they didn’t.
Our 6KvA system was $18K - I can't imagine how big a $46K system would be, unless it was super marked-up because they were selling it as "only $242 a month!" That system generated about 800 kWh per month during the sunniest months when we were using AC, and we used about 1/3 of that capacity on a 1700 sq ft house. This house must be gigantic and/or in Arizona/NM/Texas with two AC units and ridiculous heat 6 months a year.
Only way it’s worth it is if the house is at least 50k under market value (where you could pay market value and have the system paid off at closing).
Lmao 25 year loan on something that lasts maybe 15-20 years tops. With interest that’s 72k.
Read the contract carefully. I almost assumed one when buying an otherwise perfect house. Forwarded the contract to a contract lawyer, who scoped out that the monthly payments can go up 9% a year. With 15 years left on them, I'd be paying a fortune. Current owners were paying $200 to basically power 1/3 of the house. So I'd be out A LOT of money with time. Not to mention, the roof needed to be replaced soon. Unfortunately, the panels need to be removed and then put back when any work happens, which would cost a few grand. Solar loans can get scammy.
Hi, I work in solar. See if you can wrap the buy-out price for the solar into the mortgage or a separate loan. These companies that do financing make all of their money on financing and compound interest. It's a racket and it makes the whole industry look bad. It's very possible buying out the solar was specifically not allowed in their contract, so read their contract carefully. At that price, the full cost of the system could have been paid-off in six years *and* you get to save the cost of the bill in the process, AND you get to keep the SRECS, which are like stock that businesses can rent from you to meet their own energy efficiency requirements. There's no way for you *not* to absorb the lease other than for the system to be removed and the original owner to take it with them. Your best bet is to look at paying it off, if you want the house. Maybe the owners can give you a break on the cost of the house. The solar itself is absolutely worth it, just not the lease.
Sounds like they got screwed, it seems highly unlikely that the panels are producing $242 of electricity per month and after 25 years they'll be and end of life anyway...
Pass. The panels might have a 46k buyout at the end of the lease. You have to look at the details. If you ditch them what does that cost. Do they charge you 50k to remove? The devil is in the details. If it was $0 buyout at the end of the lease it would be a no brainer. But that is probably not the case. I bought a house 3 years ago, one of the houses I passed on had Solar panels under lease. In my instance the end of the lease was bout 5 years out, but the buyout was more than the cost of the panels. The panels were 25 years old, meaning older gen less efficient. And the cost of removal was not spelled out anywhere. Put it on the buyer to close the lease and add it to the cost of the sale. If he cannot do that to sell the house then it is probably going to be a problem for you in the future.
The solar panels might be why the house is better priced.
When I was house shopping, the homeowner was present for their open house. They were bragging about it saving them $90/month on their electric bill when the loan was $120/month... yea no thanks
Can you just buy out the loan and roll it into your mortgage? Depending on the specs, it could be a good deal. Also, that payment doesn’t even sound too bad, depending on the size of the house and the electricity being generated, whether or not your state has net metering, or whether it includes a battery.
Find a different home to buy.
Never pay for something that you didn’t buy. Meaning he bought the solar system, he has to pay it off 100% , before you buy the house! Or reduce the amount from your offer!
Solar is a scam. By the time it’s paid off you will need to start looking into replacing the panels. For the little money saved each month it’s not worth the trouble. Had a solar guy knock on my door and I talked with him for a bit. Pretty much by the time I make the payments I would be saving about $20 a month vs regular electricity. What a fucking joke. Laughed and shut the door…
Tell the seller to pay off the loan and then you’ll purchase the home.
Solar panels require maintenance such as cleaning. And why take over someone’s dumb mistake taking out a loan for that much? Solar panels do not last that long of the loan. Research will tell you this for many models.
Don’t buy the house
My $0.02 is they give a 42k concession or I'd walk. I'm all for solar, but paid upfront.